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Frequently Asked Questions

Health Reimbursement Arrangement (HRA) and Small Business HRA (QSEHRA) frequently asked questions

One Employee HRA

Limited Purpose HRA

Multi-Employee HRA

No Limit Plan

Small Business HRA (QSEHRA)  
   

ONE EMPLOYEE HRA

Q. Is my Plan subject to all of the regulations and changes due to the Patient Protection and Affordable Care Act (PPACA); i.e., Healthcare Reform?

A. No. A One Employee HRA is EXEMPT for most PPACA regulations.

Q. Why aren't S-Corporation owners protected by TASC's Deduction Guarantee?

A. While S-Corporation owners can still benefit from an HRA (especially if they have a significant amount of out-of-pocket medical expenses), they do not realize as big of a benefit or experience as large of a tax deduction from an HRA as other business entities. They will receive FICA or self-employment tax deductions on their out-of-pocket medical expenses only.

 
Q. Does my adult child need to be covered by my medical insurance in order for me to pay and deduct the medical expense on my HRA?

A. Any out-of-pocket expenses associated with your dependents can be taken as a tax deduction on your HRA regardless of whose health insurance plan they’re on.

Q. Is there a list of eligible expenses that TASC could provide?

A. TASC has generated a list of items that are considered eligible expenses with AgriPlan and BizPlan (www.tascmicrobusinessnews.com). However, this is NOT a comprehensive list. For a current list of allowable items/expenses, visit the IRS.gov website and view Publication 502 Medical and Dental Expenses (pdf). If still in doubt, enter the expense into MyTASC or on a paper Transmittal. We will review and adjudicate it at the end of the year when you create your Year-End Report from MyTASC or submit your list of expenses to TASC on a paper Transmittal.

Q. How does the TASC Card work?

A. Complete a TASC Card Enrollment form or elect the TASC Card when you sign up for your Plan. A Participant can use the card for any eligible out-of-pocket medical expense (The TASC Card cannot be used to pay insurance premiums). The card differentiates between expenses that are eligible and those that are not. When purchasing an eligible item, the card is swiped; TASC fronts the money (up to $1,000. Increasing to $2,500 effective 5/1/17) and pays the merchant. Within 5 business days, you will receive an email notifying you that funds will be taken from your business checking account for that expense. The transaction will occur shortly thereafter. The TASC Card is not a credit card; it is a DEBIT card. Benefits of using the card include...

  • Automatically qualifies expenses at point of sale
  • Eliminates the need to reimburse the employee for medical expenses
  • Pre-populates the transmittal (online and paper) for end of year submissions
 

Q. Is the TASC Card a credit card?

A. No. The TASC Card is a debit card. An Automatic Clearing House (ACH) transaction occurs within 5 business days of the point of sale. TASC draws funds from the Client’s business checking account after notifying him/her via email of the transaction.

Q. How much does the TASC Card cost?

A. The TASC Card is free with your Plan. There is no charge tied to it. Dependent cards are also available for a spouse or child.

Q. Can I pay my spouse with commodity wages?

A. Yes and no. You must pay at least a minimal W-2 wage (in addition to any commodity wages) to your spouse or employee in order be protected by TASC's Audit Guarantee.

Q. Can a greater than 2% S-Corporation shareholder participate in a One Employee HRA?

A. Yes; however, the savings will be limited to FICA/Medicare — or 15.3% of out-of-pocket medical expenses. If the shareholder has a significant amount of out-of-pocket medical expenses, a BizPlan is still a good investment. A 2% shareholder or greater will be required to add the AgriPlan and BizPlan employee benefit amount to Box 1 (wages, tips and other compensation) of their employee W-2; however, this amount will be deducted from Boxes 3 (Social security wages) and 5 (Medicare wages and tips).

Q. Am I required to have health insurance?

Yes. The Patient Protection and Affordable care Act (PPACA) generally requires individuals, with limited exceptions, to maintain minimum essential coverage or pay a penalty with their annual federal income tax return. The annual penalty will be the greater of a flat dollar amount ($325 in 2015; $695 in 2016) or a percentage of taxable income (2% in 2015; 2.5% in 2016).

 

MUTLI-EMPLOYEE HRA

Q. Can I offer a BizPlan Section 105 HRA? I am an employer who DOES NOT sponsor Group insurance.

A. If you have fewer than 50 eligible employees the answer is yes! The Cures Act and H.R. 34 containing provisions that establish Qualified Small Employer HRAs (QSEHRA) was signed into law by President Obama on December 13, 2016. Beginning January 1, 2017, qualified businesses (more than one but fewer than 50 eligible employee) who do not offer Group health but want to assist their employees with ever rising healthcare costs that establish QSEHRAs will be able to use tax-advantaged funds to reimburse employees for individual health insurance premiums and family out-of-pocket medical expenses. (Note: This change does not affect one-employee, integrated, or Limited Purpose HRA Plans that were already compliant with federal law.)

