ACA Affordability Percentages Increase for 2019

The IRS issued Revenue Procedure 2018-34 on May 21, 2018. This action is intended to determine the affordability of an employer’s plan under the Affordable Care Act (ACA) by indexing the contribution percentages in 2019.

So what does this do? For plan years beginning in 2019, employer sponsored coverage will be considered affordable if the employee’s required contribution for self only coverage does not exceed 9.86% of the employee’s household income for the year, for purposes of both the pay or play rules and premium tax credit eligibility. Additionally, for purposes of an individual mandate exemption, the required contribution can’t exceed 8.3% of the employee’s yearly household income.

These affordability percentage updates apply to taxable years and plan years beginning January 1, 2019. It’s worth noting that this is an increase from the affordability percentages set for 2018, which had been a household income percentage of 9.56%. This could mean that some employers have additional flexibility with respect to their employee contributions for 2019.

Still have questions? Let’s break down the ACA.

The Affordability Requirement

The affordability of an employer’s plan can be assessed in three different contexts, under the ACA:

  1. “Pay or Play” rules, also known as employer mandate. This is the employer shared responsibility penalty for applicable large employers
  2. Exemptions from the individual mandate tax penalty for individuals who failed to obtain health coverage
  3. The premium tax credit for low-income individuals to purchase health coverage through an Exchange

Affordable Employer-Sponsored Coverage

Employees and their family members who are eligible for coverage under an affordable employee-sponsored plan are generally not eligible for the premium tax credit. Why is that important? Because the ACA’s employer shared responsibility penalty is triggered when a full-time employee receives a premium tax credit for coverage under an Exchange.

Employer Shared Responsibility Rules

Employer shared responsibility (aka pay or play) rules require Applicable Large Employers (ALEs) to offer affordable, minimum value health coverage to their full-time employees and their dependents.

The affordability of health coverage is the key factor in determining who is subject to these penalties. These rules generally determine affordability of employer-sponsored coverage by reference to the rules for determining premium tax credit eligibility.

For 2019, Rev. Proc. 18-34 increases the affordability percentage to 9.86 percent.

Employers have three options for an affordability safe harbor that they may utilize to measure the affordability of their coverage. These safe harbors are:

  1. Form W-2 wages
  2. The employee’s rate of pay
  3. The federal poverty line for a single individual

ALEs using an affordability safe harbor may rely on the adjusted affordability contribution percentages for 2015 and future years.

The affordability test only applies to annual premiums for self-only coverage and doesn’t include the additional costs for family coverage. Additionally, an employer that offers multiple coverage options is subject to the lowest-cost option that also satisfies the minimum value requirement.

Individual Mandate Exemption

The individual mandate under the ACA formerly required most individuals to obtain acceptable health coverage for themselves and their dependent children or pay a penalty. Individuals who lack access to affordable minimum essential coverage are exempt. For the purposes of the exemption, coverage is only considered affordable if the required contribution for the lower-cost, self-only coverage does not exceed 8.3% of the household income. With respect to family members, coverage is affordable, if the required contribution for lowest-cost family coverage also does not exceed 8.3% of the household income.

The Tax Cuts and Jobs Act reduced the ACA’s individual mandate penalty to zero, effective beginning in 2019. This means that individuals will no longer be penalized for failing to obtain acceptable health coverage, starting in 2019. An individual qualifies for this affordability exemption if he or she must pay more than 8.3% of their household income for minimum essential coverage.

Premium Tax Credit

The ACA provides premium tax credits in order to help low-income individuals and families afford health insurance. Determining the amount of a taxpayer’s premium tax credit is based on the amount of the individuals expected contribution. This value is calculated as a percentage of the taxpayer’s household income.

For decades, Boon has been offering the widest possible range of products and services tailored to the needs of government contracts. From major medical to minimum essential coverage and everything in between, Boon has been providing meaningful benefits from full-time, part time and seasonal employees with the backing of our partnerships with the country’s largest national carriers.

The Boon Blog is your resource for the most current industry updates. You can also follow us on Facebook, Twitter, and LinkedIn for the latest on all things Boon!

Posted in ACA, ACA reporting, Affordable Care Act, compliance, employee benefits, employer-sponsored group health plans, government contractors, health care, health insurance | Leave a comment

Heart Health: The Most Meaningful Valentine of All

Author Benjamin Percy once said, “Matters of the heart make your world worth occupying.” Around Valentine’s Day, that may have you thinking of your sweetheart, but we’re taking a more literal approach.

The heart matters, and that’s why every February we celebrate American Heart Month by raising awareness about heart health.

What is American Heart Month?

