With some provisions of the new, far-reaching Tax Cuts and Jobs Act already taking effect Jan. 1, many people may still be wondering how and when tax reform will affect their businesses. The bill, which was signed into law in late December, impacts employee benefits in a number of ways and may very well affect what employers choose to offer their employees going forward. The following topics are some of the tax reform provisions that employers will want to consider when designing employee benefits plans this year and in the years to come.

Commuting expenses

It is not uncommon for employers to help employees pay for transit passes, parking or some other type of transportation-related expenses. These benefits have been popular with not only employees, but also employers, given that these expenses have been tax-deductible under the tax code. However, with the passage of tax reform, effective Jan. 1, employers will no longer see transportation expenses as tax deductible. While employers may no longer enjoy the deductions of commuting expenses, they may still cover these benefits for employees. One option is to pay employees the cost of their transit pass or parking expenses in the form of wages and then allow them to pay directly for those expenses, pre-tax, through a transportation plan.

Affordable Care Act

A common question on many employers’ minds after the new bill passed is whether tax reform affects, or even effectively repeals, the Affordable Care Act (ACA). Because tax reform does in fact repeal the individual mandate of the ACA starting in 2019, this is certainly a legitimate question. That being said, tax reform does not repeal any other component of the ACA. This means that only the portion of the ACA requiring individuals to pay a tax if they do not maintain health coverage is affected. Essentially, employers with 50 or more full-time equivalent employees will still be required to offer health coverage, or else risk penalty exposure under the ACA’s employer mandate. Also keep in mind that all of the ACA’s reporting requirements are still intact, so be sure to make all the necessary preparations for reporting as in previous years.

Moving expenses

Another important change contained in the new bill is the treatment of moving expenses, both for employers and employees. Previously, employers who had their employees relocate to another worksite or hired employees from out of state could deduct those moving expenses, and the employees would not count moving expense reimbursements as taxable income. Taxpayers could also deduct the reasonable costs of moving household goods and related traveling costs for which they were not otherwise reimbursed by their employers. However, starting in 2018 and continuing until 2025, employers can no longer make deductions for employee-related moving expenses, and most employees can no longer exclude qualifying reimbursements from gross income. (The only exception is for taxpayers who are members of the military on active duty.) With this new change in place, it may be a good idea for affected employers to review their policies or materials so that employees are aware of the new tax implications of moving and relocation expenses that are paid for and reimbursed by the company.

Fringe benefits

Also, changes were made to deductions for other fringe benefits offered to employees. There are now stricter limits with employee-achievement award deductions for employers, and the partial deduction for some work-related entertainment has been eliminated. Additionally, deductions of certain meal expenses at a 100 percent level will no longer be available starting in the 2018 tax year, although 50 percent remains deductible.

Retirement plans

Although there are a lot of changes for employee benefits in the new tax bill, retirement plans like 401(k) plans are largely unaffected. That being said, tax reform does make a few small adjustments, such as how outstanding loans on a retirement plan should be treated and paid when an employee severs employment with a company. It is a good idea to make sure loan-related documents reflect these changes.

Allison Jacobsen is an attorney with Barran Liebman LLP. She advises employers in all aspects of employee benefits. Contact her at 503-276-2197 or ajacobsen@barran.com.

The post OP-ED: Federal tax reform and its impact on employee benefits appeared first on Daily Journal of Commerce.

There never seems to be a dull moment when it comes to the employment law landscape, especially in Oregon. As for the employee benefits world, it is not too far behind. Throughout the state and at the national level, companies seem to be constantly preparing and implementing change for the well-being of their businesses, as well as for their people. 2017 has been no different in that regard. In some ways, it feels like so much has changed in the employee benefits realm, but in other ways, as if nothing has changed at all. We still have a lot of questions yet to be answered, and there are a number of topics that employers should keep their eyes on as we approach 2018.

Health care

Are you tired of hearing about health care? Do you roll your eyes when you hear the words “Affordable Care Act” uttered in the news? This year has been quite the wild ride in the world of health care. After a number of false starts, close calls and efforts by Congress to “repeal and replace” the Affordable Care Act (ACA), it did not reach the finish line – at least not this year. While the future of health care reform in our country remains unclear, the important thing to remember is that the ACA is still the law of the land. This means not only that the employer mandate (“Pay or Play”) is still in play, but also that ACA reporting remains an obligation for applicable large employers. The good news is the 2017 IRS instructions for ACA reporting have not changed substantively, so if you reported last year, your experience will likely be similar this time around.

Wellness plans

Another area to be thinking about is wellness plans. For those companies sponsoring wellness programs, it may be a good time to take a closer look at plan design and administration to ensure that the program follows all current applicable rules and regulations. We are beginning to see more scrutiny from the Department of Labor (DOL) on employer-sponsored wellness programs, so there is no better time for a review.

Meanwhile, in a hot case out of the District of Columbia, a district court judge remanded a case back to the Equal Employment Opportunity Commission (EEOC) earlier this year for reconsideration of its most recent regulations under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). Even though all current regulations are still in effect while the case is pending, this action signals that additional guidance regarding wellness plan voluntariness and incentives is on the horizon from the EEOC.

The EEOC filed a status report a few months ago indicating that it expects to unveil a proposed rule in 2018 and then issue a final rule in late 2019. That being said, the agency has also noted that the final version would likely not take effect until 2021. Even so, it is a great time to make sure that wellness plans are in compliance with current regulations. Be sure to reach out to counsel if a program is discovered to be in that legal gray area.

