Source: http://freedombenefits.org/blog/page/9/
Timestamp: 2019-04-23 02:11:30+00:00

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If your business is worried about the potential cost of shared responsibility payments in 2015, you are not alone. Perhaps your company does not offer group health insurance now or your employee health plan does not meet the minimum essential coverage requirements under the Affordable Care Act (ACA). Now with only 90 days until the new tax penalty becomes effective, mid-sized employers are scrambling to find an affordable strategy. Transitional relief provisions help businesses in 2015, especially those with 50-99 employees. Employers in low margin industries like retail and food service have already begun testing these defensive cost control strategies so we now have a limited amount of experience to make these suggestions.
The basic underlying requirement is that beginning January 1, 2015 an employer with 100 or more full time employer’s must offer health insurance to avoid the shared responsibility payment. That health coverage must: a) be available to 70% of full time employees, b) meet minimum value rules, and c) cost less than 9.5% of an employees total household income. The rules get much tougher in 2016, encompassing employers with 50 or more employees and requiring coverage for 95% of employees and dependents. The penalty calculation formula also changes in 2016 resulting in a hike in the employer’s penalty.
The employer shared responsibility penalty is large enough to scare any small business owner. The minimum employer shared responsibility penalty for an employer who provides no health coverage in 2015 is $40,000 for a company with 100 employees. The penalty rises by $2,000 for each employee above that. In 2016 the penalty increases sharply due to the expiration of transition rules that are not discussed in this article. An alternate penalty is available if the employer provides some health coverage but this coverage fails one or more of the requirements of the law. In most cases the alternate penalty is lower than the regular employer shared responsibility payment.
This checklist below assumes that your goal is to reduce the maximum cost of ACA compliance to dollar amount that is less than the amount of the penalty1 and that you have already determined that your firm is large enough to trigger the shared responsibility payment requirement. It also assumes that the price of minimum value group health insurance is greater than the calculated tax penalty; that providing the plan as proposed by ACA would be the highest cost approach and is not practical for the employer.
Offer employee health coverage at the maximum price of 9.5% of an employee’s total household income.2 Employers can stipulate and control the price of employee health coverage by combining insurance with a Health Reimbursement Arrangement (HRA) or Health Savings Account (HSA), or both. Early experience indicates that few employees will enroll in coverage at that highest price allowed under the law, especially in lower wage industries. The business is not penalized on the employees who are offered coverage but decline to enroll.
Change to part time employees so that insurance is not required. Many firms have already adopted this approach by reducing work schedules below 30 hours per week.
Use independent contractors to outsource tasks formerly handled by employees.
Turn employees into their own self-employed business segments.
Business managers may conclude that none of the options are really attractive. We understand that implementation of the Affordable Care Act will take a toll on almost everyone except for those who receive subsidized coverage.
Finally, If you use any of these cost-saving approaches, it makes sense to pair your strategy with an employee health benefits consulting service. Make sure it is an independent service, not affiliated with the provider of your health insurance. find an independent adviser whose only interest is advising your employees on the best coverage options and how to pay for it. Remember that ACA implementation is challenging for everyone and it makes sense to provide someone who can bear the bulk of employee concerns with their changing coverage. This service costs less than 10% of the penalty (because not all of the employees actually use it) but goes a long way toward rebuilding employee financial confidence.
1When most employees earn less than 400% of federal poverty level, as is common in retail, food service, agriculture and other industries, it still makes sense to just pay the penalty. You’ll be doing your employees a huge financial favor because they will qualify for larger subsidies and, as a result, enjoy lower cost coverage through the exchange than the employer could ever offer. Many of the nation’s major employees have already selected this option and more are likely to follow.
2Since employers generally do not know an employees total household income, most employers will rely on a safe harbor provision where the calculation uses the employee’s income only. However, there is no prohibition on using the employee’s total household income as stated in the law. This is best accomplished by adopting a health care planning service as described in the past paragraph of the article.
3This cost savings concept is well illustrated in graphical format in an Employer Mandate Fact Sheet by Cigna.
Summary: The individual mandate provision of the Affordable Care Act is likely to trigger more small business owners to offer financial help to employees with the cost of required health insurance, but this reaction may not be simple. Coverage will be available through insurance exchanges. Traditional employer funding approaches like Health Reimbursement Arrangements (HRA) and Flexible Spending Accounts (FSA) are both limited by the Affordable Care Act. A combination of health plans possibly including a HRA, FSA, Health Savings Account (HSA) and Medical Spending Reimbursement Plan (MERP) may be used in combination to provide best results. Freedom Benefits offers these individually or in combination for free or at little cost to small businesses through the payroll system. Administration and tax treatment regulations do not change substantially for employers in 2014 but employees may see some or all their employer-paid health insurance benefits become taxable in 2014.
The first step is to arrange for the employees to have access to a well-qualified professional enroller for personal assistance in finding the best plans on the online health insurance marketplace.
The second step to set up a tax-qualified Health Reimbursement Arrangement (HRA) to allow the employer to pay for part of the coverage. This is a tax-qualified employee benefit plan that, if designed and administered properly, allows employer contributions to be deductible by the employer without becoming taxable wages to the employee.
Beginning in 2014 HRAs may no longer be used to integrate with essential health benefit plans offered through the insurance exchanges. HRAs will likely grow in popularity as the preferred method of providing excepted benefits to employees like limited medical insurance. The insurance and employee benefit market is making adjustments to ensure that products and services for small business may continue to enjoy tax-favored status. Most HRA plans will be modified to comply with the new laws and other plans will provide health benefits that are taxable to employees. Best results may be obtained by combining a HRA with other plans like a Flexible Spending Account (FSA) and Health Savings Account (HSA).
Freedom Benefits offers these plans individually or in combination without charge to small businesses that use affiliated insurance services.
This page is an annotated version of U.S. Department of Labor Technical Release No. 2013-03 released September 13, 2013. The author’s annotations highlighted in yellow below are meant to emphasize provisions that commonly trigger questions from small business owners and clients of Freedom Benefits who plan to have employees use the individual health insurance exchanges offered by the federal government, state governments as well as private commercial health insurance companies, and then help employees pay for the cost of that health insurance with employer funds. The comments envision the situation where the employees enroll individually on an exchange rather than in a group insurance plan.
Freedom Benefits offers free HRA, HSA, FSA, MERP and other health plan setup, payroll integration and claim administration for small businesses that take this approach and use the Members’ Insurance Exchange (or their soon-to-be-announced new private insurance exchange service) for insurance coverage in 2014. Details of this offer have not been announced but will be posted on this site as soon as possible shortly after the new health insurance exchange system launches. In the meanwhile, please email tonynovakcpa@gmail.com for more information.