Q. I have downloaded, completed and distributed your ERISA Compliance Feature Pack forms to my Plan Participants. Can I safely assume that I would pass a Department of Labor Audit (DOL)?

A. NO! Employers who sponsor Group insurance or any Group-sponsored health and welfare benefit have much more stringent reporting requirements. For example, if you sponsor a Group dental plan in addition to your HRA, you will need a Wrap Document that ties each of the compliant Summary Plan Descriptions together into one document. Failure to comply to any of the ERISA or DOL requirements could lead to hefty fines and penalties. TASC has you covered with its Microbusiness Compliance Suite. If elected, these services will incur an additional fee. Please contact your TASC Provider or a Microbusiness Specialist to learn more.

Q. Do I need to submit a 1094-B Transmittal Form and 1095-B Individual form for each covered employee?

A. The answer depends on whether or not you sponsor Group insurance. For fully-insured health plans this responsibility lies with the insurance carrier.

This responsibility rests with the employer for self-insured Plans. Employers are required to submit a 1094-B Transmittal Form and 1095-B Individual Forms for each covered employee to the IRS by February 28th, or March 31st if filing electronically. In addition, you must distribute IRS Form 1095-B to affected employees by January 31st (deadline delayed for 2016). Employees will use this form when completing their own individual income tax returns as proof of health insurance coverage for the prior calendar year. Under new Healthcare Reform rules, an individual can be fined for any month they fail to maintain health coverage. TASC will assist by providing instruction and fillable forms at the end of each year.

Q. Do I have to submit IRS Excise Tax Form 720 and pay an annual PCORI fee?

A. Yes. PPACA requires you to pay a minimal per participant annual fee ($2.00 per participant in 2014 and indexed annually thereafter) to help finance the Patient-Centered Outcomes Research Institute. This PCORI fee will need to be recorded on IRS Excise Tax Form 720 and paid by July 31st of the calendar year immediately following the last day of the Plan year. TASC will assist by providing you with a completed IRS Excise Tax Form 720 and instruction.

Q. What is a Summary of Benefits and Coverage? Is this the same as a Summary Plan Description?

A. A Summary of Benefits and Coverage (SBC) is a uniform explanation of coverage that is now required by the Departments of Treasury, Labor and Health & Human Services. No, It is not the same as a Summary Plan Description. TASC provides you with fillable SBC and SPD documents that you can download, complete and distribute.

 

LIMITED PURPOSE HRA

Q. What is a Limited Purpose HRA and what benefits does it provide?

A. A Limited Purpose HRA provides coverage for dental, orthodontia, vision and long-term care benefits only. These are considered excepted benefits and can be offered whether you offer Group insurance or not.

Q. Can I still provide my Plan participants with the TASC Card if my Plan is a Limited Purpose HRA?

A. Yes; however, TASC has no way to limit your employees' reimbursement to only dental and vision services via the TASC Card. This is something that you as the employer will have to monitor.

 
Q. Do I have to submit IRS Excise Tax Form 720 and pay an annual PCORI fee?

A. Yes. PPACA requires you to pay a minimal per participant annual fee ($2.00 per participant in 2014 and indexed annually thereafter) to help finance the Patient-Centered Outcomes Research Institute. This PCORI fee will need to be recorded on IRS Excise Tax Form 720 and paid by July 31st of the calendar year immediately following the last day of the Plan year. TASC will assist by providing you with a completed IRS Excise Tax Form 720 and instruction.

 

Q. Can an S-Corporation owner actively participate in a Limited Purpose HRA?

A. Yes.

Q. I run a small farm (less than 50 employees) with a mix of full-time and part-time workers. Am I required to offer coverage?

A. No, there is no requirement for small employers to offer health benefits to their workers.

 

NO LIMIT PLAN

Q. I have a non-family member employee. Would you recommend this tax-advantaged benefit for my business?

A. No, TASC would not recommend the No Limit Plan for an employer who has non-family member employees. This Plan was specifically developed for family-owned and operated businesses. There is no limit to the amount of claims submitted. The risk to this type of Plan design is the potential of receiving a high amount of medical claims, written off through your business, in any given year.

Q. Do I need to submit a 1094-B Transmittal Form and 1095-B Individual form for each covered employee?

A. Yes, this responsibility rests with the employer for self-insured Plans. Employers are required to submit a 1094-B Transmittal Form and 1095-B Individual Forms for each covered employee to the IRS by February 28th, or March 31st if filing electronically. (For Group-insured health Plans, this new requirement lies with the insurance carrier.)

In addition, you must distribute IRS Form 1095-B to affected employees by January 31st (deadline delayed for 2016). Employees will use this form when completing their own individual income tax returns as proof of health insurance coverage for the prior calendar year. Under new Healthcare Reform rules, an individual can be fined for any month they fail to maintain health coverage.

