ABN Newsletter Volume 2, Issue 1 October 2018
Qualified Medical Expenses for Health Spending Accounts
Consumer-Directed Health Care
Health spending accounts are used to pay for medical expenses that your healthcare plan doesn’t cover, such as deductibles or copays. They’re part of what’s called consumer-directed health care. Consumer-directed means you manage more of the money you spend on health care costs.
There are several types of health spending accounts, including:
- A health savings account (HSA) is a tax-favorable savings account for medical expenses and is typically used in conjunction with a high-deductible health insurance plan. Unlike a flexible spending account (FSA), unused money in your HSA isn’t forfeited at the end of the year; it can be rolled over and used for the following year’s qualified health expenses. You can only have an HSA if you enroll in an HSA-compatible health plan.
- A flexible spending account (FSA) is set up by your employer. They own the account, but you get to decide which qualified medical expenses to pay for with your FSA. What makes it flexible? It works with most of PPO employer-sponsored health plans. Unused money in the FSA at the end of the year may have to be forfeited. In addition to medical expenses, FSAs can often be used to pay for childcare expenses, as well as other expenses.
- A health reimbursement arrangement (HRA) is a benefit fund set up by your employer. Your employer contributes a certain amount of money each year for you to use for medical expenses not covered by your health plan. Only your employer can fund an HRA. In most cases, if all of the money is not used by the end of the year, the HRA can be rolled over to the following year – as long as the employee stays on the same plan.
Money is deposited in these accounts tax-free and is taken out tax-free or tax-deductible. You can use it to pay for qualified medical expenses. A debit card may also be available depending on your plan. Where they differ is the kind of health plan they work with, who owns the account, who controls it and who can put money into it. Here is a comparison chart showing some of the similarities and differences:
Examples of Qualified Medical Expenses
If you have one of these health savings accounts, it’s important to be aware of what is considered a qualified medical expense to be able to use these funds. A qualified medical expense is one that can be purchased with tax-free money through your health savings account.
Some examples of qualified expenses include:
- insulin and diabetic supplies
- eye surgery (including laser eye surgery)
- doctor’s fees
- fertility enhancement (including in-vitro fertilization)
- first aid supplies and bandages
- dental treatment (x-rays, fillings, extractions, dentures, braces, etc.)
- braces and supports
- wheelchairs and walkers
- contact lenses and reading glasses
- prescribed medications
- sleep aids
Note that some qualified medical expenses require a prescription from your doctor. If you’re thinking about purchasing something with your health savings account, it’s recommended that you first check to ensure that the expense is qualified and what the procedure is for getting it covered (such as sending a copy of your prescription or receipt or filing a reimbursement request form).
Need Health Insurance and Miss out on Open Enrollment?
Your Guide to Understanding Qualifying Life Events and Special Enrollment
Life happens, and when it does, it is very likely that your health insurance coverage may need to change. When you encounter a qualifying life event that impacts your insurance needs, it is important to know that you can take advantage of a special enrollment period – since most people are unaware that they may enroll outside of open enrollment.
This guide is created to help you understand everything you need to know about qualifying life events and the special enrollment period. You will learn whether or not you qualify and what documents you will need prior to enrolling and shopping for coverage.
#1 Loss Of Coverage
Due To:
- Termination of group coverage
- Reduction of hours to part-time status
- Loss of employer contribution
- COBRA ending
- REQUIRED PROOF: Letter from employer, Certificate of credible coverage
#2 Marital Status Change
Due To:
- Marriage
- Divorce
- Legal separation
- REQUIRED PROOF: Marriage Certificate or divorce/separation court documents, Certificate of credible coverage.
#3 Dependent Status Change
Due To:
- Birth of a child
- Adoption
- Aged out of dependent status
- REQUIRED PROOF: Child’s DOB, Legal adoption paperwork, Certificate of credible coverage.
#4 Moving
Permanently move to another state and/or no longer live in the existing/prior plan’s service area.
REQUIRED PROOF: New Mortgage Bill/Renter’s Agreement and drivers license, utility, Postal Service change of address receipt.
#5 Death
Your primary policyholder passed away leaving you with no coverage.
REQUIRED PROOF: Death Certificate, Copy of termination letter from prior insurance company.
#6 Income Change
That makes you newly eligible or ineligible for a tax credit.