This Technical Release provides guidance on the application of certain provisions of the Affordable Care Act(1) to the following types of arrangements: (1) health reimbursement arrangements (HRAs), including HRAs integrated with a group health plan; (2) group health plans under which an employer reimburses an employee for some or all of the premium expenses incurred for an individual health insurance policy, such as a reimbursement arrangement described in Revenue Ruling 61-146, 1961-2 CB 25, or arrangements under which the employer uses its funds to directly pay the premium for an individual health insurance policy covering the employee (collectively, an employer payment plan); and (3) certain health flexible spending arrangements (health FSAs). This Technical Release also provides guidance on section 125(f)(3) of the Internal Revenue Code (Code) and on employee assistance programs or EAPs.
The Departments of the Treasury (Treasury Department), Health and Human Services (HHS), and Labor (DOL) (collectively, the Departments) are continuing to work together to develop coordinated regulations and other administrative guidance to assist stakeholders with implementation of the Affordable Care Act. The guidance in this Technical Release is being issued in substantially identical form by the Treasury Department, and guidance is being issued by HHS to reflect that HHS concurs in the application of the laws under its jurisdiction as set forth in this Technical Release.
An HRA is an arrangement that is funded solely by an employer and that reimburses an employee for medical care expenses (as defined under Code § 213(d)) incurred by the employee, or his spouse, dependents, and any children who, as of the end of the taxable year, have not attained age 27, up to a maximum dollar amount for a coverage period. IRS Notice 2002-45, 2002-02 CB 93; Revenue Ruling 2002-41, 2002-2 CB 75. This reimbursement is excludable from the employee’s income. Amounts that remain at the end of the year generally can be used to reimburse expenses incurred in later years. HRAs generally are considered to be group health plans within the meaning of Code § 9832(a), § 733(a) of the Employee Retirement Income Security Act of 1974 (ERISA), and § 2791(a) of the Public Health Service Act (PHS Act) and are subject to the rules applicable to group health plans.
Novak: Internal Revenue Code section 105 is the provision of the tax code that allows a tax deduction for the employer’s payment of a health insurance premium as an ordinary business expense. This is not changed by the Affordable Care Act. Because of this, some reference to the term “Section 105 medical reimbursement plan” or “MERP” may become popular in the small business market. This simply means a plan that makes tax-deductible employer payments for employee health expenses. Unless otherwise qualified, the amount of the benefits paid under a Section 105 plan are taxable to the employees.
Revenue Ruling 61-146 holds that if an employer reimburses an employee’s substantiated premiums for non-employer sponsored hospital and medical insurance, the payments are excluded from the employee’s gross income under Code §106.
Novak: Most of the following changes in tax treatment discussed in this regulation pertain to IRC section 106, the tax treatment of the payment with regard to the employee.
This exclusion also applies if the employer pays the premiums directly to the insurance company. An employer payment plan, as the term is used in this Technical Release, does not include an employer-sponsored arrangement under which an employee may choose either cash or an after-tax amount to be applied toward health coverage. Individual employers may establish payroll practices of forwarding post-tax employee wages to a health insurance issuer at the direction of an employee without establishing a group health plan, if the standards of the DOL’s regulation at 29 C.F.R. §2510.3-1(j) are met.
Novak: It is always possible to set up an after-tax employee health plan without the restrictions imposed by this body of tax and labor law. Non-adherence to the federal requirements does not destroy the employee health plan, it only takes away it’s tax benefits. The more challenging goal, however, is usually to have a successful pre-tax employee health plan that meets the employer’s and employees’ requirements.
In general, a health FSA is a benefit designed to reimburse employees for medical care expenses (as defined in Code § 213(d), other than premiums) incurred by the employee, or the employee’s spouse, dependents, and any children who, as of the end of the taxable year, have not attained age 27. See Employee Benefits—Cafeteria Plans, 72 Fed. Reg. 43938, 43957 (August 6, 2007) (proposed regulations; to be codified, in part, once final, at 26 C.F.R. §1.125-5); Code §§ 105(b) and 106(f). Contributions to a health FSA offered through a cafeteria plan satisfying the requirements of Code § 125 (a Code § 125 plan) do not result in gross income to the employee. Code § 125(a). While employees electing coverage under a health FSA typically also elect to enter into a salary reduction agreement, employers may provide additional health FSA benefits in excess of the salary reduction amount. See Employee Benefits—Cafeteria Plans, 72 Fed. Reg. 43938, 43955-43957 (August 6, 2007) (proposed regulations; to be codified, in part, once final, at 26 C.F.R. §§1.125-1(r), 1.125-5(b)). For plan years beginning after December 31, 2012, the amount of the salary reduction is limited by Code §125(i) to $2,500 (indexed annually for plan years beginning after December 31, 2013). See IRS Notice 2012-40, 2012-26 IRB 1046, for more information about the application of the limitation. Additional employer contributions are not limited by Code §125(i).
Novak: Flexible Spending Accounts (FSAs) are still a viable option for small firms, but employees are limited to contributions of $2,500 per year. Also, the use it or lose it” provision remains, detracting from the usefulness of these plans. FSAs must be voluntary salary reduction plans and do not allow contributions from the employer.
The Code, ERISA, and the PHS Act impose various requirements on group health plans, but certain of these requirements do not apply to a group health plan in relation to its provision of excepted benefits. Code § 9831(b), ERISA § 732(b), PHS Act §§ 2722(b) and 2763. Although a health FSA is a group health plan within the meaning of Code §9832(a), ERISA § 733(a), and PHS Act § 2791(a), a health FSA may be considered to provide only excepted benefits if other group health plan coverage not limited to excepted benefits is made available for the year to employees by the employer, but only if the arrangement is structured so that the maximum benefit payable to any participant cannot exceed two times the participant’s salary reduction election for the arrangement for the year (or, if greater, cannot exceed $500 plus the amount of the participant’s salary reduction election). 26 C.F.R. §54.9831-1(c)(3)(v), 29 C.F.R. §2590.732(c)(3)(v), and 45 C.F.R. §146.145(c)(3)(v).
Novak: Most of the innovation in insurance and non-insured employee health plans for small businesses over the coming years is expected to be in “excepted benefits”, meaning that most of these Affordable Care Act provisions will not apply.
The Affordable Care Act contains certain market reforms that apply to group health plans (the market reforms).(2) In accordance with Code § 9831(a)(2) and ERISA §732(a),the market reforms do not apply to a group health plan that has fewer than two participants who are current employees on the first day of the plan year, and, in accordance with Code §9831(b), ERISA § 732(b), and PHS Act §§2722(b) and 2763, the market reforms also do not apply to a group health plan in relation to its provision of excepted benefits described in Code §9832(c), ERISA §733(c) and PHS Act §2791(c).(3) Excepted benefits include, among other things, accident-only coverage, disability income, certain limited-scope dental and vision benefits, certain long-term care benefits, and certain health FSAs.