OregonSaves

OregonSaves, the state’s own retirement savings program, hit a milestone on Nov. 15, reaching its first registration deadline for employers employing 100 or more employees after implementing its pilot program earlier in the year. The program requires all Oregon companies, regardless of size, to either register if it does not already sponsor a retirement plan for its employees, or certify an exemption if it does. From now until 2020, the program is on rolling deadlines depending on company size, with employers employing 50 to 99 employees facing the next deadline on May 15, 2018.

Once it is time to register, depending on employer size, a company’s choice does not have to be set in stone. For example, an employer that opts out because it already offers a retirement plan to its employees may always opt back in to the program at any time if the situation changes. If employees participate in an existing employer-sponsored retirement plan, they may not also participate in the state’s program. That being said, the state has mentioned that it is considering how it may provide this option in the future. For those companies with employees in multiple states including Oregon, the company only has to facilitate the state’s program for those employees with income in Oregon.

For now, keep your eyes out for the notification that your company will receive from the state prior to the applicable deadline so that the company can make its pick on the program’s employer portal, at employer.oregonsaves.com.

Allison Jacobsen is an attorney with Barran Liebman LLP. She advises employers in all aspects of employee benefits. Contact her at 503-276-2197 or ajacobsen@barran.com.

The post OP-ED: Three employee benefits areas to keep tabs on in 2018 appeared first on Daily Journal of Commerce.

2015 turned out to be a busy year, not only for many employers getting into the groove of offering health insurance and preparing for reporting, but for the IRS as well. As usual, the IRS provided more guidance and changes to reporting requirements under the Affordable Care Act (ACA) late in the game. That left some employers and human resources personnel once again confused and uncertain about how to comply with the law and what to expect in the coming year.

January is a good time to reflect on the year past and get a better handle on what to expect in the days to come in the world of the ACA. Here’s the skinny:

2015 highlights

When the ACA first came into existence, it added section 4980H to the Internal Revenue Code, requiring applicable large employers to either offer full-time employees ACA-compliant health coverage or face potential penalties. In 2015, we saw applicable large employers with 100 or more full-time equivalent employees on business days in the prior year first face the challenges of ensuring that employees the ACA defined as “full-time” had the opportunity to enroll in company-provided health coverage. These companies were required to comply with the ACA’s “shared responsibility” mandate to offer minimum essential health coverage to at least 70 percent of full-time equivalent workers in order to avoid global penalties.

This past year, employers with 50 or more full-time equivalent employees began preparing for reporting requirements that take effect in early 2016. These new requirements call for employers with 50 or more full-time equivalent employees in the prior calendar year to report information about their offers of health coverage (and for self-insured plans, actual coverage) on Forms 1095-C. What this means is that employers with an average employee count of 50 or more full-time equivalent employees in 2014 have an obligation to report information about the health insurance they offered in 2015. These forms will go to employees and the IRS in 2016.

The IRS has acknowledged the steep learning curve in filling out the forms; as a result, it has previously stated that for 2015 it will not impose penalties in cases where an employer makes a good faith effort to comply with the reporting requirements. However, employers that do not make a good faith effort could face a penalty of up to $250 per return (with a $3 million cap).

While these forms were initially due to the employees and the IRS on a W-2 schedule, late in December the IRS bought employers more time to furnish and file their ACA reporting forms by extending the 2016 deadlines. The deadline to furnish Forms 1095-B and 1095-C to individuals is now March 31, 2016, while the deadline to file Forms 1094-B, 1094-C, 1095-B and 1095-C with the IRS is now May 31, 2016 (electronic filers got an extension to June 30, 2016).

The IRS also in December released Notice 2015-87, providing guidance on various ACA compliance issues for employer-sponsored health plans. This notice is intended to address and bring clarity to issues pertaining to employers’ health coverage affordability, as well as the application of the ACA’s market reforms to Health Reimbursement Arrangements (HRAs), in 26 questions and answers.

Around the same time in December, the IRS and the Treasury Department released final regulations on the health insurance premium tax credit enacted by the ACA, affecting both individuals who have enrolled in qualified health plans through marketplaces claiming the premium tax credit and exchanges that make qualified health plans available to individuals and employers.

Finally, President Obama signed a spending and tax bill on Dec. 18, pushing back the start of the so-called Cadillac Tax from 2018 to 2020. Even though this has no immediate effect on some employers, collectively-bargained employers have been anxiously awaiting further guidance, because a contract negotiated today could easily extend into 2018. When it does go into effect, the Cadillac Tax will impose a 40 percent excise tax on employers that offer premium health insurance plans exceeding specific high-cost limits. For many employers, this delay hopes to invite adjustments by Congress – or even better, kill the regulation altogether.

2016 expectations

Starting this year, applicable large employers with 50 to 99 full-time equivalent employees face minimum essential health coverage and affordability requirements as their transition relief period for them has come to an end. Additionally, those companies with 100 or more full-time equivalent employees could face global penalties if they fail to offer coverage to 95 percent of their full-time employees starting this year and beyond. This is up from the 70 percent threshold in 2015.

With another year since the ACA’s passage in the rear view, few big ACA regulations remain outstanding. While many smaller issues still need to be resolved, the only major concerns on the horizon are the ever-looming regulations implementing nondiscrimination testing for insured health plans and more details (or a repeal of) the Cadillac Tax. But for now, all that employers can do is hunker down, prepare and submit their forms for accurate reporting, and keep their employee benefits experts and attorneys on speed dial.

Allison Jacobsen is an attorney with Barran Liebman LLP. She advises employers in all aspects of employee benefits. Contact her at 503-276-2197 or ajacobsen@barran.com.

The post OP-ED: Review and a look ahead for the Affordable Care Act appeared first on Daily Journal of Commerce.