Voluntary Benefits Open Enrollment: What is it? What do I need to know in regards to PPACA?
Open Enrollment is the period of time when worksite employees and client companies can make changes to their elected voluntary benefits; these include Flexible Spending Accounts, Disability Insurance, and Life Insurance. While the PPACA has changed health/medical insurance, in ways that many are still trying to figure out, most companies and individuals are just now beginning to realize that the new health care law will have an impact on voluntary benefits as well.
Flexible Spending Accounts offer employees a way to save on payroll taxes by setting aside a portion of their earnings through a cafeteria plan into an account for qualified medical expenses. According to a recent article by NAPEO, “The new guidance (on PPACA) make clear that a health FSA that does not qualify as “excepted benefits” is subject to the PPACA market reforms, including the prohibition on essential health benefits and the preventive care rules. However, the new guidance provides that a health FSA that provides only excepted benefits is not subject to the PPACA market reforms.” So what does this mean for PEO/HRO/ASO clients and worksite employees? And what are excepted benefits? To be an excepted benefit, a health FSA must satisfy two conditions: The maximum benefit payable to any participant for the year cannot exceed two times the salary reduction election under the health FSA for the year (or, if greater, the amount of the employee’s salary reduction for the health FSA for the year, plus $500); and other non-excepted group health coverage (e.g., major medical) must be made available for the year to the participants by reason of their employment.(Troutman Sanders, LLP) If your company is outsourcing their employee benefits, it is imperative that you review what is being offered, and know whether or not your FSA is an excepted benefit. If your FSA does not qualify as an excepted benefit, you could be in for some penalties under PPACA.
On the other hand, Health Savings Accounts are a type of savings account offered to those participating in high-deductible major-medical plans. The latest guidance, mentioned in relation to FSA’s, does not address HSA’s. This does not mean that HSA’s are not in play when it comes to PPACA, as the IRS has stated that the preventative health services can be paid for by a high-deductible plan without the deductible being applied. This is good news for those participating in high-deductible plans. Additionally, “some employers are pushing employees to high-deductible plans combined with health savings accounts. That approach is designed to give employees more of a financial stake when getting health care.”
As PPACA continues to shape the way benefits, not only major-medical but also voluntary, are handled and approached, HR Strategies clients and worksite employees can rest assured that we are staying ahead of the curve, and will continue to update them on how the new guidance’s and regulations affect them.
- Carrie Teegardin, Atlanta Journal-Constitution
- Troutman Sanders, LLP