Novak: This dollar limitation provision is the key that makes most traditional HRAs ineffective in 2014.
(b) PHS Act § 2713 which requires non-grandfathered group health plans (or health insurance issuers offering group health insurance plans) to provide certain preventive services without imposing any cost-sharing requirements for these services (the preventive services requirements).
The preamble to the interim final regulations implementing the annual dollar limit prohibition states that if an HRA is integrated with other coverage as part of a group health plan and the other coverage alone would comply with the annual dollar limit prohibition, the fact that benefits under the HRA by itself are limited does not fail to comply with the annual dollar limit prohibition because the combined benefit satisfies the requirements. Further, the preamble states that in the case of a standalone HRA that is limited to retirees, the exemption from the requirements of the Code and ERISA relating to the Affordable Care Act for plans with fewer than two current employees means that the retiree-only HRA is not subject to the annual dollar limit prohibition. 75 Fed. Reg. 37188, 37190-37191 (June 28, 2010).
On January 24, 2013, the Departments issued FAQs that address the application of the annual dollar limit prohibition to certain HRA arrangements (HRA FAQs).(6) In the HRA FAQs, the Departments state that an HRA is not integrated with primary health coverage offered by an employer unless, under the terms of the HRA, the HRA is available only to employees who are covered by primary group health plan coverage that is provided by the employer and that meets the annual dollar limit prohibition.
Novak: This describes an HRA that runs alongside an employer-sponsored group insurance plan. This strategy is popular today but will remain viable only in local markets where a competitive small group insurance market remains after 2014. We have no way of predicting this in advance.
(b) an employer-sponsored HRA may be treated as integrated with other coverage only if the employee receiving the HRA is actually enrolled in the coverage, and any HRA that credits additional amounts to an individual, when the individual is not enrolled in primary coverage meeting the annual dollar limit prohibition provided by the employer, will fail to comply with the annual dollar limit prohibition.
The HRA FAQs also state that the Departments anticipate that future guidance will provide that, whether or not an HRA is integrated with other group health plan coverage, unused amounts credited before January 1, 2014 consisting of amounts credited before January 1, 2013, and amounts that are credited in 2013 under the terms of an HRA as in effect on January 1, 2013, may be used after December 31, 2013 to reimburse medical expenses in accordance with those terms without causing the HRA to fail to comply with the annual dollar limit prohibition. If the HRA terms in effect on January 1, 2013 did not prescribe a set amount or amounts to be credited during 2013 or the timing for crediting such amounts, then the amounts credited may not exceed those credited for 2012 and may not be credited at a faster rate than the rate that applied during 2012.
Under the interim final rules implementing the annual dollar limit prohibition, a health FSA, as defined in Code § 106(c)(2), is not subject to the annual dollar limit prohibition. See 26 C.F.R. §54.9815-2711T(a)(2)(ii), 29 C.F.R. §2590.715-2711(a)(2)(ii), and 45 C.F.R. §147.126(a)(2)(ii). See Q&A 8 of this Technical Release limiting the exemption from the annual dollar limit prohibition to a health FSA that is offered through a Code § 125 plan.
Section 36B of the Code allows a premium tax credit to certain taxpayers who enroll (or whose family members enroll) in a qualified health plan (QHP) through an Affordable Insurance Exchange (referred to in this Technical Release as an Exchange, and also referred to in other published guidance as a Marketplace). The credit subsidizes a portion of the premiums for the QHP. In general, the premium tax credit may not subsidize coverage for an individual who is eligible for other minimum essential coverage. If the minimum essential coverage is eligible employer-sponsored coverage, however, an individual is treated as eligible for that coverage only if the coverage is affordable and provides minimum value or if the individual enrolls in the coverage.
Coverage provided through Code § 125 plans, employer payment plans, health FSAs, and HRAs are eligible employer-sponsored plans and, therefore, are minimum essential coverage, unless the coverage consists solely of excepted benefits. See Code § 5000A(f)(2) and Treas. Reg. §1.5000A-2, 78 Fed. Reg. 53646, 53658 (August 30, 2013).
Amounts newly made available for the current plan year under an HRA that is integrated with an eligible employer-sponsored plan and that an employee may use to pay premiums are counted for purposes of determining affordability of an eligible employer-sponsored plan under Code § 36B. See Minimum Value of Eligible Employer-Sponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit, 78 Fed. Reg. 25909, 25914 (May 3, 2013) (proposed regulations; to be codified, in part, once final, at 26 C.F.R. §1.36B-2(c)(3)(v)(A)(5)). Amounts newly made available for the current plan year under an HRA that is integrated with an eligible employer-sponsored plan are counted toward the plan’s minimum value percentage for that plan year if the amounts may be used only to reduce cost-sharing for covered medical expenses and the amount counted for this purpose is the amount of expected spending for health care costs in a benefit year. See Minimum Value of Eligible Employer-Sponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit, 78 Fed. Reg. 25909, 25916 (May 3, 2013) (proposed regulations; to be codified, in part, once final, at 26 C.F.R. §1.36B-6(c)(4), (c)(5)). See Q&A 11 of this Technical Release for more explanation of the application of these rules to HRAs and other arrangements.
Question 1: The HRA FAQs provide that an employer-sponsored HRA cannot be integrated with individual market coverage, and, therefore, an HRA used to purchase coverage on the individual market will fail to comply with the annual dollar limit prohibition. May other types of group health plans used to purchase coverage on the individual market be integrated with that individual market coverage for purposes of the annual dollar limit prohibition?
Answer 1: No. A group health plan, including an HRA, used to purchase coverage on the individual market is not integrated with that individual market coverage for purposes of the annual dollar limit prohibition.
For example, a group health plan, such as an employer payment plan, that reimburses employees for an employee’s substantiated individual insurance policy premiums must satisfy the market reforms for group health plans. However the employer payment plan will fail to comply with the annual dollar limit prohibition because (1) an employer payment plan is considered to impose an annual limit up to the cost of the individual market coverage purchased through the arrangement, and (2) an employer payment plan cannot be integrated with any individual health insurance policy purchased under the arrangement.
Question 2: How do the preventive services requirements apply to an HRA that is integrated with a group health plan?
Answer 2: Similar to the analysis of the annual dollar limit prohibition, an HRA that is integrated with a group health plan will comply with the preventive services requirements if the group health plan with which the HRA is integrated complies with the preventive services requirements.
