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Don't Get Bitten by COBRA
Did you miss a required notification?
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FUTA Tax Rate Decrease
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How to get Reimbursed for Summer Camp
Dependent Care Flex Accounts more...
PLUS
W-2 Reporting of Health Care Costs
IRS Issues New Mileage Rates
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Don't Get Bitten by COBRA
Did you miss a required notification?
Third in our COBRA series, COBRA notifications are another area in which employers are often out of compliance with COBRA regulations. Most employers send out the COBRA election notice upon a qualifying event (such as termination), however did you know there are four more required notifications? Below is a list of required COBRA notifications:
- General Notice. Group health plans must provide this notice to each employee and his/her dependents that become covered under a COBRA eligible plan this notice describing their COBRA rights. It must be provided within 90 days of coverage and include plan name, contact information, procedures to notify, and general description of coverage.
- Election Notice. This notice describes the rights to continue coverage and how to make an election for coverage. It must be sent to each benefit enrolled participant at time of termination of coverage due to a COBRA qualifying event.
- Qualifying Event Notice. This notice details the qualifying event for a covered employee and dependents. It is typically sent with the Election Notice to each benefit enrolled participant at time of coverage termination.
- Notice of Early Termination. Continuation of coverage must be made available for a maximum period, generally 18, 29, or 36 months. Coverage may terminate early for a specific reason, most commonly, for non-payment or coverage under another plan. This notice must be sent whenever continuation coverage terminates before the maximum period is reached.
- Notice of Unavailability. Group health plans may sometimes deny a request for continuation coverage or for an extension of coverage when the requester is not entitled to receive it. This notice must be provided within 14 days after the request is received and explain the reason for denial.
Each of these are required notifications to plan enrollees or COBRA participants. Failure to provide a COBRA notification could result in DOL and IRS fines or unpaid claims that the employer is now responsible for paying. Contact our COBRA department for more information.
See also
Department of Labor Employer’s Guide to COBRA.
and DOL model notices.
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Employer FUTA Tax Rate Decreases
IRS issues new rate effective July 1, 2011.
The FUTA rate will decrease from .8% to .6% due to the surtax expiration.
FUTA or Federal Unemployment Tax Act pays unemployment compensation to workers who lose their jobs. Employers report and pay FUTA tax separately from Social Security and Medicare taxes. Employees do not pay this tax or have it withheld from their pay. FUTA is an employer only tax based upon an employee's pay. The statutory rate is now 6% on the first $7000 of an employee’s wage and employers receive a 5.4% credit for state unemployment taxes.
For more information watch a short video by the IRS
What you need to know about Federal Unemployment Taxes lesson 9
See also
IRS Publication 15, Employer's Tax Guide
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How to get Reimbursed for Summer Camp
Summer is here and as the need for day care or special summer camps arise, we’d like to remind you of allowable dependent care expenses.
The following are not considered employment related expenses and therefore not eligible for reimbursement.
Non Eligible Expenses
Overnight camps, where the child stays overnight.
A camp that is specifically designed for a sport, such as swimming or ballet.
Summer school expenses that are primarily for education and tuition.
Eligible Expenses
Day camps qualify for reimbursement as long as their primary function is a dependent care center on a regular basis during the taxable year. These day camps may also have specialized summer activities for your child.
Reimbursements
Once services have been incurred, you may submit a request for reimbursement for the expense, however, as per IRS regulations, reimbursements can only be paid after the services have been provided.
As always, we are here to serve you. Please contact our TPA department for more information regarding eligible expenses for flexible spending accounts.
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W-2s and Health Coverage Costs
A provision of the Affordable Care Act enacted on March 23, 2010, requires employers to report the cost of employer sponsored group health plans on the employee’s W-2. This reporting to employees is for their informational use only and does not cause employer provided health care coverage to become taxable.
Who must comply?
2011 – Optional for all employers
2012 – Optional for employers issuing 250 or less 2011 W-2s
What must be reported?
Employers are required to report the total cost of all applicable employer sponsored coverage provided to an employee on a pretax basis. The amount includes both the portion paid by the employer and the portion paid by the employee.
Where on the W-2?
Box 12, with code DD to identify the amount.
Detailed information can be found in IRS Notice 2011-28
and see also Instructions for the 2011 W-2
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New mileage rates effective July 1, 2011
Issued by the IRS beginning July 1, 2011 the new standard mileage rates are:
55.5 cents per mile for business miles driven
23.5 cents per mile for medical or moving purposes
.14 cents per mile driven in service of charitable organizations
The IRS mileage rate is used to compute the deductible costs of operating a vehicle for business use in lieu of tracking actual costs. This rate is also used as a benchmark by many businesses to reimburse their employees for mileage.
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