REQUIRED PROOF: Copy of certificate of creditable coverage OR a copy of the termination letter from prior Insurance Company and/or federal or state agency.
#7 Non-Calendar Year
Your current plan ends on a non-calendar year basis.
REQUIRED PROOF: Copy of termination letter from prior insurance company OR Certificate of Credible Coverage Anytime that you enroll in a plan you will be asked to provide the following information:
- What was your qualifying event?
- What was the date of this event?
- You’ll be asked to submit supporting documents.
So how long is this special enrollment period? Typically, you only have 60 days from the QLE to enroll in a new plan due to ACA law, carriers are very strict on enrollment timelines.
Crucial Health Insurance Terms You Need To Know
Navigating the tricky waters of health insurance terminology can be difficult. This is why we’ve put together this handy guide featuring some of the most popular insurance language terms and explaining just what they mean as it relates to you and your family.
Coinsurance:
Coinsurance is your share of the costs of a covered healthcare service calculated as a percent (for example, 20 percent) of the allowed amount for the service. You pay coinsurance plus any deductibles you still owe for a covered health service.
Premium:
A premium is the amount of money charged by an insurance company for coverage. The cost of premiums may be determined by several factors, including age, geographic area, tobacco use, and number of dependents.
Copayment:
A copayment, or co-pay, is a fixed amount you pay for a covered health care service, usually when you get the service. The amount can vary by the type of covered health care service.
Deductible:
A deductible is an amount you owe for health care services each year before the insurance company begins to pay. For example, if your annual deductible is $1,000, your plan won’t pay anything until you’ve met your $1,000 deductible for covered health care services that are subject to the deductible. The deductible may not apply to all services, such as when a co-pay only applies or preventive care services. Deductibles are useful for keeping the cost of insurance low. The amount varies by plan, with lower deductibles generally associated with higher premiums. They are fairly standard on most types of health coverage.
Out-of-pocket Maximum (OOPM):
An out-of-pocket maximum is the most you should have to pay for your health care during a year, excluding the monthly premium. It protects you from very high medical expenses. After you reach the annual out-of-pocket maximum, your health insurance or plan begins to pay 100 percent of the allowed amount for covered health care services for the rest of the year. The deductible, coinsurance, co-pays and prescription drug co-pays are included in the out-of-pocket maximum.
Annual Limit and Lifetime Limit:
In the past, health insurance carriers imposed Annual and Lifetime limits on the benefits you receive. You are no longer subject to these limitations and there is no maximum to the benefits you may receive.
Preventive Care:
Rather than waiting for a patient to become sick, preventive care aims to keep people healthy, or at least catch illnesses at their earliest and most treatable stages. Preventive care includes preventive services performed by providers, such as annual physicals or mammograms. Under the provisions of the Affordable Care Act (ACA), policies must cover various preventive services for men, women, and children without sharing the cost for these services through coinsurance, deductibles or copayments. Certain Preventive care services are subject to frequency limitations.
PPO Plan:
This plan allows you to receive care from any doctor you choose, no referral for specialty care (except United HealthCare FL), may use out-of-network doctors – but may have to pay additional fees. PPO plans typically have higher monthly premiums.
POS Plan:
Very similar to a PPO. The biggest difference between the two is the contract between the insurance carrier and healthcare providers.
HMO Plan:
Must pre-select an approved Primary Care Physician, referrals are needed and for most plans, there are no out of network benefits except for qualifying emergencies. HMO plans typically have lower monthly premiums.
EPO Plan:
This is a hybrid network that has limitations that vary based on the carrier. In some instances, you would need to get referrals and may not have coverage for out-of-network. These plans typically have a lower monthly premium.
Planning A Workforce Health Promotion Program
Workforce Health Promotion programs have evolved from fitness, to health promotion, to comprehensive wellness programs. In the past, the focus was on physical fitness. Today, the focus has broadened to include topics such as nutrition, mental health, and chronic disease prevention, as well as the workplace environment, policies, productivity, and others. Additionally, employers’ Workforce Health Promotion programs vary according to workforce size, program scope, resources, and leadership support.
Experts agree that planning and designing a Workforce Health Promotion program is essential to ensuring the program’s success. Just as one would not begin a long trip without considering how to reach one’s destination, planners should not begin a Workforce Health Promotion program without mapping out where the program needs to go, and how it will get there.