Question 3: The HRA FAQs provide that an employer-sponsored HRA cannot be integrated with individual market coverage, and, therefore, an HRA used to purchase coverage on the individual market will fail to comply with the annual dollar limit prohibition. May a group health plan, including an HRA, used to purchase coverage on the individual market be integrated with that individual market coverage for purposes of the preventive services requirements?
Answer 3: No. A group health plan, including an HRA, used to purchase coverage on the individual market is not integrated with that individual market coverage for purposes of the preventive services requirements.
For example, a group health plan, such as an employer payment plan, that reimburses employees for an employee’s substantiated individual insurance policy premiums must satisfy the market reforms for group health plans. However, the employer payment plan will fail to comply with the preventive services requirements because (1) an employer payment plan does not provide preventive services without cost-sharing in all instances, and (2) an employer payment plan cannot be integrated with any individual health insurance policy purchased under the arrangement.
Question 4: Under what circumstances will an HRA be integrated with another group health plan for purposes of the annual dollar limit prohibition and the preventive services requirements?
Answer 4: An HRA will be integrated with a group health plan for purposes of the annual dollar limit prohibition and the preventive services requirements if it meets the requirements under either of the integration methods described below. Pursuant to this Technical Release, under both methods, integration does not require that the HRA and the coverage with which it is integrated share the same plan sponsor, the same plan document or governing instruments, or file a single Form 5500, if applicable.
An HRA is integrated with another group health plan for purposes of the annual dollar limit prohibition and the preventive services requirements if (1) the employer offers a group health plan (other than the HRA) to the employee that does not consist solely of excepted benefits; (2) the employee receiving the HRA is actually enrolled in a group health plan (other than the HRA) that does not consist solely of excepted benefits, regardless of whether the employer sponsors the plan (non-HRA group coverage); (3) the HRA is available only to employees who are enrolled in non-HRA group coverage, regardless of whether the employer sponsors the non-HRA group coverage (for example, the HRA may be offered only to employees who do not enroll in the employer’s group health plan but are enrolled in other non-HRA group coverage, such as a plan maintained by the employer of the employee’s spouse); (4) the HRA is limited to reimbursement of one or more of the following—co-payments, co-insurance, deductibles, and premiums under the non-HRA group coverage, as well as medical care (as defined under Code § 213(d)) that does not constitute essential health benefits; and (5) under the terms of the HRA, an employee (or former employee) is permitted to permanently opt out of and waive future reimbursements from the HRA at least annually and, upon termination of employment, either the remaining amounts in the HRA are forfeited or the employee is permitted to permanently opt out of and waive future reimbursements from the HRA. This opt-out feature is required because the benefits provided by the HRA generally will constitute minimum essential coverage under Code § 5000A (see Q&A 10 of this Technical Release) and will therefore preclude the individual from claiming a Code § 36B premium tax credit.
Alternatively, an HRA that is not limited with respect to reimbursements as required under the integration method expressed above is integrated with a group health plan for purposes of the annual dollar limit prohibition and the preventive services requirements if (1) the employer offers a group health plan to the employee that provides minimum value pursuant to Code § 36B(c)(2)(C)(ii); (2) the employee receiving the HRA is actually enrolled in a group health plan that provides minimum value pursuant to Code § 36B(c)(2)(C)(ii), regardless of whether the employer sponsors the plan (non-HRA MV group coverage); (3) the HRA is available only to employees who are actually enrolled in non-HRA MV group coverage, regardless of whether the employer sponsors the non-HRA MV group coverage (for example, the HRA may be offered only to employees who do not enroll in the employer’s group health plan but are enrolled in other non-HRA MV group coverage, such as a plan maintained by an employer of the employee’s spouse); and (4) under the terms of the HRA, an employee (or former employee) is permitted to permanently opt out of and waive future reimbursements from the HRA at least annually, and, upon termination of employment, either the remaining amounts in the HRA are forfeited or the employee is permitted to permanently opt out of and waive future reimbursements from the HRA.
Facts. Employer A sponsors a group health plan and an HRA for its employees. Employer A’s HRA is available only to employees who are either enrolled in its group health plan or in non-HRA group coverage through a family member. Employer A’s HRA is limited to reimbursement of co-payments, co-insurance, deductibles, and premiums under Employer A’s group health plan or other non-HRA group coverage (as applicable), as well as medical care (as defined under Code § 213(d)) that does not constitute essential health benefits. Under the terms of Employer A’s HRA, an employee is permitted to permanently opt out of and waive future reimbursements from the HRA both upon termination of employment and at least annually.
Employer A employs Employee X. Employee X chooses to enroll in non-HRA group coverage sponsored by Employer B, the employer of Employee X’s spouse, instead of enrolling in Employer A’s group health plan. Employer A and Employer B are not treated as a single employer under Code § 414(b), (c), (m), or (o). Employee X attests to Employer A that he is covered by Employer B’s non-HRA group coverage. When seeking reimbursement under Employer A’s HRA, Employee X attests that the expense for which he seeks reimbursement is a co-payment, co-insurance, deductible, or premium under Employer B’s non-HRA group coverage or medical care (as defined under Code § 213(d)) that is not an essential health benefit.
Conclusion. Employer A’s HRA is integrated with Employer B’s non-HRA group coverage for purposes of the annual dollar limit prohibition and the preventive services requirements.
Facts. Employer A sponsors a group health plan that provides minimum value and an HRA for its employees. Employer A’s HRA is available only to employees who are either enrolled in its group health plan or in non-HRA MV group coverage through a family member. Under the terms of Employer A’s HRA, an employee is permitted to permanently opt out of and waive future reimbursements from the HRA both upon termination of employment and at least annually.
Employer A employs Employee X. Employee X chooses to enroll in non-HRA MV group coverage sponsored by Employer B, the employer of Employee X’s spouse, instead of enrolling in Employer A’s group health plan. Employer A and Employer B are not treated as a single employer under Code § 414(b), (c), (m), or (o). Employee X attests to Employer A that he is covered by Employer B’s non-HRA MV group coverage and that the coverage provides minimum value.
Conclusion. Employer A’s HRA is integrated with Employer B’s non-HRA MV group coverage for purposes of the annual dollar limit prohibition and the preventive services requirements.
Question 5: May an employee who is covered by both an HRA and a group health plan with which the HRA is integrated, and who then ceases to be covered under the group health plan that is integrated with the HRA, be permitted to use the amounts remaining in the HRA?
Answer 5: Whether or not an HRA is integrated with other group health plan coverage, unused amounts that were credited to an HRA while the HRA was integrated with other group health plan coverage may be used to reimburse medical expenses in accordance with the terms of the HRA after an employee ceases to be covered by other integrated group health plan coverage without causing the HRA to fail to comply with the market reforms. Note that coverage provided through an HRA, other than coverage consisting solely of excepted benefits, is an eligible employer-sponsored plan and, therefore, minimum essential coverage under Code § 5000A.