To help ensure the compliance of your Plan, TASC will provide you with instruction and access to these fillable tax forms at the end of each calendar year.

 
Q. Do I have to submit IRS Excise Tax Form 720 and pay an annual PCORI fee?

A. Yes. PPACA requires you to pay a minimal per participant annual fee ($2.00 per participant in 2014 and indexed annually thereafter) to help finance the Patient-Centered Outcomes Research Institute. This PCORI fee will need to be recorded on IRS Excise Tax Form 720 and paid by July 31st of the calendar year immediately following the last day of the Plan year. TASC will assist by providing you with a completed IRS Excise Tax Form 720 and instruction.

 
Q. What do I have to do to be compliant with ERISA?

A. Download, complete and distribute TASC's ERISA Compliance Feature Pack forms to your Plan Participants. Follow direction in the booklet and you should be good to go unless you sponsor a Group health and welfare benefit (i.e., a Group-sponsored Dental Plan).

Employers who sponsor Group insurance or any Group-sponsored health and welfare benefit have much more stringent reporting requirements. For example, if you sponsor a Group Dental Plan in addition to your HRA, you will need a Wrap Document that ties each of the compliant Summary Plan Descriptions together into one document. Failure to comply to any of the ERISA or DOL requirements could lead to hefty fines and penalties. TASC has you covered with its Microbusiness Compliance Suite. If elected, these services will incur an additional fee. Please contact your TASC Provider or a Microbusiness Specialist to learn more.

Q. Can I pre-establish a limit for non-insured or out-of-pocket medical expenses?

A. No. The reason this Plan is compliant with Healthcare Market Reform regulations is because we have removed the limit on the amount of out-of-pocket medical expenses that can be reimbursed through the business. All insurance premiums and unlimited out-of-pocket medical expenses are eligible to be reimbursed.

Q. Is the No Limit Plan an HRA?

A. No. The No Limited Plan is technically a self-funded Plan. It is a "modified" HRA in that it works in the same manner as an HRA; however the limit on insurance premiums and out-of-pocket medical expenses has been removed.

Q. What other compliant tax-advantaged options do I have if I don't sponsor Group insurance and I have non-family member employees?

A. Due to the passage of The Cures Act and H.R. 34, you can offer a Qualified Small Employer HRA (QSEHRA) as of January 1, 2017 without sponsoring Group insurance. Other options include a Limited Purpose HRA or purchase a Health Savings Account (HSA) from your local financial institution. A High Deductible Health Plan is a requirement of the HSA.

 
SMALL BUSINESS HRA (QSEHRA)
Q. Who can offer a Small Business HRA?
A. An employer who has more than one but fewer than 50 benefit-eligible employees and does not offer employees Group health insurance.
 
Q. What can be reimbursed through a Small Business HRA?
A. Employee's individual insurance premiums and out-of-pocket medical expenses (Any 213(d) expense per the IRS).
 
Q. What is the annual maximum allowed reimbursement through the Small Business HRA?
A. The annual maximum limit that an employer may reimburse is $4,950 for an individual and $10,000 for a family. These limits will be adjusted annually for inflation.
 
Q. Are there any special requirements for the Small Business HRA?
A. Yes. 1) There is a maximum 90-day enrollment waiting limit for new and current employees, 2) a 90-Day Notice must be provided to employees during open enrollment, 3) Employees must have Minimum Essential Coverage in order to participate and the employer must obtain certification from eligible employees, 4) Annual contribution limits ($4,950 for an individual and $10,000 for a family) apply, and 5) the employer may not sponsor or offer Group insurance to any employee.
 
Q. Who funds the Small Business HRA?
A. The Small Business HRA is solely funded by an eligible employer.; they are employer-sponsored and reimbursed benefits. The employee is not allowed to contribute pre-tax dollars via salary reduction.
 
Q, Will participation in a Small Business HRA disqualify participants from Marketplace subsidies (i.e., premium tax credits)?
A. No, participation in a Small Business HRA will not disqualify participants from Marketplace subsidies; however, monthly HRA reimbursements will be included in income calculations for determining eligibility for any subsidy.
 
Q. What other differences exist between a Small Business HRA and a Multi-Employee HRA (with Group insurance)?
A. A Small Business HRA is not subject to ERISA or COBRA and does not require: 1) Summary of Benefits & Coverage, 2) PCORI fee and Excise Tax Form 720 reporting, 3) Marketplace Notices, or 4) ACA Reporting of Minimum Essential Coverage to the IRS and covered employees using IRS Tax Forms 1094-B and 1095-B.
 
Q. IRS Notice 2017-20 provides transition relief for QSEHRA 90-Day Notice. What does this mean?
A. Until further guidance is released, an eligible employer offering a QSEHRA for a Plan Year beginning in 2017 is not required to furnish the initial written notice to eligible employees. Additionally, no penalties will be imposed for failure to provide the initial written notice before the extended deadline which will be specified in future guidance.
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