Before embarking on a Workforce Health Promotion program, consider some important attributes of a comprehensive program identified from these selected planning resources from the Centers for Disease Control (CDC):
- Support from company leadership, unions, employees, and external stakeholders
- Clear program goals and objectives that align with your overall company objectives
- Continual assessment of information important to your employees, which can include health risks, employee needs, costs, benefits, productivity, and current practices
- Policies that support healthy behaviors in the workplace
- A physical environment that provides employees with access to wellness practices and health behaviors
- Employee services that provide wellness practices to employees
- Systems and procedures that evaluate program effectiveness, return on investment, and alignment with business goals
Many business tools related to project management, process improvement, and problem-solving can also be applied to workforce health promotion design and implementation.
Short-Term Health Insurance Soon Available For Up To 36 Months
New Rule Loosens Current Restrictions
Effective October 2, 2018, a new rule will allow individuals to purchase short-term, limited-duration health insurance coverage for a period of less than 12 months, and renew such coverage for up to 36 months. Under current law, the maximum coverage period for short-term, limited-duration health insurance is less than 3 months, and these policies cannot be renewed.
Notably, short-term, limited-duration health insurance is:
- Not required to comply with the Affordable Care Act’s ban on pre-existing condition exclusions and lifetime and annual dollar limits.
- Not required to comply with the Affordable Care Act’s essential health benefits requirement, which requires individual health insurance policies to cover, among other things, hospitalizations, emergency services, and maternity care.
- Not “minimum essential coverage,” meaning that policyholders may remain liable for an individual mandate penalty for any month in 2018.
Click here to read the new rule. A fact sheet is also available.
HR Self-Assessment Guide
The HR Self-Assessment Guide is composed of six modules. Each HR assessment section may be taken independently of the others, and is separately graded. You may take each module as many times as you like. Once you complete a module, your score will be calculated and displayed along with explanations for the answers in that module. Your scores are not stored in a database, so please print the results page for each module if you need it for future reference. The six modules comprising the Guide are listed below:
- HR Management Practices
- Employee Classification, Compensation and Benefits
- Employee Relations
- Recruitment and Selection
- Safety, Health and Security
- Training and Development
Please follow the instructions below as you answer the questions:
- Please answer all questions unless otherwise instructed. In some cases, selecting an answer will require you to skip some of the subsequent questions. If you inadvertently make an entry in a question that should be skipped, your response will not be considered.
- Keep in mind that the questions apply to company-wide human resources practices.
- Some questions may require internal research to arrive at an accurate answer. As much as possible, base your answers on a review of documentation maintained by your company.
HR Compliance Quick-Check
Whether your company has 5 or 500 employees, it’s important to conduct a regular review of your HR and benefits-related notices, records and procedures to ensure compliance with the law and prevent potential liabilities and employee lawsuits. The checklist below features key steps for evaluating your management practices to help keep your company HR compliant.
Hiring
- Job descriptions, advertisements, and interviews are ADA compliant and meet state requirements.
- Review employment applications for compliance with any applicable state laws regarding prohibited questions or statements that should be included.
- All interview questions are appropriate and relate directly to the position and the applicant’s ability to perform the job’s essential functions. Questions do not discriminate based on race, sex, religion, age, ethnic group, national origin, marital status, military service, disability or other protected status.
- Written authorization is obtained for background checks and Fair Credit Reporting Act requirements are satisfied, along with any state requirements for conducting background checks.
- Policies and procedures related to drug testing, use of arrest and conviction records, and other candidate-information requests comply with applicable federal and state law.
- Evaluate all recruitment and hiring strategies, policies, and procedures to ensure compliance with federal and state nondiscrimination laws.
- Job offer letters are reviewed by an HR specialist or employment law attorney and include a statement regarding employment-at-will.
- Forms I-9 are completed for all new employees within 3 business days from the first day of work for pay.
- New hire reporting requirements are satisfied and necessary tax forms (Form W-4 and any required state forms) are collected from new employees.
- Review your orientation/onboarding program for welcoming new employees and familiarizing them with the company’s basic management practices.
Employee Pay
- Employees are properly classified as exempt or non-exempt based on their specific job duties and compensation. (Note: Job titles alone do not determine an employee’s exempt or non-exempt status.)