Question 6: Does an HRA impose an annual limit in violation of the annual dollar limit prohibition if the group health plan with which an HRA is integrated does not cover a category of essential health benefits and the HRA is available to cover that category of essential health benefits (but limits the coverage to the HRA’s maximum benefit)?
However, under the integration method available for plans that provide minimum value described under Q&A 4 of this Technical Release, if a group health plan provides minimum value under Code § 36B(c)(2)(C)(ii), an HRA integrated with that group health plan will not be treated as imposing an annual limit in violation of the annual dollar limit prohibition, even if that group health plan does not cover a category of essential health benefits and the HRA is available to cover that category of essential health benefits and limits the coverage to the HRA’s maximum benefit.
Answer 7: The market reforms do not apply to a group health plan in relation to its provision of benefits that are excepted benefits. Health FSAs are group health plans but will be considered to provide only excepted benefits if the employer also makes available group health plan coverage that is not limited to excepted benefits and the health FSA is structured so that the maximum benefit payable to any participant cannot exceed two times the participant’s salary reduction election for the health FSA for the year (or, if greater, cannot exceed $500 plus the amount of the participant’s salary reduction election).(8) See 26 C.F.R. §54.9831-1(c)(3)(v), 29 C.F.R. §2590.732(c)(3)(v), and 45 C.F.R. § 146.145(c)(3)(v). Therefore, a health FSA that is considered to provide only excepted benefits is not subject to the market reforms.
The Departments understand that questions have arisen as to whether HRAs that are not integrated with a group health plan may be treated as a health FSA as defined in Code §106(c)(2). Notice 2002-45, 2002-02 CB 93, states that, assuming that the maximum amount of reimbursement which is reasonably available to a participant under an HRA is not substantially in excess of the value of coverage under the HRA, an HRA is a health FSA as defined in Code § 106(c)(2). This statement was intended to clarify the rules limiting the payment of long-term care expenses by health FSAs. The Departments are also considering whether an HRA may be treated as a health FSA for purposes of the exclusion from the annual dollar limit prohibition. In any event, the treatment of an HRA as a health FSA that is not excepted benefits would not exempt the HRA from compliance with the other market reforms, including the preventive services requirements, which the HRA would fail to meet because the HRA would not be integrated with a group health plan. This analysis applies even if an HRA reimburses only premiums.
Question 8: The interim final regulations regarding the annual dollar limit prohibition contain an exemption for health FSAs (as defined in Code § 106(c)(2)). See 26 C.F.R. §54.9815-2711T(a)(2)(ii), 29 C.F.R. §2590.715-2711(a)(2)(ii), and 45 C.F.R. §147.126(a)(2)(ii). Does this exemption apply to a health FSA that is not offered through a Code § 125 plan?
Answer 8: No. The Departments intended for this exemption from the annual dollar limit prohibition to apply only to a health FSA that is offered through a Code §125 plan and thus subject to a separate annual limitation under Code § 125(i). There is no similar limitation on a health FSA that is not part of a Code § 125 plan, and thus no basis to imply that it is not subject to the annual dollar limit prohibition.
To clarify this issue, the Departments intend to amend the annual dollar limit prohibition regulations to conform to this Q&A 8 retroactively applicable as of September 13, 2013. As a result, a health FSA that is not offered through a Code § 125 plan is subject to the annual dollar limit prohibition and will fail to comply with the annual dollar limit prohibition.
Question 9: Are benefits under an employee assistance program or EAP considered to be excepted benefits?
Answer 9:The Departments intend to amend 26 C.F.R. §54.9831-1(c), 29 C.F.R. §2590.732(c), and 45 C.F.R. §146.145(c) to provide that benefits under an employee assistance program or EAP are considered to be excepted benefits, but only if the program does not provide significant benefits in the nature of medical care or treatment. Excepted benefits are not subject to the market reforms and are not minimum essential coverage under Code § 5000A. Until rulemaking is finalized, through at least 2014, the Departments will consider an employee assistance program or EAP to constitute excepted benefits only if the employee assistance program or EAP does not provide significant benefits in the nature of medical care or treatment. For this purpose, employers may use a reasonable, good faith interpretation of whether an employee assistance program or EAP provides significant benefits in the nature of medical care or treatment.
Question 10: Is an HRA that has fewer than two participants who are current employees on the first day of the plan year (for example, a retiree-only HRA) minimum essential coverage for purposes of Code §§ 5000A and 36B?
Question 11: How are amounts newly made available under an HRA treated for purposes of Code § 36B?
Answer 11: An individual is not eligible for individual coverage subsidized by the Code § 36B premium tax credit if the individual is eligible for employer-sponsored coverage that is affordable (premiums for self-only coverage do not exceed 9.5 percent of household income) and that provides minimum value (the plan’s share of costs is at least 60 percent). If an employer offers an employee both a primary eligible employer-sponsored plan and an HRA that would be integrated with the primary plan if the employee enrolled in the plan, amounts newly made available for the current plan year under the HRA may be considered in determining whether the arrangement satisfies either the affordability requirement or the minimum value requirement, but not both. Amounts newly made available for the current plan year under the HRA that an employee may use only to reduce cost-sharing for covered medical expenses under the primary employer-sponsored plan count only toward the minimum value requirement. See Minimum Value of Eligible Employer-Sponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit, 78 Fed. Reg. 25909, 25916 (May 3, 2013) (proposed regulations, to be codified, in part, once final, at 26 C.F.R.§1.36B-6(c)(4), (c)(5)). Amounts newly made available for the current plan year under the HRA that an employee may use to pay premiums or to pay both premiums and cost-sharing under the primary employer-sponsored plan count only toward the affordability requirement. See Minimum Value of Eligible Employer-Sponsored Plans and Other Rules Regarding the Health Insurance Premium Tax Credit, 78 Fed. Reg. 25909, 25914 (May 3, 2013) (proposed regulations; to be codified, in part, once final, at 26 C.F.R. §1.36B-2(c)(3)(v)(A)(5)).
Even if an HRA is integrated with a plan offered by another employer for purposes of the annual dollar limit prohibition and the preventive services requirements (see Q&A 4 of this Technical Release), the HRA does not count toward the affordability or minimum value requirement of the plan offered by the other employer. Additionally, if an employer offers an HRA on the condition that the employee does not enroll in non-HRA coverage offered by the employer and instead enrolls in non-HRA coverage from a different source, the HRA does not count in determining whether the employer’s non-HRA coverage satisfies either the affordability or minimum value requirement.
