Welcome to 2015! As we head into the New Year, employers will be impacted by many provisions that have effective dates of January 1, including certain parts of the Affordable Care Act and several state minimum wage increases. With that in mind, we are here to help guide you through these evolving events as they affect you and your employees.
FSA, HSA, and 401(k) Contribution Limits Increase in 2015
Several of the most common benefit plans and account types have an increased allowance for contribution limits in 2015. The IRS has announced that it will raise the annual dollar limit on contributions for health care flexible spending accounts (FSAs), health savings accounts (HSAs), and 401(k) accounts based on cost of living adjustments (COLAs). These limits are reviewed annually by the IRS.
Health Care Flexible Spending Accounts (FSA)- The maximum allowed amount that an employee can contribute to an employer-sponsored health care FSA is $2,550 in 2015 which is a $50 increase from the previously allowed amount of $2,500.
Health Savings Accounts (HSA)- The maximum allowed contribution amount for individuals to a Health Savings Account increases by $50 for 2015 going from $3,300 to $3,350. The limit for contributions for a family also increases in 2015 going from $6,550 to $6,650, an increase of $100.
401(k) Accounts- In 2015, employees may contribute up to $18,000 for the year to their 401(k) account. This is a $500 increase from 2014. This increase also applies to several other types of retirement accounts such as 403(b) accounts and profit-sharing plans.
Employers that offer FSA, HSA and 401(k) accounts should ensure that they have communicated these increases to their employees if the employer decides to adopt the higher limits for 2015. These increases may also require changes and revisions to existing written employer communications and to open enrollment materials.
IRS Standard Mileage Reimbursement Rate Increases
The Internal Revenue Service has issued its 2015 optional standard mileage rates. Effective January 1st, 2015, the IRS standard rate is 57.5 cents per mile driven for business purposes (an increase of one-and-a-half cents from the 2014 rate of 56 cents per mile).
Use of this rate is optional, though it is widely seen by employers as a simple way to determine a standard rate for calculating mileage reimbursement for employees who use their personal vehicle for business purposes. If your organization uses the IRS rate to calculate mileage reimbursement, be sure to update your systems to account for this change.
New Year’s HR Resolutions
For many organizations, the beginning of a New Year is the perfect time to address the to-do list from the previous year or set goals for the new one. It’s a great way to focus the organization on the key priorities for the year ahead. As you make your list of resolutions, consider these three small changes you can make to your workplace to increase productivity and reduce turnover.
One: Think positively for 5 seconds. Small and mid-size organizations are constantly under stress. You need to do more with less. Stay on top of the recent changes – business and regulatory – in your state and industry. Keep employees happy and motivated. The list goes on. It’s easy to feel the burden and give in to negativity. So try this simple trick: when presented with an issue, take five seconds to reflect before you react. Five seconds doesn’t seem very long, but it’s long enough to reframe the issue in a positive light, or to return to your company’s mission and core values. Try it for a few weeks and before long, it will become habit. Then train your team to do the same.
Two: Say thanks. In the hurry of everyday life, we often forget to thank those that make it possible: our employees. Some organizations choose to recognize their employees through year-end bonuses or holiday gifts or cards. If those options were not feasible, try a simpler approach. Write your employees a quick email thanking them for their contributions. If you can include something specific and personal about an employee’s individual contribution, and connect it with your organization’s mission or goals, it will mean even more.
Three: Put down your phone and turn off your email. When an employee walks in to discuss an issue with you, turn off your computer monitor and give that person your full attention. With so many methods of communication these days, if your employee is taking the time to speak with you face to face, it’s because that person really values your personal attention on the issue. It may be difficult to focus exclusively on the issue, but doing so will make the conversation more efficient, reduce the risk of a miscommunication, and strengthen your relationship with that person.
A New Year is a perfect time to try new techniques or build new habits. Try these three simple New Year’s resolutions to make 2015 your best year yet.
Question & Answer
Q. May we give different break amounts and schedules to employees in different departments?
A. You may have different rest and meal periods for employees based on job duties or department, so long as the policy is non-discriminatory, complies with federal and state regulations, and is applied consistently. This may make sense in many situations where employees in different departments have vastly different duties and daily work rhythms, but you should be cognizant of whether it will have a negative impact on morale if employees know that certain departments have more generous break allowances. Remember that many states have specific requirements as to the length and timing of required breaks, so it is important to ensure that you are giving all employees at least the minimum required breaks and that you are compensating for breaks appropriately. Federal law requires that any shorter rest periods (5-20 minutes) provided (other than lactation breaks) be compensated. Meal periods (typically lasting at least 30 minutes) serve a different purpose and may be unpaid.
It’s Go Time….The Employer Mandate is Here
After controversy, debate, and delays, the Employer Mandate has arrived. This provision of the Affordable Care Act (also known as the “Play or Pay” provision) requires all employers with 50 or more full-time equivalent employees to offer a certain level of health insurance coverage at an affordable rate to all full-time employees or face a possible penalty.
Large employers (those with 100 or more full-time equivalent employees) that do not comply with the Employer Mandate may begin incurring penalties in each month of the 2015 tax year. Midsized employers (those with 50-99 full-time equivalent employees) enjoy an additional year of reprieve (to 2016) as long as the organization did not reduce its workers’ hours/workforce to get below the 99 employee threshold without a bona fide reason or materially reduce its health care plan as it existed on February 9, 2014. Employer Mandate penalties are incurred on a monthly basis, but paid annually.
It’s important to note that the IRS will only apply Employer Mandate penalties to an organization if the employer is subject to the Employer Mandate, fails to comply with the Mandate, and has at least one full-time employee shop in the Marketplace and receive a federal premium subsidy. Employers have no control regarding whether a full-time employee opts to shop in the Marketplace, so the only fool-proof way to avoid penalties is to follow these three steps:
- Offer a health insurance plan that meets the minimal essential coverage requirements;
- Offer at least one such plan at an “affordable rate”; and
- Offer at least one such plan to all full-time employees regularly working 30 or more hours per week and their dependent children.
If you follow these three steps, your organization will be immunized from any type of Employer Mandate Penalties, regardless of which employees opt to shop in the Marketplace or what types of premium subsidies they receive.
With the implementation of the Employer Mandate comes new IRS reporting requirements. Employers with 50 or more full-time equivalent employees must begin Section 6056 (Employer Mandate) reporting for the 2015 tax year. These forms will be filed with the IRS and provided to employees in early 2016. Although the actual reporting will not be performed until early 2016, some of the data included in the reporting must be classified by month. So now is the time to begin tracking this data.
Employers subject to the reporting requirements must complete and submit one Transmittal Form (IRS Form 1094-C) for the organization and one Employee Statement (IRS Form 1095-C) for each employee. Employers that sponsor a self-funded health plan have additional reporting requirements. The IRS draft forms are available in your HR Support Center.
Anxiety is understandably high in regard to both the Employer Mandate and the new IRS reporting requirements associated with the Mandate. The penalties have the potential to be substantial for some employers, and the regulations are somewhat tedious and technical. Some anxiety can be mitigated by reviewing the “Navigating the Employer Mandate” guide in your HR Support Center. It provides detailed common-sense instructions on how to comply with the Employer Mandate, including sample penalty calculations, IRS reporting requirements and much more. Your Human Resources Professional and Tax Professional can also be great resources for you.
Tool of the Month:
With the start of the New Year, the minimum wage rate will be increasing in nearly half the states. Our Minimum Wage Chart shows you at-a-glance which states saw increases and what the minimum wage rate is for each state in 2015. You can find the guide by searching for “Minimum Wage” under the Guides section of the Essentials tab.
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