Recent Notable Federal Health Plan Guidance

Recent Notable Federal Health Plan Guidance

  • On February 17, 2017

In January and early February, federal government agencies issued several key pieces of guidance that may be of help to employer group benefit plans for 2017 administration purposes.

The 2017 federal poverty level (FPL) standards were released, which applicable large employers (ALEs) may elect to use to help determine if the coverage they offer to employees is “affordable” and establish their potential employer mandate liability. If an employer chooses to use the FPL “affordability safe harbor,” then their coverage will be considered affordable in 2017 if the monthly cost of the cheapest minimum value plan an employer offers doesn’t exceed 9.69% of the 2017 FPL, or $97.38 per month. The FPL safe harbor is the easiest safe harbor to calculate, but it’s also the most difficult to meet. However, even if an employer doesn’t qualify for the FPL safe harbor, the annual amount can be a good quick rule of thumb to use to judge if employee premium rates for the year ahead are going to be anywhere close to the affordable range.

The IRS also finalized Publication 15-B, the 2017 Employer’s Tax Guide to Fringe Benefits. This annual publication provides employers with key information on the tax treatment of certain fringe benefits, including group health insurance coverage, adoption assistance, dependent care assistance, educational assistance, discount programs, group term life insurance, moving expense reimbursements, HSAs, transportation benefits and more. The 2017 publication is largely the same as past year versions, but includes 2017 details like cost-sharing limits for the year ahead, the 2017 HSA contribution limits and more.

Finally last week the Internal Revenue Service (IRS) released a chief counsel advice (CCA) memorandum from December 2016 that provides insight about how the IRS will view the tax-treatment of cash payments from employer-sponsored fixed indemnity health plans and certain employer-sponsored wellness program rewards. This information is important for employers who offer fixed indemnity health coverage to employees to review, so that they know how benefit payments should be considered when reporting employee income.  Few employer-sponsored wellness programs offer payments in the manner described by the memo, but employers who offer wellness programs still may want to review the guidance, just to ensure that they are compliant.