Guidance on FSAs COBRA Student Plans Cadillac Tax Tweaks

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Guidance on FSAs COBRA Student Plans Cadillac Tax Tweaks
Calendar12 February 2016

New IRS guidance on health flexible spending arrangements (FSAs) addresses what COBRA rights and employer constraints may apply to carryovers. The Q&As are effective for plan years starting after Dec. 16, 2015 (Jan. 1, 2016, for calendar-year plans), although employers may rely on this guidance for earlier periods. Employers that permit health FSA carryovers should work with vendors to consider compliance issues, and some also may want to take advantage of the new permitted carryover restrictions.

A college or university that subsidizes health insurance premiums for student workers has until 2017 to ensure these arrangements do not violate the ACA, according to new triagency guidance.

Updated HHS guidelines set the 2016 federal poverty line (FPL) at $11,880 -- up $110 from 2015 -- for a person living in the mainland US. The 2016 FPL is set at $13,670 for someone living in Hawaii and at $14,840 in Alaska. Employers can use the FPL under one ACA employer shared responsibility safe harbor to test whether their coverage is “affordable” to employees. Which year’s FPL can be applied depends on the plan year of the arrangement tested.

President Obama introduced his budget plan for fiscal 2017 on Feb. 9, which includes new proposals to increase the thresholds for the ACA’s “Cadillac tax” in high-cost states, make it easier for employers with flexible spending arrangements to calculate the tax, and entice more states to expand Medicaid. The proposals aren’t expected to gain traction in Congress, where Republicans are drafting their own budget plans.

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