For purposes of the Code § 36B premium tax credit, the requirements of affordability and minimum value do not apply if an employee enrolls in any employer-sponsored minimum essential coverage, including coverage provided through a Code §125 plan, an employer payment plan, a health FSA, or an HRA, but only if the coverage offered does not consist solely of excepted benefits. See 26 C.F.R.§1.36B-2(c)(3)(vii). If an employee enrolls in any employer-sponsored minimum essential coverage, the employee is ineligible for individual coverage subsidized by the Code § 36B premium tax credit.
Question 12: Section 125(f)(3) of the Code, effective for taxable years beginning after December 31, 2013, provides that the term “qualified benefit” does not include any QHP (as defined in ACA § 1301(a)) offered through an Exchange.(11) This prohibits an employer from providing a QHP offered through an Exchange as a benefit under the employer’s Code §125 plan. Some states have already established Exchanges and employers in those states may have Code § 125 plan provisions that allow employees to enroll in health coverage through the Exchange as a benefit under a Code §125 plan. If the employer’s Code §125 plan operates on a plan year other than a calendar year, may the employer continue to provide the Exchange coverage through a Code §125 plan after December 31, 2013?
Answer 12: For Code § 125 plans that as of September 13, 2013 operate on a plan year other than a calendar year, the restriction under Code § 125(f)(3) will not apply before the first plan year of the Code § 125 plan that begins after December 31, 2013. Thus, for the remainder of a plan year beginning in 2013, a QHP provided through an Exchange as a benefit under a Code § 125 plan will not result in all benefits provided under the Code § 125 plan being taxable. However, individuals may not claim a Code § 36B premium tax credit for any month in which the individual was covered by a QHP provided through an Exchange as a benefit under a Code § 125 plan.
This Technical Release applies for plan years beginning on and after January 1, 2014, but the guidance provided in this Technical Release may be applied for all prior periods. If legislative action by any State, local, or Indian tribal government entity is necessary to modify the terms of a pre-existing HRA, a health FSA that does not qualify as excepted benefits, an employer payment plan, or other similar arrangement, sponsored by any State, local, or Indian tribal government entity, as an employer, to avoid a failure to comply with the market reforms (including action to terminate such arrangement) and such action may only be taken by a State, local, or Indian tribal government entity legislative body, the applicability date of the portions of this Technical Release under which such arrangement would otherwise fail to comply with the market reforms is extended to the later of (1) January 1, 2014, or (2) the first day of the first plan year following the first close of a regular legislative session of the applicable legislative body after September 13, 2013.
The Departments have coordinated on the guidance and other information contained in this Technical Release. The guidance in this Technical Release is being issued in substantially identical form by the Treasury Department, and guidance is being issued by HHS to reflect that HHS concurs in the application of the laws under its jurisdiction as set forth in this Technical Release. Questions concerning the information contained in this Technical Release may be directed to the IRS at 202-927-9639 begin_of_the_skype_highlighting 202-927-9639 FREE end_of_the_skype_highlighting, the DOL’s Office of Health Plan Standards and Compliance Assistance at 202-693-8335 begin_of_the_skype_highlighting 202-693-8335 FREE end_of_the_skype_highlighting, or HHS at 410-786-1565 begin_of_the_skype_highlighting 410-786-1565 FREE end_of_the_skype_highlighting. Additional information for employers regarding the Affordable Care Act is available at www.healthcare.gov, www.dol.gov/ebsa/healthreform, and at www.business.usa.gov.
↑ The “Affordable Care Act” refers to the Patient Protection and Affordable Care Act (enacted March 23, 2010, Pub. L. No. 111-148) (ACA), as amended by the Health Care and Education Reconciliation Act of 2010 (enacted March 30, 2010, Pub. L. No. 111-152), and as further amended by the Department of Defense and Full-Year Continuing Appropriations Act, 2011 (enacted April 15, 2011, Pub. L. No. 112-10).
↑ Section 1001 of the ACA added new PHS Act §§ 2711-2719. Section 1563 of the ACA (as amended by ACA §10107(b)) added Code §9815(a) and ERISA § 715(a) to incorporate the provisions of part A of title XXVII of the PHS Act into the Code and ERISA, and to make them applicable to group health plans and health insurance issuers providing health insurance coverage in connection with group health plans. The PHS Act sections incorporated by these references are sections 2701 through 2728. Accordingly, these referenced PHS Act sections (i.e., the market reforms) are subject to shared interpretive jurisdiction by the Departments.
↑ See the preamble to the Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the Patient Protection and Affordable Care Act, 75 Fed. Reg. 34538, 34539 (June 17, 2010). See also Affordable Care Act Implementation FAQs Part III, Question 1, available at http://www.dol.gov/ebsa/faqs/faq-aca3.html and at http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs3.html.
↑ The Departments previously addressed HRAs and the requirements under PHS Act § 2715 (summary of benefits and coverage and uniform glossary). See 77 Fed. Reg. 8668, 8670-8671 (February 14, 2012); see also Affordable Care Act Implementation FAQs Part VIII, Question 6, available at http://www.dol.gov/ebsa/faqs/faq-aca8.html and at http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html and see page 1 of the Instruction Guide for Group Coverage, available at http://www.dol.gov/ebsa/pdf/SBCInstructionsGroup.pdf.
↑ See ACA § 1302(b) for the definition of “essential health benefits”.
↑ See Affordable Care Act Implementation FAQs Part XI, available at http://www.dol.gov/ebsa/faqs/faq-aca11.html and at http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs11.html.
↑ Small group market plans will not be considered to fail to meet qualified health plan certification standards based solely on the fact that they exclude coverage of pediatric dental benefits that are otherwise required under ACA § 1302(b)(1)(J) where a stand-alone dental plan is also available. See ACA § 1302(b)(4)(F) and Question 5, CMS QHP Dental Frequently Asked Questions, May 31, 2013, https://www.regtap.info/uploads/library/PM_QHP_DentalFAQsV2_5cr_060313.pdf.
↑ An HRA is paid for solely by the employer and not provided pursuant to salary reduction election or otherwise under a Code § 125 plan. IRS Notice 2002-45, 2002-02 CB 93.
↑ Under the interim final rules implementing the annual dollar limit prohibition, a health FSA is not subject to the annual dollar limit prohibition, regardless of whether the health FSA is considered to provide only excepted benefits. See 26 C.F.R. §54.9815-2711T(a)(2)(ii), 29 C.F.R. §2590.715-2711(a)(2)(ii), and 45 C.F.R. §147.126(a)(2)(ii). See Q&A 8 of this Technical Release regarding the restriction of the exemption from the annual dollar limit prohibition to a health FSA that is offered through a Code § 125 plan.
↑ See the preamble to the Interim Final Rules for Group Health Plans and Health Insurance Coverage Relating to Status as a Grandfathered Health Plan Under the Patient Protection and Affordable Care Act, 75 Fed. 34538, 34539 (June 17, 2010).
