[Mail_treas] Providing Incentives for Employees Waiving Health Insurance Coverage

[Abby Sharp]

Hello!  

I had many responses requesting I forward the info I received, so I have
included it below.  I also have included one attachment.

Thank you for all of the responses.  I am feeling slightly better about what
needs to happen.
Have a great day!

-- 
Abby Sharp
CFO/Treasurer
Ayersville Local Schools
28046 Watson Road
Defiance, OH 43512
419.395.1111 ext. 403

***Please note new email address: asharp at ayersvillepilots.org



Here is as far as we have gotten...I haven't had a chance to dig into the
plan docs yet.  the memo in the paragraph below was from the OASBO magazine
article:
the Guidance and the memo you sent and have the following for you. At this
point nothing happens until final regulations are issued, which is likely
not before 1/1/17. There is a provision to not apply this requirement to
plans in effect prior to 12/16/2015, which is you. Of course we can¹t tell
exactly what that will mean until the final regulations come out. You will
notice toward the bottom of the second page (in bold) it refers to
³unconditional opt-out arrangements.² Within that definition an example is
provided noting that if there is another requirement, like providing proof
of coverage under a spouse¹s plan, that it won¹t apply. Do you have such a
requirement? It¹s not in the NFA agreement, but I didn¹t know if you require
that. If you don¹t currently require that, it would be good to get that
requirement added, because, based on what we now know it would appear that
the requirements would not apply to a plan that required proof of other
coverage. Your current contract language (NFA) provides that the opt-out is
only available to full-time members ³who are insured under a health
insurance plan other than that provided in this agreement.² That should be
enough to remove it from the unconditional opt-out provision. Do you require
that the employee provide you with proof of that other coverage? If not, add
that. Also, the determination of whether your insurance is ³affordable² or
not is based on the cost of a single plan (bottom of page 2 to top of page
3). If your opt-out payment is offered only to those with family coverage,
we believe that the amount won¹t be imputed because it is not available for
single only coverage. The NFA agreement just refers to an ³eligible plan
participant² so I don¹t know if you are limiting it to family coverage only.
If not, if you can change it to that, that should also help you avoid this
provision.  Also, all of these things need to be written in your plan
document. Do you know if they are? If you¹re not sure we can review your
plan if you¹d like.


We provide a monetary stipend to employees who elect not to take our health
insurance and our attorney and our section 125 (American fidelity) both
agreed that if it is listed as an option in your section 125 document, that,
while the benefit is taxable to those that take it, it does not make the
insurance taxable to those that take that.


We stayed in compliance by moving the payment inside our Section 125
offering.


In addition to the tax implications ­ adverse selection of just keeping
those on the plan who have claims and cutting the premiums paid in a small
group can backfire on raising costs to the district and remaining employees
as well.
 
See page 4, it may help -
http://www.ia-sb.org/Main/Downloads/news/IRS_Guidance_Cash_Options_2.16.16.p
df




From:  Abby Sharp <asharp at ayersvilleschools.org>
Date:  Tuesday, July 19, 2016 at 2:59 PM
To:  oecn_treas <oecn_treas at oecn.k12.oh.us>
Subject:  Providing Incentives for Employees Waiving Health Insurance
Coverage

Hello!

I hope you are enjoying some peace and quiet this summer!

Has anyone figured out how to provide an incentive to employees for waiving
health insurance coverage without causing an unfunded tax liability to those
employees who take insurance?  The OEA seems to think there is a way around
this but our attorneys don¹t quite agree.  If you have an answer to this,
I¹d love to hear it!

Thanks!
Have a great day!
-- 
Abby Sharp
CFO/Treasurer
Ayersville Local Schools
28046 Watson Road
Defiance, OH 43512
419.395.1111 ext. 403




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