health savings accounts

The Internal Revenue Service (IRS) recently announced the cost-of-living adjustments to the applicable dollar limits for various employer-sponsored retirement and welfare plans for 2018. Although some of the dollar limits currently in effect for 2017 will remain the same, the majority of the limits will experience minor increases for 2018.

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In a recent webinar, Jake Mattinson and Sarah Raaii discussed the basics of health savings accounts (HSAs) and health flexible spending accounts. They provided an overview of the various regulations surrounding HSA, such as eligibility requirements, high deductible health plans, and contributions and distributions, and cafeteria plans. Additionally, they analyzed the differences between HSAs and Health FSAs and HRAs.

View the full presentation.

The Internal Revenue Service (IRS) recently announced the cost-of-living adjustments to the applicable dollar limits on various employer-sponsored retirement and welfare plans for 2015. Although many dollar limits currently in effect for 2014 will change, some limits will remain unchanged for 2015.

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The Internal Revenue Service (IRS) recently announced cost-of-living adjustments to the applicable dollar limits on various employer-sponsored retirement and welfare plans for 2014. Although many dollar limits currently in effect for 2013 will change, some limits will remain unchanged for 2014. This On the Subject provides a chart of these 2014 cost-of-living changes.

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by Amy M. Gordon and Susan Nash

The Internal Revenue Service (IRS) has released the 2012 version of Form 8889 (Health Savings Accounts [HSA]) and its Instructions.  The Form 8889 is filed by HSA holders as an attachment to the IRS Form 1040.  The Form 8889 is generally used to report contributions and distributions to and from the HSA.  The 2012 versions of the form and instructions are substantially similar to the 2011 versions, however the 2012 form and instructions have been updated to include the 2012 contribution limits, and to reflect that qualified HSA distributions from health flexible spending accounts (FSA) or health reimbursement accounts (HRA) are no longer permitted.  Please note the 2012 HSA contribution limits are $3,100 for an individual and $6,250 for a family.  

by Elizabeth A. Savard, Todd A. Solomon and Brian J. Tiemann

The Illinois Department of Revenue recently issued guidance reversing its position on the state income tax treatment of benefits for non-dependent civil union partners.

Federal law excludes amounts that an employer pays toward medical, dental or vision benefits for an employee and the employee’s spouse or dependents from the employee’s taxable income.  However, because civil union partners are not recognized under federal law, employers that provide these same benefits to employees’ civil union partners must impute the fair market value of the coverage as income to the employee that is subject to federal income tax, unless the civil union partner otherwise qualifies as the employee’s “dependent” pursuant to Section 152 of the Internal Revenue Code.

The Illinois Department of Revenue previously indicated that Illinois would follow the federal approach in taxing the fair market value of employer-provided coverage for non-dependent civil union partners because state law did not provide an exemption from such taxation.  However, recent guidance issued by the Department of Revenue reverses that position and indicates that employer-provided benefits for a non-dependent civil union partner are now exempt from Illinois state income taxation.  Illinois civil union partners are directed to calculate their state income taxes by completing a mock federal income tax return as if they were married for purposes of federal law.

In addition, for federal tax purposes, employees may not make pre-tax contributions to a Section 125 cafeteria plan on behalf of a non-dependent civil union partner (i.e., contributions for the partner generally must be after-tax) and may not receive reimbursement for expenses of the non-dependent civil union partner from flexible spending accounts (FSAs), health reimbursement accounts (HRAs) or health savings accounts (HSAs).  However, for Illinois state tax purposes, the employee now can be permitted to pay for the non-dependent civil union partner’s coverage on a pre-tax basis.

Employers providing medical, dental or vision benefits to civil union partners residing in Illinois should take action to structure their payroll systems to tax employees on the fair market value of coverage for employees’ non-dependent civil union partners for federal income tax purposes, but not for state purposes.
 

by Raymond M. Fernando, Diane M. Morgenthaler and Adrienne Walker Porter

The IRS recently announced the 2012 cost-of-living adjustments to the applicable dollar limits for various employer-sponsored retirement and welfare plans.  Plan sponsors should update payroll and plan administration systems for the new 2012 cost-of-living adjustments and should incorporate the new limits in relevant participant communications, like open enrollment materials and summary plan descriptions.  Also, because 2012 marks the first year that the IRS has increased employee benefit plan limits since 2009, plan sponsors may want to consider updating plan documents to include the new cost-of-living adjustments, to the extent such adjustments are not automatically incorporated by cross-reference.  Please click here for a full list of the 2012 IRS limits.