↑ This rule does not apply with respect to any employee if the employee’s employer is a qualified employer (as defined in ACA § 1312(f)(2)) offering the employee the opportunity to enroll through an Exchange in a qualified health plan in a group market. See Code § 125(f)(3)(B).
What are the health care exchanges?
Do small business owners receive a penalty for uninsured workers?
Is it cheaper to take the penalty than offer employees coverage?
What are the tax implications to small businesses?
To help editors and business reporters cover the issues important to their readers, as well as uncover some unusual slants for articles, the New Jersey Society of Certified Public Accountants (NJSCPA) is holding a free webinar on Monday, November 4, from 11:15am to noon. Interested journalists can register for free at https://cc.readytalk.com/cc/s/registrations/new?cid=eywxjklzve6t.
The webinar will be presented by NJSCPA member Tony Novak. Mr. Novak is an accountant and adviser serving individual and small business clients. He has taught financial planning at Delaware Valley College; hosted a radio show covering various financial planning topics; and written the Employer’s Guide to Health Reimbursement Arrangements and the Small Business Owner’s Guide to Employee Benefit Plans. Mr. Novak is a member of the NJSCPA Health Care and Personal Financial Planning interest groups. He has an M.B.A. from Temple University and a Master’s In Taxation from Villanova University.
The New Jersey Society of Certified Public Accountants, with more than 15,000 members, represents the interests of the accounting profession and advances the financial well-being of the people of New Jersey. The NJSCPA plays a leadership role in supporting the profession by providing members with educational resources, access to shared knowledge and a continuing effort to create and expand professional opportunities.
A simple packaged solution to help small business owners and advisers comply with 2015 tax law changes for employer-provided health plans and mitigate potentially severe tax penalties.
Health Savings Account (HSA) in addition to a Flexible Spending Account (FSA) with carry-over benefits from the prior year.
The kit helps employers minimize the tax and legal risks of using the strategies outlined in IRS notices 2013-54 and 2015-17. NOTE THAT NO ASURANCE IS OFFERED THAT SMALL BUSINSSES WILL AVOID ANY TAX PENALTY. The approach incorporated by the Toolkit materials is suggested as a good faith compliance measure.
Without corrective action, small businesses run the risk of penalties for improper wage tax informational filings as well as the severe $100 per employee per day penalty under IRC 4980D.
The compliance and tax mitigation strategy is to address the offending health plan as soon as possible by amending or terminating the plan (or converting it from an employee benefit plan to a payroll system accommodation and then addressing penalty relief provisions built into IRC 4980D.
Copy of engagement agreement and fair use agreement.
The tools are drafted in the Office 2016 (Office 365) version of Microsoft Word.
The toolkit is available to directly to small businesses without charge. The kit is not available to accountants, advisers or agents at this time but is expected to be available to all soon.
For background information see “Novak’s 2015 small business health plan tax article bibliography”. The bibliography is meant as a free public resource and the toolkit is meant as a solicitation of commercial service.
Federal tax law allows certain small or fringe benefits to made available to employees. The term “fringe benefits” refers to the list of qualified benefits not specifically covered by other sections of the tax code. For example, employee health benefits are a qualified employee benefit covered by other sections of the tax code and therefore not typically considered to be a fringe benefit. The cost of a qualified fringe benefit is tax deductible to the employer but is not taxable income to the employee.
Freedom Benefits regularly includes both qualified and non-qualified employee fringe benefits in plans designed for small businesses. The benefits are typically customized based on the details of each sponsoring employer.
Fringe benefits are addressed by Section 132 of the Internal Revenue Code. This section of the code as it existed on the date of publication, April 2, 2012, is reproduced in its entirely below.
(8)qualified military base realignment and closure fringe.
(2)the employer incurs no substantial additional cost (including forgone revenue) in providing such service to the employee (determined without regard to any amount paid by the employee for such service).
(B)in the case of services, 20 percent of the price at which the services are being offered by the employer to customers.
(ii)the aggregate sale price of such property.
(ii)the employer’s experience during a representative period.
(B)the price at which such property or services are being offered by the employer to customers.
The term “qualified property or services” means any property (other than real property and other than personal property of a kind held for investment) or services which are offered for sale to customers in the ordinary course of the line of business of the employer in which the employee is performing  services.
For purposes of this section, the term “working condition fringe” means any property or services provided to an employee of the employer to the extent that, if the employee paid for such property or services, such payment would be allowable as a deduction under section 162 or 167.
The term “de minimis fringe” means any property or service the value of which is (after taking into account the frequency with which similar fringes are provided by the employer to the employer’s employees) so small as to make accounting for it unreasonable or administratively impracticable.
(B)revenue derived from such facility normally equals or exceeds the direct operating costs of such facility.
The preceding sentence shall apply with respect to any highly compensated employee only if access to the facility is available on substantially the same terms to each member of a group of employees which is defined under a reasonable classification set up by the employer which does not discriminate in favor of highly compensated employees. For purposes of subparagraph (B), an employee entitled under section 119 to exclude the value of a meal provided at such facility shall be treated as having paid an amount for such meal equal to the direct operating costs of the facility attributable to such meal.
(A)Transportation in a commuter highway vehicle if such transportation is in connection with travel between the employee’s residence and place of employment.
(D)Any qualified bicycle commuting reimbursement.
(C)the applicable annual limitation in the case of any qualified bicycle commuting reimbursement.
In the case of any month beginning on or after the date of the enactment of this sentence and before January 1, 2012, subparagraph (A) shall be applied as if the dollar amount therein were the same as the dollar amount in effect for such month under subparagraph (B).
For purposes of this subsection, the term “qualified transportation fringe” includes a cash reimbursement by an employer to an employee for a benefit described in paragraph (1). The preceding sentence shall apply to a cash reimbursement for any transit pass only if a voucher or similar item which may be exchanged only for a transit pass is not readily available for direct distribution by the employer to the employee.
No amount shall be included in the gross income of an employee solely because the employee may choose between any qualified transportation fringe (other than a qualified bicycle commuting reimbursement) and compensation which would otherwise be includible in gross income of such employee.
(ii)provided by any person in the business of transporting persons for compensation or hire if such transportation is provided in a vehicle meeting the requirements of subparagraph (B)(i).
(II)on trips during which the number of employees transported for such purposes is at least 1/2 of the adult seating capacity of such vehicle (not including the driver).
The term “qualified parking” means parking provided to an employee on or near the business premises of the employer or on or near a location from which the employee commutes to work by transportation described in subparagraph (A), in a commuter highway vehicle, or by carpool. Such term shall not include any parking on or near property used by the employee for residential purposes.
