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November 2013 Volume XII, Issue 11

DataPath Newsletter - The DataPath Voice

New Fax Number for
DataPath Customer Service

DataPath Customer Service has a new, direct fax number for receiving client materials related to customer support issues and tickets. The new number is 501.801.8243.

Please use this fax number only for sending support-related items directly to Customer Service, such as:

  • Sample/example reports, screenshots or other material specifically relevant to open technical support tickets (admin systems and myRSC.com)
  • Employee Count Summary Reports (ECSR) or MAX105 royalty reports
  • myRSC/inTouch user access request forms

All other faxes (sales, billing, accounting, executive team material, etc.) should continue being sent to the main DataPath company fax number, 501.296.9940. All items pertaining to DataPath Card Services or DataPath Financial Services should be sent to their respective fax numbers, which are 501.687.1460 for Card Services and 501.687.1409 for Financial Services.

IRS Modifies 'Use or Lose' Rule;
Employee Communication Materials Available

With Notice 2013-71, the Internal Revenue Service (IRS) modified the longstanding "use it or lose it" rule for Health FSAs to allow taxpayers to carryover up to $500 of unspent FSA funds to the following plan year.  Details include:

  • Plan sponsors may adopt either the new Carryover option or the previously-available Grace Period option, but not both.
  • Although the IRS will allow a carryover of up to $500, your plan may allow a lower annual carryover amount, or no carryover at all.

  • Any amount carried over does not count against an employee’s annual $2,500 FSA limit.

The IRS ruling is effective immediately. Employers can choose to adopt the Carryover for as early as the current (2013) plan year. Issuance of a summary of material modification (SMM) is needed to add the Carryover and, if appropriate, to remove the Grace Period. We encourage you to read IRS Notice 2013-71 in its entirety to learn more details and view examples of how the ruling applies to various situations. You might also want to review the one-page fact sheet summarizing the ruling also published by the IRS.

Modification of the 'Use It or Lose It' rule creates a major opportunity for your employer groups to increase employee FSA participation rates. We have created basic education materials to help you communicate the new Carryover option to employees during enrollment. Easily customizable for your groups, these are available for download and include the following materials:

The above links provide sample documents in .pdf format. The same documents in Word format can be downloaded from inTouch; just log on, select "Marketing Materials" under Client Tools, and select the DataPath 125 tab.

CMS Transition Policy Allows Renewal
of Selected 'Non-Compliant' Health Policies

In a Nov. 14 letter to state insurance commissioners, the Centers for Medicare and Medicaid Services (CMS) of the U. S. Dept. of Health and Human Services (HHS) detailed a transition policy, announced that day by President Obama, to allow renewal of certain health insurance policies for 2014 that otherwise would have been canceled due to noncompliance with ACA requirements.

Under the transition policy, individual and small group policies that are renewed for a policy year starting between January 1 and October 1, 2014 will not be considered to be out of compliance with six “specified” reforms, including premium rating rules, guaranteed availability and renewability, and the requirement to provide essential health benefits, provided that certain conditions are satisfied. Two additional reforms – prohibitions on pre-existing condition exclusions for adults, and discrimination based on a health factor – are also specified, but for individual policies only; small group policies covered by the transition policy must still comply with these two reforms.

To qualify for the transitional relief, the coverage must have been in effect as of October 1, 2013, and the health insurer must send an informational notice as soon as reasonably possible to all individuals and employers who have received (or would receive) a cancellation notice. See the CMS letter for additional details.

IRS Releases 2013 Form 2441, Instructions

The IRS has released Form 2441, Child and Dependent Care Expenses, and the accompanying instructions for the 2013 tax year, which bear only minor changes from 2012. Taxpayers file Form 2441 with Form 1040 to determine the amount of their available dependent care tax credit (DCTC) and, in the case of DCAP participants, to support the income exclusion for their DCAP reimbursements.

The DCTC for the 2013 tax year can be calculated on up to $3,000 in expenses for one qualifying dependent and up to $6,000 for two or more, minus the amount of any DCAP reimbursements. In other words, an employee with two or more qualifying dependents who meets other DCTC requirements and excluded the maximum $5,000 DCAP for 2013 can still take a partial DCTC on up to $1,000 of any 2013 expenses they may have incurred that exceeded $5,000.

Self-Insured Gain Partial Fee Exemption

Certain self-insured employers will be exempted from paying the last two years of the Transitional Reinsurance Fee, according to rule modifications by the Department of Health and Human Services (HHS). Published in the Federal Register on Oct. 30, the modifications are the result of HHS listening sessions with interested parties about specific ACA requirements.

All employers will be required to pay the first-year fee for the three-year program that begins in 2014. Certain self-insured, self-administered plans however will be exempted from the requirement to make reinsurance contributions for the 2015 and 2016 benefit years. The 2014 fee is $63 per plan participant. Fee levels have not been set for 2015 and 2016.

The Transitional Reinsurance Program is designed to yield $25 billion to help offset costs incurred by insurers covering high-cost individuals purchasing coverage in public insurance exchanges.

2014 Cost-of-Living and Other Adjustments

Health FSAs. For 2014, the dollar limitation on employee salary reduction contributions to health FSAs is unchanged at $2,500. This annual limit is not affected by the new Carryover option.

Qualified Transportation Fringe Benefits. For 2014, the combined monthly limit for transit passes and vanpooling expenses reduces to $130, a decrease of $115 a month from 2013. This decrease is due to expiration of the temporary “rule of parity” that made the combined monthly limit for transit and vanpooling in 2012 and 2013 the same as the monthly parking limit; whether Congress will eventually extend the rule of parity to 2014 is uncertain. For 2014, the monthly limit for qualified parking benefits is $250 (a $5 increase from the 2013 limit of $245).

Adoption Assistance Exclusion and Adoption Credit. The maximum that may be excluded from an employee’s gross income under an employer-provided adoption assistance program for the adoption of a child will be $13,190 for 2014 (up $220 from 2013). The maximum adoption credit allowed to an individual for the adoption of a child will be $13,190 for 2014 (also up $220 from 2013). For 2014, both the exclusion and the credit begin phasing out for individuals with modified AGI’s greater than $197,880 and will be entirely phased out for individuals with modified AGI’s of $237,880 or more (up $3,300 from 2013).

DCAPs. The non-indexed $5,000/$2,500 DCAP limit remains unchanged.

Small Business Health Care Tax Credit. For 2014, the average annual wage level at which the tax credit begins to phase out for eligible small employers is $25,400 (up¬† $400 from 2013). The maximum average annual wages to qualify for the credit as an “eligible small employer” for 2014 (adjusted for the first time) will be $50,800 (up $800).

Archer MSAs. For Archer MSA-compatible high-deductible health coverage, the annual deductible for self-only coverage must not be less than $2,200 (up $50 from 2013) or more than $3,250 (up $50), with an out-of-pocket maximum of $4,350 (up $50). For family coverage, the annual deductible must not be less than $4,350 (up $50 from 2013) or more than $6,550 (up $100), with an out-of-pocket maximum of $8,000 (up $150).

For more information on these and other 2014 limits, download IRS Rev. Proc. 2013-35.

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