American Heart Month is a combined campaign from the American Heart Association and other health associations to raise awareness about heart disease, other ailments of the heart, and to raise general awareness about heart health and disease prevention. For 2019, the spotlight is on talking about cholesterol. Cholesterol is a major risk factor when it comes to heart disease and strokes.

To get to the heart of it all: your heart is essential.

The heart is responsible for pumping blood through our bodies and is a huge support to crucial functions performed by other organs. Did you know heart disease is the number one cause of death in the United States? Our hearts are very vulnerable to risks: cardiac arrest, strokes, and high cholesterol to name a few.

Heart attacks are another common and deadly complication. It’s important to recognize the signs of a heart attack, such as:

  • Chest discomfort
  • Shortness of breath
  • Lightheadedness, nausea, or a cold sweat

What can you do to promote heart health?

Awareness is only half of the battle. It’s vital to take an active interest in your heart health and replace poor habits with healthy ones. Some examples of things you can do to improve your heart health include:

  • Eat a heart friendly diet.
  • Get regular exercise.
  • Avoid smoking.
  • Consume alcohol responsibly and in moderation.
  • Be diligent about managing stress.

Take heart and take care of your heart this February. It’s the best Valentine you can give yourself and the ones you love.

The Boon Blog is your source for updates in the healthcare and benefits industry and all things Boon! Make sure you follow us to keep up with the latest!

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Boon Buzz: 2019 in Benefits, So Far…

We might only be a few weeks into the new year, but 2019 hit the ground running in the world of benefits. Here are the highlights of what should already be on your 2019 radar:

  1. The IRS Has Started to Enforce 2016’s “Pay or Play”

The Internal Revenue Service (IRS) began issuing enforcement letters regarding employer compliance with the shared responsibility rules under the Affordable Care Act, in late 2018.

Only Applicable Large Employers (ALEs) are sent these letters and the determination of whether an ALE may be liable for a penalty is based on the information in forms 1094-C and 1095-C.

If an ALE receives this enforcement letter, they must either agree with the IRS’s determination of  employer shared responsibility or formally disagree before the  penalty is assessed and payment is demanded. ALEs must respond within 30 days from the date of the letter.

  1. FSA Limit Increases in 2019

The Affordable Care Act (ACA) has historically set a dollar limit on health flexible spending account (FSA) contributions. Typically, cost of living adjustments are a consideration in setting this limit and the limit may be increased each year.

The same will be true in 2019. As of November 2018 the FSA contribution limit was increased from $2650 to $2700, effective with the 2019 tax year. This contribution limit increase is par for the course and in step with similar increases made over the past few years.

It’s important for employers that offer FSA’s to their employees to communicate the new 2019 limit during the open enrollment process.

It would appear that the word of 2019 is “Compliance.” At Boon, Compliance is our middle name; it’s also part of our New Year’s Resolution to keep providing competitive benefits solutions for government contractors.

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Boon Buzz: Data Privacy and You

In our technology-driven world, there is nothing more important than respectful and thorough protection of online privacy, keeping your data secure and safe, and enabling trust. In January, we celebrate Data Privacy Day in an effort to educate and empower individuals and businesses to take action and protect their online data.

What is data privacy?

Data privacy, also known as data protection, is the relationship between the collection and distribution of data, as well as the technology, public expectation of privacy, and legal and political issues related to the protection of personal and company data.

Why is data privacy so important?

Your personal information or business information is just as valuable as the money in your bank account and it needs to be protected!

Think about your personal information. What would you be comfortable with a total stranger knowing? Your name and workplace? Maybe. Your address and personal phone number? Hold on a minute. How about your social security number and bank information? Stop right there!

For businesses, not only is all of that personal employee information at risk, but your client lists and important financial information associated with your business can also be exposed. In the wrong hands, your data can lead to devastation.

Check out this blog post for more examples of how cybercriminals hunt for and exploit data.

Data Privacy in the Workplace

It’s imperative employees understand that they play a key role in protecting company data. Here are a few examples of ways your employees can create a data friendly and safe environment:

  • Stay up-to-date and aware of all company privacy and technology policies.
  • Keep work computer updated with the latest security software and operating systems.
  • Exercise caution when working remotely and accessing work information on a personal device.
  • Practice caution when it comes to potential spam emails and be sure to report.

Personal Data Privacy

On average, 1.49 billion people log onto and use Facebook daily. That’s just one social media platform!

Consider that the average internet user is on multiple social media platforms. Factor in that many people are active in online forums and other communities. That says nothing of the online shoppers, entering valuable information and entrusting it to a host of sites. What about the app you downloaded so you could get your horoscope?