- Review all pay practices, including minimum wage and overtime compensation, for compliance with the Fair Labor Standards Act and any state laws that are more favorable to employees.
- Employee pay periods (weekly, bi-weekly, semi-monthly) are scheduled in accordance with state wage payment timing requirements.
- Pay and incentive programs treat employees equitably, and decisions regarding promotions and merit raises are based on clear, objective criteria.
- Independent contractor relationships are carefully reviewed to prevent misclassification.
Benefits
- Employee benefit plans (medical and retirement) comply with all requirements under federal and state law, including new Health Care Reform notices and other requirements for group health plans.
- Review all plan documents, including enrollment forms and employee communications, to ensure they are accurate, consistent, and in compliance with applicable law.
- Summary plan descriptions (SPDs) and other benefit plan notices are distributed to employees as required under federal and state law.
- All reporting and filing requirements related to medical and retirement benefits are satisfied.
- Employees are provided required notices regarding continuation of health coverage under COBRA or state “mini-COBRA” laws (if your company is subject to those requirements), and all obligations with respect to continuation coverage are fulfilled.
- Review policies and procedures relating to paid vacation, holiday and sick leave (including compliance with FMLA or similar state laws that may apply to your company) on a regular basis, along with other benefits offered such as flex-time and telecommuting.
- Information regarding benefits is clearly communicated to employees, and policies and procedures related to benefits are applied fairly and consistently.
Employee Policies & Procedures
- All company policies and procedures comply with federal and state labor laws related to employee leave, equal employment opportunity, sexual harassment, worker safety and other requirements.
- Every employee is provided with a handbook explaining the company’s policies and procedures related to standards of conduct, nondiscrimination, benefits and other terms and conditions of employment. (Be sure the employee signs a receipt acknowledging that he or she has reviewed the handbook.)
- Labor law posters required to be displayed under federal and state law are posted where employees can easily see them.
- Procedures are in place for maintaining employee records and files as required by law, including what information should be collected, confidentiality, and how long to keep records. Medical records and other confidential documents are kept in a separate file from the employee’s personnel file.
- Employees receive necessary skills and regulatory training, including safety and sexual harassment.
- Human resources policies and procedures apply equally to all employees, and are applied fairly and consistently throughout the company.
Performance Reviews
- Performance reviews are conducted for all employees on a regular basis.
- Job expectations and responsibilities are clearly communicated to employees, including the conduct and results required and the performance standards by which they will be measured.
- Systems for measuring performance are in place (e.g., number of sales or customer satisfaction), based on specific job-related functions and criteria set forth in the employee’s job description.
- Employee job descriptions are reviewed and updated at least annually.
- Accurate documentation regarding performance is kept for each employee and documentation is direct, factual, and detail-oriented to support disciplinary or other personnel decisions.
- Employee performance reviews are based upon specific, job-related criteria and feedback provided is honest, factual and complete.
- Performance is compared against job descriptions and goals to offer ongoing feedback.
- The review process and systems for measuring performance treat employees equitably.
Employee Discipline & Termination
- All policies and procedures for handling employee disciplinary actions and investigations are clearly defined, written, and communicated to employees as appropriate.
- All matters involving employee discipline warnings, investigations, and terminations are carefully and accurately documented, and related notices are reviewed on a regular basis.
- Termination meetings are conducted to inform the employee of the termination, discuss the return of company property, deliver the final paycheck, and facilitate the employee’s departure. A summary of the meeting and any related information is prepared and placed in the employee’s personnel file.
- Departing employees are provided with a written summary of accrued benefits and notices regarding post-termination benefits, including, where applicable, compensation for vacation and sick time, continuation of health coverage, severance pay and 401(k) plan information. Be sure to comply with any applicable federal or state requirements.
- Policies are in place for collecting keys and other company property from the terminated employee and confirming that access to computer systems, email, and voicemail are deactivated.
- Final paychecks are delivered at the time of termination or as otherwise required by state law.
- Neutral references confirming a former employee’s position held and dates of employment are available upon request in accordance with company policy.
- Review all discipline, investigation, and termination procedures for compliance with applicable federal and state laws and enforce them fairly and consistently.
