Compliance

Compliance

Compliance is a crucial part of any successful benefits plan; however, with the ever-changing regulatory landscape it has never been harder to ensure your group's plan is up to date and compliant with the latest government rules and regulations. By partnering with NueSynergy, we provide the resources and expertise needed to help ensure your compliance and ease the administrative burden. Below is a summary list of the various compliance documents or processes - as a plan sponsor - you may be responsible for.

SECTION 125 PLAN DOCUMENT

If offering a Flexible Spending Account as part of a benefits program, employers will also need to have a Section 125 Plan Document in place. A Cafeteria Plan (includes Premium Only Plans and Flexible Spending Accounts) allows for the pre-taxing of qualified employee insurance premiums and the employees' use of pre-tax funds to pay for eligible expenses related to medical, dependent care, adoption, and transportation. Funds contributed pre-tax through these plans are not subject to federal, state, or Socials Security taxes. Participants in these plans can save on average between $0.25 to $0.49 on dollar contributed.

Employers also benefit as a result of the pre-tax advantage of these plans. For every participating employee, the employer will see a tax savings from reduced FUTA, FICA, SUTA, and Worker's Compensation taxes.

 

If you have any questions about the compliance of your plan documents or need help implementing them, please Click Here for a free plan document review.

 

POP PLAN

For employers wanting to allow employees to deduct their portion of a company sponsored insurance premium pre-tax, they will need to implement a Premium Only Plan or "POP".  The premiums for the following types of  group coverage can be paid pre-tax using a POP plan:

Medical     |     Dental     |    Vision     |     Disability     |     Term Life Insurance

Employers and employees both benefit by having a POP plan in place. Employers experience a reduction in payroll taxes, as well as savings of 7.65% on FICA taxes. Employees are able to reduce their taxable income and increase their take home pay.

 

If you have any questions about the compliance of your plan documents or need help implementing them, please Click Here for a free plan document review.

 

SECTION 105 PLAN DOCUMENT

A Section 105 Plan Document will need to be drafted if implementing an employer self-funded Health Reimbursement Arrangement (HRA) as part of a group benefits program. These plans offer a sponsoring employer a level of flexibility in design and reimbursement guidelines. As an employer self-funded plan, any reimbursement for eligible expenses are tax deductible for the employer. They're also tax free for the employee. The following are several key components an employer should be aware of when ensuring an HRA plan is compliant:

HIPAA Privacy Rules   |   COBRA Rules     ERISA Plan Rules    

Medicare Secondary Payer (MSP) provisions   |   Affordable Care Act (ACA) Rules

 

If you have any questions about the compliance of your plan documents or need help implementing them, please Click Here for a free plan document review.

 

 

DISCRIMINATION TESTING

As a plan sponsor of a Section 125 or Section 105 plan, an employer is required to perform discrimination testing each year on their plan. The IRS-required tests are designed to ensure that Key and Highly Compensated Employees within the company receive nontaxable benefits in balance with all employees.

In order to perform the discrimination testing, five separate tests are run on the plan:

1.  Eligibility Test 

At least some non-highly compensated employees must be eligible to participate in the plan.

2.  Contributions Test

All employees should receive the same amount of employer contributions

3.  Benefits Test 

The eligibility rules should be the same for all employees, and the same benefits must be provided to all employees.

4.  Key Employee Concentration Test 

This test compares the non-taxable health benefits provided to Key Employees to the non-taxable benefit provided to all employees. The value of non-taxable benefits provided to Key Employees cannot exceed 25% of the total non-taxable benefits provided under the plan.

5.  55% Average Benefit Test

This test looks only at the dependent care portion of the FSA plan. The average dollar amount of benefits elected by non‐highly compensated employees must be at least 55% of the average dollar amount of benefits elected by highly compensated employees.

Remember, 2% or more shareholders in a “S” Corp, LLC or Sole Proprietor cannot participate (nor can spouses and/or relatives of owners) in the company-sponsored Section 125 or Section 105 plan. This rule applies to any insurance premiums that may be pre-taxed.

 

If you have any questions about the compliance of your plan documents or need help implementing them, please Click Here for a free plan document review.

 

WRAP DOCUMENT

A WRAP Document is a document that "wraps" around the insurance policy, so that the plan sponsor maintains compliance with ERISA. All plan benefits continue to be governed by the insurance policy; however, the WRAP Document supplements the information together so the documents are compliant with ERISA. WRAP Documents eliminate gaps between the other plans supplied by the carriers so that the employer complies with ERISA regulations applicable to Summary Plan Descriptions (SPDs).

 

If you have any questions about the compliance of your plan documents or need help implementing them, please Click Here for a free plan document review.

 

 

Resources

FAQs

All “eligible employees” who received compensation during the previous year are included in nondiscrimination testing. Generally only union employees, non-resident aliens, leased employees and independent contractors can be excluded from nondiscrimination testing because they are not considered “eligible employees.”

 

 

Each year, the IRS requires companies with pre-tax reimbursement accounts to complete nondiscrimination testing. Nondiscrimination testing ensures that the business owners and Highly Compensated Employee(s) (HCE) do not receive a disproportionate benefit from a pre-tax plan compared to other employees.

Form 1099-SA notifies the IRS of distributions made from your HSA during the tax year. Form 5498-SA notifies the IRS of contributions made to your HSA during the tax year. These forms will be available electronically for your NueSynergy HSA and can be found online under "Tax Forms" within the "My HSA" section.

When you participate in a payroll deduction program through your employer, deductions can be taken from your payroll before calculating your taxable federal income, FICA (Social Security and Medicare) tax and for most states, taxable state income. By taking deductions pre-tax, you reduce the dollars on which you are taxed and, as a result, reduce your total tax bill.

• Change in legal marital status (marriage, death of spouse, divorce, legal separation, annulment)
• Change in number of tax dependents (birth, death of dependent, adoption or placement for adoption)
• Change in dependent’s eligibility
• Change in employment status of employee, spouse or dependents
• Other changes that may permit an election change under the Dependent Care FSA are:

     ○ Change of dependent care provider
     ○ Change of rate charged by unrelated dependent care provider
     ○ Child attaining age 13

Election changes must be consistent with the event. If you experience a Change in Status, please review your Summary Plan Description, as it will provide you with important information on the deadline for reporting this event.

Blog

Breaking News

LEAWOOD, KS., (October 20, 2017) – The IRS has announced the 2018 contribution maximums for Flexible Spending Account (FSA) plans in the newly released Revenue Procedure 2017-58.

Employers Can Contribute to Employees’ Flexible Spending Accounts

For years, Flexible Spending Accounts (FSAs), also known as 125 plans or cafeteria plans, have been a popular employee benefit because they allow employees to set aside tax-free dollars for medical expenses they expect to incur during the year.

Adoption Assistance Flexible Spending Account

The Adoption Assistance Flexible Spending Account helps you pay for eligible adoption expenses by contributing to the account with pre-tax money from your paycheck. This means you do not pay federal or state income taxes (where applicable) on these funds.

Forms and Guides

An example of the information needed within a Letter of Medical Necessity.

Release form enabling you to designate individuals that you authorize NueSynergy to release information to related to your benefir account.

Employee status change form for qualifying event election changes.

Employee education and FAQs for the Adoption Assistance benefit account.

Eligible Expenses

To see a complete Eligible Expenses Chart please go to the following link.

See All Eligible Expenses

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