That’s a lot of data flying around! Here are some of the top ways to make sure your information is staying safe:

  • Be aware of how websites and apps are collecting and using your information. Read the user agreements.
  • When posting on social media, be mindful of what a post reveals and who could possibly see it.
  • Routinely check security and privacy settings on your favorite apps, devices, and accounts.
  • Only use secure networks when making online purchases.
  • Share information and awareness on how to protect your data.

Stay safe online!

The Boon Blog is your source for industry updates and news and all things Boon! Follow us to get the best of Boon and catch up with us on Facebook, Twitter, and LinkedIn.

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Mentor-Protégé Programs: Everything You Ever Wanted To Know

We can all think of one time or another when we needed a little guidance. When someone wiser (or maybe just bigger and tougher) than us had to come through and lend a helping hand. Or maybe you’ve been that person.

We often tend to think of business as cutthroat and competitive to a fault, and often it is. But the SBA’s Mentor-Protégé program is an opportunity to get back to the basics of just being a boon to your peers and to learn from those who are making it happen.

The purpose of the Mentor-Protégé program is to develop stronger small firms (the protégés) through business development assistance provided by mentors. It allows smaller businesses to tap into the expertise and capital of larger firms. The overarching goal being that, when a larger firm takes a smaller firm under their wing, it will help that smaller firm compete for (and win!) government contracts.

The Department of Defense provides incentives to their major contractors to furnish these disadvantaged smaller firms with this assistance.

These big fish firms that are taking part in these Mentor-Protégé programs have resources, numbers, and the know-how to help a smaller firm grow their business. Some areas where mentor-provided assistance can be a boon are: Financial Assistance, Trade Education, Business Development Assistance, Contracting Assistance, and General Administrative Assistance.

Whether you need to build up your human resources, discover your market, or build up your business strategy while pursuing contracting and partnership opportunities, mentor firms are out there.

A Mentor-Protégé program allows the two firms to sign a teaming agreement to partner together and compete for contracts.

So how does one become a mentor or a protégé?

For protégés, size matters. In particular, it begs the question “are you a small business concern”?

To be eligible for assistance, small businesses must be organized for profit, operate primarily within the United States, have a place of business located in the United States, and make significant contributions to the economy of the United Statements (via your taxes or through your use of American products and labor).

How do you know if you’re a small business?

The SBA will count the number of employees and receipts for your business, and any of your affiliates whether they’re foreign or domestic.

In the case of mentors, it’s really just as simple as being ready, willing, and able. Any business, large or small, that desires to assist small businesses may act as a mentor and receive benefits. The SBA will review a mentor’s tax returns, financial statements, and any SEC filings to determine whether or not the mentor is financially fit and able to take on the responsibility of mentoring. Generally, mentors will only work with one protégé, at a time, though there are some exceptions to this rule.

The nuts and bolts of the Mentor-Protégé program are as follows:

  • There must be a written agreement, acknowledging the protégé’s needs and setting forth a detailed description and timeline for the mentor’s commitments to the protégé and how those needs are going to be addressed.
  • Ensure that the mentor will provide the required assistance to the protégé for at least one year
  • Provide that either party may terminate the agreement with 30 days advance notice to the other party and to the SBA

When you succeed with the mentor-protégé program, we will be there for the job of matching benefits between companies.

Follow the Boon Blog for the latest in industry news and all things Boon! You can also find us on Facebook, Twitter, and LinkedIn.

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Boon Buzz: Final Forms for 2018 ACA Reporting Released

The final forms and instructions for 2018 Affordable Care Act (ACA) reporting under Sections 6055 and 6056 are now available.

Overall, these final forms are  similar to the final versions from 2017 with one major change. In the revised version of the Form 1095-C, it’s stated that the “Plan Start Month” entry in Part II will remain optional in 2018 after some discussion about possibly making it a mandatory field to complete.

What are these forms for?

Internal Revenue Service Code Sections 6055 and 6056 created the reporting requirements for the Affordable Care Act. Under the rules laid out in these sections, certain employers are required to provide information to the IRS about health plan coverage they do, or do not, offer to their employees. Forms 1094-C and 1095-C are used for reporting under Section 6056 by applicable large employers.

Each reporting employer must file the forms annually with the IRS. Specifically, the employer must file:

  • Form 1095-B or Form 1095-C: A separate statement for each individual that is provided with minimum essential coverage or each full-time employee. Section 6055 applies to employers that offer minimum essential coverage, while Section 6056 is for applicable large employers with full-time employees.
  • A transmittal form for all returns filed in a given calendar year. This is in Form 1094-B or Form 1094-C.