Please note that the above list is not all-inclusive. If an HR assessment reveals violations that are not subsequently corrected, your company could be at risk for costly fines or lawsuits. If you have any questions regarding your obligations under the law or about best practices when it comes to HR compliance, please consult with a knowledgeable employment law attorney for individualized guidance.
Introduction to Discipline and Termination
Terminating an employee, whether for misconduct or a reduction in force, is never a pleasant task. However, at times it is a necessary part of managing a workforce. Voluntary termination by an employee through resignation or retirement may not carry the negative stigma of an involuntary termination, but it does trigger certain responsibilities for the employer.
Involuntary Termination
Each step in the process of terminating an employee should be carefully executed. Each step must be carefully and thoroughly documented. If an employee is discharged for poor performance and later sues alleging discrimination, the employer will have a difficult time defending if the personnel file is devoid of any documentation of the poor performance over a reasonable period of time.
Note: Terminating an employee is a very sensitive matter, requiring careful communication and documentation to avoid potential lawsuits or other future problems. It is prudent to consult an employment law attorney or HR specialist before taking any specific steps should the need to terminate an employee arise.
Although “at-will” employment is common to virtually all states, employees do have substantial statutory protection, as well as remedies found in judicially recognized exceptions to the at-will employment rule.
Statutory Protections
- Federal law prohibits any adverse employment action based on race, color, sex (including pregnancy and certain protections for lesbian, gay, bisexual, and transgender (LGBT) individuals), age, national origin, disability, military service or genetic information.
- Federal law further prohibits adverse employment action because an employee:
- Participates in an investigation or proceeding related to a claim of discrimination, or opposes discriminatory conduct.
- Reports violations of wage and hour laws, such as minimum wage and overtime.
- Reports workplace safety violations under the Occupational Safety and Health Act.
- State and local laws often prohibit discrimination based upon such factors as marital status as well as the factors contained in the federal legislation.
- Employees of employers with more than 50 employees have the right to leave under the Family and Medical Leave Act. Some states provide such protection as well, often covering smaller employees. Many states also provide job-protected military leave.
- Voting leave under state law.
- Jury and witness leave under state law.
- Terminations which may be construed to be implemented to avoid payment of benefits under a plan covered by ERISA.
- COBRA continuation coverage of group health care benefits or state “mini-COBRA” benefits.
- The right to notice by larger employers of certain mass layoffs under the WARN Act, which requires advance notice to employees terminated as a result of a plant closing or mass layoff.
Although this list is not exhaustive, you can see the need for sound HR practices regarding termination, because there are many potential pitfalls for employers surrounding terminations.
IRS Tips On Preparing for Natural Disasters
Using Electronic Records and Documenting Valuables Encouraged
With hurricane season approaching, the IRS is offering advice to those impacted by storms and other natural disasters. The following tips may help businesses prepare for such events:
- Use electronic records. Businesses may have access to bank and other financial statements online. If so, their statements are already securely stored there. They can also keep an additional set of records electronically. One way is to scan tax records and insurance policies onto an electronic format. Businesses may want to download important records to an external hard drive, USB flash drive or burn them onto CDs or DVDs. Be sure to keep duplicates of records in a safe place. For example, store them in a waterproof container away from the originals. If a disaster strikes your business, it may also affect a wide area. If that happens, it may be impossible to retrieve the records that are stored in that area.
- Document valuables. Take time and date stamped photos or videos of the contents of your business. These visual records can help prove the value of lost items. They may help with insurance claims or casualty loss deductions on a tax return. Businesses should also store these in a safe place.
- Contact the IRS for help. Businesses that fall victim to a disaster may call the IRS disaster hotline at 866-562-5227 for special help with disaster-related tax issues.
- Get copies of prior year tax records. If a business needs a copy of its tax return, it should file IRS Form 4506, Request for Copy of Tax Return. The usual fee per copy is $50. However, the IRS is expected to waive this fee if a business is a victim of a federally declared disaster. For information that shows most line items from a tax return, call 1-800-908-9946 to request a free transcript. Alternatively, businesses may file IRS Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript, or IRS Form 4506-T, Request for Transcript of Tax Return.
The IRS offers many resources to help employers plan for and recover from disasters, including IRS Publication 584-B, Business Casualty, Disaster, and Theft Loss Workbook, and webpages devoted to preparing for a disaster and tax relief in disaster situations.