Transportation referred to in paragraph (1)(A) shall be considered to be provided by an employer if such transportation is furnished in a commuter highway vehicle operated by or for the employer.
For purposes of this subsection, the term “employee” does not include an individual who is an employee within the meaning of section 401(c)(1).
(i)Qualified bicycle commuting reimbursement The term “qualified bicycle commuting reimbursement” means, with respect to any calendar year, any employer reimbursement during the 15-month period beginning with the first day of such calendar year for reasonable expenses incurred by the employee during such calendar year for the purchase of a bicycle and bicycle improvements, repair, and storage, if such bicycle is regularly used for travel between the employee’s residence and place of employment.
(ii)Applicable annual limitation The term “applicable annual limitation” means, with respect to any employee for any calendar year, the product of $20 multiplied by the number of qualified bicycle commuting months during such year.
(II)does not receive any benefit described in subparagraph (A), (B), or (C) of paragraph (1).
(ii)the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting “calendar year 1998” for “calendar year 1992”.
In the case of any taxable year beginning in a calendar year after 2002, clause (ii) shall be applied by substituting “calendar year 2001” for “calendar year 1998” for purposes of adjusting the dollar amount contained in paragraph (2)(A).
If any increase determined under subparagraph (A) is not a multiple of $5, such increase shall be rounded to the next lowest multiple of $5.
For purposes of this section, the terms “working condition fringe” and “de minimis fringe” shall not include any qualified transportation fringe (determined without regard to paragraph (2)).
For purposes of this section, the term “qualified moving expense reimbursement” means any amount received (directly or indirectly) by an individual from an employer as a payment for (or a reimbursement of) expenses which would be deductible as moving expenses under section 217 if directly paid or incurred by the individual. Such term shall not include any payment for (or reimbursement of) an expense actually deducted by the individual in a prior taxable year.
(B)any widow or widower of any individual who died while employed by such employer in such line of business or while an employee within the meaning of subparagraph (A).
Any use by the spouse or a dependent child of the employee shall be treated as use by the employee.
(ii)both of whose parents are deceased and who has not attained age 25.
For purposes of the preceding sentence, any child to whom section 152(e) applies shall be treated as the dependent of both parents.
Any use of air transportation by a parent of an employee (determined without regard to paragraph (1)(B)) shall be treated as use by the employee.
(2)neither of such employers incurs any substantial additional costs (including foregone revenue) in providing such service or pursuant to such agreement.
Paragraphs (1) and (2) of subsection (a) shall apply with respect to any fringe benefit described therein provided with respect to any highly compensated employee only if such fringe benefit is available on substantially the same terms to each member of a group of employees which is defined under a reasonable classification set up by the employer which does not discriminate in favor of highly compensated employees.
(ii)employees in the leased section shall be treated as employees of the person operating the department store.
For purposes of subparagraph (A), a leased section of a department store is any part of a department store where over-the-counter sales of property are made under a lease or similar arrangement where it appears to the general public that individuals making such sales are employed by the person operating the department store.
For purposes of subsection (a)(3), qualified automobile demonstration use shall be treated as a working condition fringe.
(ii)there are substantial restrictions on the personal use of such automobile by such salesman.
Gross income shall not include the value of any on-premises athletic facility provided by an employer to his employees.
(iii)substantially all the use of which is by employees of the employer, their spouses, and their dependent children (within the meaning of subsection (h)).
then, for purposes of applying paragraph (1) of subsection (a) to such no-additional-cost service provided to such employees, such qualified affiliate shall be treated as engaged in the same line of business as such other member.
For purposes of this paragraph, the term “qualified affiliate” means any corporation which is predominantly engaged in airline-related services.
(iv)Flight planning and weather analysis.
(v)Restaurants and gift shops located at an airport.
(vi)Such other similar services provided to the airline as the Secretary may prescribe.
For purposes of this paragraph, the term “affiliated group” has the meaning given such term by section 1504(a).
For purposes of this section, the term “highly compensated employee” has the meaning given such term by section 414(q).
For purposes of subsection (b), the transportation of cargo by air and the transportation of passengers by air shall be treated as the same service.
Amounts paid or expenses incurred by the employer for education or training provided to the employee which are not excludable from gross income under section 127 shall be excluded from gross income under this section if (and only if) such amounts or expenses are a working condition fringe.
For purposes of this section (other than subsection (c)(2)), the term “customers” shall only include customers who are not employees.
This section (other than subsections (e) and (g)) shall not apply to any fringe benefits of a type the tax treatment of which is expressly provided for in any other section of this chapter.
For purposes of this section, the term “qualified retirement planning services” means any retirement planning advice or information provided to an employee and his spouse by an employer maintaining a qualified employer plan.
Subsection (a)(7) shall apply in the case of highly compensated employees only if such services are available on substantially the same terms to each member of the group of employees normally provided education and information regarding the employer’s qualified employer plan.
For purposes of this subsection, the term “qualified employer plan” means a plan, contract, pension, or account described in section 219(g)(5).
The term “qualified military base realignment and closure fringe” means 1 or more payments under the authority of section 1013 of the Demonstration Cities and Metropolitan Development Act of 1966 (42 U.S.C. 3374) (as in effect on the date of the enactment of the American Recovery and Reinvestment Tax Act of 2009).
With respect to any property, such term shall not include any payment referred to in paragraph (1) to the extent that the sum of all of such payments related to such property exceeds the maximum amount described in subsection (c) of such section (as in effect on such date).

References: § 213
 § 9832
 § 733
 § 2791
 §106
 §2510
 § 213
 §1
 § 125
 § 125
 § 125
 §125
 §125
 § 9831
 § 732
 §9832
 § 733
 § 2791
 §54
 §2590
 §146
 § 9831
 §732
 §9831
 § 732
 §9832
 §733
 §2791
 § 2713
 § 106
 §54
 §2590
 §147
 § 125
 § 125
 § 5000
 §1
 § 36
 §1
 §1
 § 213
 § 5000
 § 36
 § 36
 § 36
 § 213
 § 414
 § 213
 § 414
 § 5000
 § 36
 §54
 §2590
 § 146
 §106
 § 106
 § 106
 §54
 §2590
 §147
 § 125
 §125
 § 125
 § 125
 § 125
 §54
 §2590
 §146
 § 5000
 § 36
 § 36
 §1
 § 36
 §125
 § 36
 § 1301
 §125
 § 125
 §125
 §125
 §125
 § 125
 § 125
 § 125
 § 125
 § 125
 § 36
 § 125
 §10107
 §9815
 § 715
 § 2715
 § 1302
 § 1302
 § 1302
 § 125
 §54
 §2590
 §147
 § 125
 § 1312
 § 125