The IRS has released their adjusted contribution limits for HSAs. Those with an HSA-eligible high-deductible health plan will be able to provide additional money into their HSA in 2020.
The Plexus Groupe explains new fringe benefits tax law changes in the Tax Cuts and Job Act released by the IRS for employers. The Internal Revenue Service (IRS) recently released the 2018 version of Publication 15-B, Employer’s Tax Guide to Fringe Benefits. This contains information for employers on the tax treatment of fringe benefits.
The new fringe benefits tax law, released in 2018, incorporates the new Tax Cuts and Jobs Act to the following fringe benefits:
→ Qualified transportation plans.
→ Moving expense reimbursements.
→ Employer-provided meals.
→ Employee achievement awards.
IRS Publication 15-B also discusses the new fringe benefits tax law for a variety of other benefits and includes key benefit limits for 2018.
Fringe Benefits: Tax Rules
A fringe benefit is a form of additional pay for an employee’s performance of services. Fringe benefits may include, for example, employer-provided cars, discounts on property or services, memberships in country clubs or other social clubs, and tickets to entertainment or sporting events. Fringe benefits are generally included in an employee’s gross income, unless a specific tax exclusion applies.
The Internal Revenue Code includes tax exclusion rules for certain types of fringe benefits. These include transportation benefits, meals, achievement awards, educational assistance and dependent care assistance. The new fringe benefits tax law excludes all or part of the value of certain fringe benefits from employees’ pay. In most cases, the excluded benefits are not subject to federal income or employment tax withholding, and are not reported on IRS Form W-2.
IRS Publication 15-B: An Overview
IRS Publication 15-B contains information for employers on the tax treatment of certain kinds of fringe benefits. The IRS updates Publication 15-B each year for tax law changes. The 2018 version of Publication 15-B is significant because it includes changes made by the new tax law.
Key provisions of Publication 15-B include the following:
Qualified Transportation Benefits
The new fringe benefits tax law, effective for 2018, does not allow employer deduction for qualified transportation benefits. IRS Publication 15-B clarifies that when an employer directly pays for qualified transportation benefits, through a bona fide reimbursement arrangement or through a compensation reduction agreement, their is no employer deduction. Thus, employers cannot deduct the wages that employees choose to contribute on a pre-tax basis for qualified transportation benefits.
IRS Publication 15-B does not address the unrelated business income tax (UBIT) issue for tax-exempt employers that provide transportation benefits.
While employers may no longer deduct payments for qualified transportation benefits, the fringe benefit exclusion rules still apply and employee wages may exclude deductions for qualified parking, commuter expenses and transit passes. However, the tax exclusion suspends qualified bicycle commuting reimbursements for tax years beginning after Dec. 31, 2017, and before Jan. 1, 2026.
Moving Expense Reimbursements
Also, the tax exclusion suspends qualified moving expense reimbursements for tax years beginning after Dec. 1, 2017, and before Jan. 1, 2026. The exclusion is limited to members of the U.S. armed forces on active duty who move due to changing stations.
The 50% limit on food or beverage expense deductions also applies to these expenses that are excluded from employees’ income. However, food or beverage expenses related to employee recreation, such as holiday parties or annual picnics, are not subject to the 50 percent limit on deductions when made primarily for the benefit of employees, other than certain highly compensated employees.
Employee Achievement Awards
Employers may exclude the value of tangible personal property that is given to an employee as an award for either length of service or safety achievement. The new tax law clarifies that the tax exclusion does not apply to awards of cash, cash equivalents, gift cards, gift coupons or gift certificates (other than arrangements in which the employee selects from a limited array of items preselected and preapproved by the employer). The tax exclusion also does not apply to vacations, meals, lodging, tickets to theater or sporting events, stock, bonds, other securities and similar items.
Let Plexus Lend a Hand
Have questions regarding this newsletter or or other employee benefits matters? Contact a Plexus client service team representative in Deer Park, Ill. (847.307.6100), Chicago (312.606.4800), Dallas (972.770.5010), or Oklahoma City (405.840.3033). We’re here to help — and we’re happy to help.
