Monthly Limits for Qualified Transportation Plan Announced

According to IRS Rev. Proc. 2011-52, beginning in 2012, the combined monthly limit for Qualified Transportation in a commuter highway vehicle and any transit pass is $125. While the monthly limit for qualified parking is $240, which is a $10 increase from the 2011 limit.

In 2009 due to the economic stimulus package, the maximum cap for commuter highway vehicle and any transit pass was temporarily increased to $230.

Qualified Transportation Plan (QTP) is an employer provided voluntary benefit program that allows employees to reduce their monthly commuting expenses. Salary contributions used for eligible expenses are excludable from gross income subject to federal taxes. QTP benefits consist of:
- Commuter transportation in a commuter highway vehicle
- Transit passes
- Qualified parking
Qualified bicycle commuting expenses

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Estimated Out-Of-Pocket Costs for 2012

Having trouble deciding what your annual election should be? While everyone’s needs are different and your annual election should be estimated based on your specific needs, according to a recent survey from AON-Hewitt, a national consulting firm, the average employee out-of-pocket costs, such as copayments, coinsurance and deductibles, are expected to be $2,275 in 2012, compared to $2,007 in 2011, and $1,691 in 2010.

IRS Increases Mileage Rate to 23.5 Cents Per Mile

The Internal Revenue Service announced today an increase in the optional standard mileage rates for the final six months of 2011 effective July 1, 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for medical expenses.

The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

"This year's increased gas prices are having a major impact on individual Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices," said IRS Commissioner Doug Shulman. "We are taking this step so the reimbursement rate will be fair to taxpayers."

While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

New Legislation to Strengthen and Expand HSAs and FSAs

Last week, Sen. Orrin Hatch (R-Utah) introduced the Family and Retirement Health Investment Act of 2011 that would modify and streamline rules for both HSAs and FSAs. Companion legislation was introduced in the House by Rep. Erik Paulsen (R-Minnesota) to improve health care through expanded HSAs.

Support is needed, as Hatch's bill specifically includes the following provisions:

Catch-up Contributions
Allows the spouse of an HSA account holder to double their catch-up contribution to account for their eligible spouse.

Contributions for Medicare Part A Eligible
Allows seniors enrolled in Medicare Part A only to continue contributing to their HSAs.

FSA Rollover
Permits up to $500 of unused FSA funds to carry forward to the following year.

Transition to HSAs
To ease transition to HSAs, clarifies current law to provide employers greater opportunity to roll-over funds from employees' FSAs or HRAs to HSAs.

Removes OTC Restrictions
Repeals restrictions on use of HSA/FSA/HRA dollars for the purchase of over-the-counter medications without a prescription.

Purchase of Health Insurance from HSA
Allows purchase of COBRA coverage, long-term care insurance, and HSA-qualified policies from an HSA.

Medicaid Health Opportunity Accounts
Provides states with the flexibility to create Health Opportunity Accounts for their Medicaid population.

Lifts Limits on Deductibles for Employer-Sponsored Plans in the Small Group Market
Repeals the recently enacted deductible limits of $2,000 for single coverage and $4,000 for family coverage for plans sold to small employers.

Expanded Definition of Qualified Medical Expenses
Modifies the definition of "qualified medical expenses" to promote wellness, and encourage exercise and better diet, by allowing HSA and FSA dollars to be used for gym memberships and meal replacement products.

Click here to read S. 1098 (Hatch).
Click here to read H.R. 2010 (Paulsen).

Act Now!

We urge you to act immediately! Please contact your legislators in Washington, and ask them to actively endorse these bills. We also encourage you to send a letter to your representatives and urge them to sign on immediately.

To locate contact information for your members of the House of Representatives, click here.
To locate contact information for your Senators, click here.

Also, you can visit savemyflexplan.org for more information.

News from Pacific Benefits iFlex, Inc.

It is with a heavy heart that we announce the departure of our Asst VP of Administration, Pam Criswell. Pam has decided to pursue a career in the entertainment staging field and we wish her all the best in her future endeavors.

On a happy note, we are delighted to announce that Wil Helm has been promoted to Senior Team Lead. Many of you have had the opportunity to work with Wil as he has been with us for 5 years. Wil is extremely knowledgeable with the process of cafeteria plan administration. He has taken over many of Pam's prior duties and will continue to be a valuable resource for both you and your employees. Wil can be reached via email at wil@pacificbenefits.com or at
(916) 363-2101 extension 251.

As we enter our 21st year in business, we continue to be the leader in the Flexible Benefit Administration and Consulting field. There are fresh challenges with the advent of Health Care Reform and its impact on Benefit Plans, and we will bring you and your employees the very best in Flex administration and consulting services and keep you informed of any and all changes that affect your Flex plans (FSAs, HSA, HRAs).

Legislation Introduced to Repeal Flexible Spending Account Limits

This week, Senator Kay Bailey Hutchison (R-TX) and Congressman Erik Paulsen (R-MN) introduced, in the Senate and House, respectively, the Patients’ Freedom to Choose Act to remove future contribution limits on FSAs as well as include over-the-counter medicines as an allowable medical expense.

On January 1, 2011, a provision in the health care law took effect prohibiting individuals from using funds from either HSAs or FSAs to purchase over-the-counter medication unless they have a prescription from their doctor. In addition, starting in 2013, PPACA institutes a $2,500 federal cap for all FSA contributions. Over 80 percent of all large employers that offer an FSA to their employees include a limit that is over this $2,500 threshold.

Sen. Hutchison’s and Rep. Paulsen’s legislation repeals the arbitrary cap on FSA contributions by striking the $2,500 restriction. It also repeals the provision that requires patients using HSAs or FSAs to have a prescription from their doctor before they purchase over-the-counter medication.

HHS acts to control "unreasonable" health insurance rate increases

New proposed Affordable Care Act regulations announced today by the U.S. Department of Health and Human Services (HHS) will bring new transparency and scrutiny to proposed health insurance rate increases. These proposed rules allow HHS to work with states to require insurers to publicly disclose and justify unreasonable rate increases.

Today’s proposed regulations will build on these efforts by requiring insurers in all states to publicly justify any unreasonable rate increases beginning in 2011. In 2011, proposed rate increases of 10 percent or higher will be publicly disclosed and thoroughly reviewed to determine if the rate increase is unreasonable. After 2011, state-specific thresholds would be set using data and trends that better reflect cost trends particular to each state.
Insurance company’s justifications for unreasonable increases will be posted on HealthCare.gov and the insurance plan’s website.

“The proposed rate review policy will empower consumers, promote competition, encourage insurers to do more to control health care costs and discourage insurers from charging premiums which are unjustified,” said Jay Angoff, director of HHS’ Office of Consumer Information and Insurance Oversight.

Under the proposed regulation, states with effective rate review systems would conduct the reviews. If a state lacks the resources or authority to do thorough actuarial reviews, HHS would conduct them. Meanwhile, HHS will continue to make resources available to states to strengthen their rate review processes.

In 2014, the Affordable Care Act empowers states to exclude health plans that show a pattern of excessive or unjustified premium increases from the new health insurance exchanges.