What do these filing forms mean for employers? 

It is important for employers to familiarize themselves with these forms in preparation for using them to report for 2018.

The IRS claims that information returns under Sections 6055 and 6056 can still be filed after the filing deadline.  They also claim that employers who miss the filing deadlines should continue to make the effort to get their returns in as soon as possible. This is true for both paper and electronic methods of filing.

Important dates to remember

On January 31, 2019, individual statements for 2018 must be furnished to employees and IRS returns for 2018 must be filed by February 28, 2019. If these forms are filed electronically, the deadline is extended to April 1, 2019.

The Boon Blog is your resource for the latest news and updates from within the healthcare industry. Follow the Boon Blog to keep up with these developing stories! You can also keep up with Boon on Facebook, Twitter, and LinkedIn.

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Competitive and Cost-Conscious Contracting: The Importance of Fringe Benefits

This article was originally written by Boon president, Taylor Boon, and Content Marketing Specialist, Caitlin Kennedy, and published in the Professional Service Counsel’s “Service Contractor” Fall 2018 magazine.

Federal government contracting is constantly evolving and presenting new challenges for contractors competing to support government missions. There are three primary objectives that companies operating under the McNamara O’Hara Service Contract Act of 1965 and the construction-related Davis-Bacon Act of 1935 are striving for: contract compliance, cost-effectiveness that is profitable to the company bottom line, and – most importantly – being competitive to win the work.

One of the provisions in both laws provides built-in cost savings opportunity for the contractor. A contractor can provide “bona fide” fringe benefits where mandated by contract provisions, thus putting the contractor at a cost-saving advantage over the competition that is not providing fringe benefits.

However, these fringe benefit contract requirement under the Service Contract Act and the Davis-Bacon Act present contractors with a challenge. Similar to wage determinations, specific fringe benefits requirements to be paid on an hourly basis, although the fringe rates vary under both acts. Employees working under contracts governed by a particular Act that has a specified fringe rate must receive that fringe rate either as cash paid out or as the benefit equivalent, always in excess of their base wages.

For example, the contractor can pay the designated fringe rate into bona fide fringe benefits. Health and welfare benefits such as group health plans, dental plans, additional sick leave days, or retirement options are some examples of these “bona fide” fringe benefits.

A common method of properly discharging fringe dollars is the “hours worked” method. Under this mode the contractor is responsible for reporting employee hours worked and must pay the designated hourly fringe rate accordingly. Most of the time, contractors address the fringe benefit obligation by paying the fringe dollars to the employee, in cash. Seems like the right choice because it’s a simple process and calculation, right? Wrong.

The contractor that is paying the fringe into a bona fide fringe benefit maintains a competitive financial tax advantage over a contractor that is paying fringe dollars into cash. Additionally, the contractor may choose a number of different options that satisfy the federal requirements.

When contractors utilize those fringe dollars to provide employee benefits, the advantages go way beyond cost-effectiveness; employee fringe benefit plans often translate to a healthier workforce and reduced absenteeism, in addition to increased employee satisfaction and productivity.

Regardless of the method, the specific fringe benefit payments must be accounted for separately to ensure compliance.

You might ask, “Why would a contractor choose to provide benefits, instead of the more direct cash payout?” While different situations provide for different company needs, it is not uncommon for groups that pay cash in lieu of benefits do so in order to meet local wage demands. Paying the fringe into bona fide benefits plans provides a boon to the employee while also providing the contractor with a small advantage over the competition.

When the contractor elects to pay cash in lieu of benefits, the contractor takes on additional payroll tax burdens. This usually manifests in the form of increased premiums for workers compensation and an increase in FICA and state taxes. Contractors working under the Acts that decide to pay the fringe rate in cash will have an additional burden that their competitor, who pays the obligated fringe as a “bona fide” fringe benefit, simply does not.

Our recommendation? Outsource fringe benefits via a third party that provides benefits for the employees working the contract.

Contractors could always handle the administration themselves, but that would require the expertise and resources to properly track and account for those fringe dollars at the individual employee level. That level of accounting is mandatory for contractor compliance and, frankly, many employers just don’t have the juice.

But there are many companies that develop benefit plans that are designed to meet the specific needs of government contractors.

In the federal contracting world, there are clear winners and losers. What separates the two could be a very small dollar differential. In this arena, it will be the competitive and cost-conscious contractor that succeeds.

The Boon Blog is your source for the latest in industry news. You can keep up with the world of healthcare, industry updates, and all things Boon on our FacebookTwitter, and LinkedIn.

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