Disclaimer and publishing credit: This Compliance Bulletin is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. © 2018 Zywave, Inc. All rights reserved.
According to a Gallup poll, 1-in-6 full- and part-time working Americans are also a caregiver for a loved one. Typically, a caregiver is an unpaid individual who assists an elderly or disabled family member, relative or friend. The National Alliance for Caregiving and AARP estimated that 70 percent of working caregivers suffer work-related difficulties due to their dual roles. Moreover, caregivers are forced to miss an average of 6.6 days of work annually because of their caregiving responsibilities. The annual cost of lost productivity due to caregiver absenteeism amounts to more than $25 billion. As the baby-boomer generation continues to age, it is likely that younger employees will take on caregiver responsibilities. Of the 129 U.S. benefits managers surveyed by the Northeast Business Group on Health (NEBGH) and AARP, 66 percent agree that caregiving will become an important issue to their workers over the next five years. Forty-five percent of these managers say that caregiving benefits are one of their top 10 priorities for health and benefits issues.
This article outlines the basics of caregiving benefits and provides best practices to follow. It does not cover legalities of caregiver benefits. Please consult a legal professional to obtain answers to questions related to federal discrimination laws or caregiver benefits.
What do caregiver benefits look like?
Currently, caregiving benefits take many forms. Of the 129 employers surveyed by the NEBGH and AARP, the following are policies that are currently available to their workers:
→ Paid leave exclusively for caregiving: 11 percent.
→ Parental leave or caregiving leave used as paid leave: 22 percent.
→ Paid family medical leave: 29 percent.
→ Sick, vacation or personal days for self-care or to care for another: 81 percent.
→ Family medical leave application guidance: 77 percent.
→ Flexible scheduling: 57 percent.
→ Employees can “donate” time to their co-workers: 21 percent.
As demonstrated by this data, the majority of employers surveyed permit employees to use their sick, vacation or personal days for caregiving, but few have leave or benefits programs designed specifically for caregivers. This survey found that employers cite absence of caregiving benchmarks and best practices, a lack of financial resources and a lack of data to identify caregivers, as reasons why they are not more caregiver-friendly.
Why should my organization consider offering caregiver benefits?
According to a survey by the National Alliance for Caregiving and UnitedHealthcare, a large number of employees may be “closet caregivers” who fear that their boss or organization will think they’re not committed to their job if they also provide care for a loved one. This stressor, in addition to the stressors of working while taking care of an ill, elderly or disabled loved one, can lead to employees experiencing chronic stress. Chronic stress is not only bad for your employees and their well-being, but also for your organization and its bottom line.
Other employees decide that they can no longer balance work and caregiving, so they choose to leave their employer in order to care for a loved one. According to the Society for Human Resource Management, it costs an average of six to nine months’ salary to replace a salaried employee, which is a significant cost for any employer.
Caregiving benefits advocates believe that if workplaces adopted policies similar to the ones that were implemented to help out working mothers (such as flexible scheduling policies and child care services), they would experience increased productivity, lower health care costs, and improved recruiting and retention efforts.
How can my organization implement caregiving benefits?
As previously mentioned, one of the most common caregiving benefits is offering sick, vacation or personal days for self-care or to care for another. In addition, your organization could create a benefit program designed specifically for caregivers so that you can give employees additional support in the form of extra time off or educational resources, such as free counseling, handouts and discount programs for at-home services.
Consider also implementing a flexible scheduling policy at your organization and train managers and supervisors on how they can support employees who are caregivers. Again, be mindful that any caregiving benefits you implement could be subject to federal laws. Please consult with a legal professional for further advice on this topic.
As the baby-boomer generation continues to age, more and more workers will become caregivers for elderly parents, in addition to the others who will take on caregiving responsibilities for a number of different reasons. Many employers across the country have implemented caregiving benefits to help alleviate some of the stressors caregiving employees face. By offering caregiving benefits at your organization, you will not only establish a culture that is supportive of caregivers, but you will also be giving your employees the tools they need to effectively manage their dual responsibilities.
Let Plexus lend a hand
Have questions regarding our newsletter or other employee benefits matters? Contact a Plexus client service team representative in Deer Park, Ill. (847.307.6100), Chicago (312.606.4800), Dallas (972.770.5010) or Oklahoma City (405.840.3033), or contact us via the Web. We’re here to help – and we’re happy to help.
Disclamer and publishing credit: This Benefits Insights is not intended to be exhaustive nor should any discussion or opinions be construed as professional advice. © 2017 Zywave, Inc. All rights reserved.
As the fourth quarter begins, companies should consider a brief review of the federal labor laws governing matters such as minimum wage and overtime rules, with firms planning to add seasonal staff for the holidays perhaps especially in need of a recap of best practices. Anything less than top compliance can leave a firm at risk of an audit -- and potentially enforcement action -- from the U.S. Department of Labor and its Wage and Hour Division. Many DOL investigations begin with a worker complaint. In Fiscal Year 2015, the agancy received close to 22,000 formal compliants, which can be filed at any one of the Wage and Hour Division's more than 200 offices. Overall, the WHD found more than 10,000 overtime and minimum wage violations in the last fiscal year.
The Wage and Hour Division also conducts its owns investigations, with 42 percent of cases in fiscal 2015 stemming from agency initative, per federal data. Moreover, about 4-of-5 investigations generated by WHD in 2015 found wage violations, according to the agency.
On its website, the Wage and Hour Division said it focuses on conducting investigations "where the data and evidence show the problems are largest, where emerging business models lead to violations, and where workers are least likely to exercise their rights."
However, firms of all types have likely had wage-hour compliance on their minds this year, especially with the DOL extending overtime pay eligibilty to many new workers. Under the regulations, which take effect in December, eligible workers making up to $47,446 per year will be in line for overtime pay if working more than 40 hours in a given work week.
In addition, firms hiring hourly workers over the holidays should be aware of the federal and state minimum wage statutes. Adding workers who will collect tips? There are regulations to consider there, too.
The Plexus Groupe can help you ensure your employee benefits compliance efforts aren't missing the mark. For more information, contact a client executive at 847-307-6100 (Deer Park, Ill.), 312-606-4800 (Chicago), 972-770-5010 (Dallas) or 405-840-3033 (Oklahoma City), or contact us via the Web.
Companies dedicated to keeping their employees happy and retaining top talent should consider compiling a comprehensive benefits statement outlining all compensation flowing to the employee. Such a statement might include the following:
-- Health insurance data.
-- 401k contributions, including employer-match data if applicable.
-- Paid time-off data.
A summary of a worker’s non-salary benefits could be an eye-opening experience. According to the Society for Human Resource Management, 30-40 percent of an employee’s compensation are benefits. Companies might consider preparing benefits statements early in the calendar year, and taking the time to compile the data unique to each employee and to share it with them can’t hurt morale. Furthermore, it’s a gesture of transparency.
For a firm with generous benefits, a benefits statement can paint a rosy — and true — picture of the employee’s total compensation. For an employee, it can shed new light on the company’s benefits. What’s more, the benefits statement can be meaningful to employees of all ages, from Baby Boomers to Millennials. Each group may see the advantages of a benefits package in different ways; by providing them with all of the data, they can quickly focus in on the benefits most important to them.
At The Plexus Groupe, we provide a wide variety of benefits communications for our clients, such as helping compile a comprehensive benefits statement or providing insurance and benefits advice. For more information on these issues and other employee benefits guidance, consult a Plexus professional at 847.307.6100 (Chicago) or 972-770-5010 (Dallas / Oklahoma), or contact us via the Web at plexusgroupe.com.
“Benefits Statements Can Spotlight Hidden Value.” Society For Human Resource Management, April 8, 2011. Scorza, John. “Benefits Can Boost Employee Loyalty." Society For Human Resource Management, April 1, 2011.