Same Sex
Marriage
Guidance
- Impact on
Employee
Benefits - Page 1
Reducing Health
Care Costs
Through HSAs
- Page 2
Important PPACA
Notices that Every
Employer Needs to
Know About
- Page 4
Governmental guidance is beginning to
be released in the wake of the Supreme
Court’s decision in United States v.
Windsor. The purpose of this article is
to summarize the current guidance and
provide initial actions steps[1] for plan
sponsors.
Background
The Defense of Marriage Act (“DOMA”)
is a federal law. Section 3 of DOMA
states “the word ‘marriage’ means only
a legal union between one man and one
woman as husband and wife, and the
word “spouse” refers only to a person of
the opposite sex who is a husband or a
wife.” On June 26, 2013, the Supreme
Court, in a 5-4 vote, held Section 3 of
DOMA unconstitutional because it
violates principles of equal protection.[2]
IRS
The IRS recently issued Revenue Ruling
2013-17. The Ruling is effective as
of September 16, 2013. The Ruling
Benefit
Insights
January 2014
A Newsletter for Clients and Friends of
BancorpSouth Insurance Services, Inc.
Same Sex Marriage
Guidance - Impact on
Employee Benefits
By: Andy Impastato, Vice President – Legal & Compliance, BancorpSouth
Insurance Services, Inc.
addressed the following issues solely in
the context of Federal tax purposes:
1. Whether the terms “spouse,”
“husband and wife,” “husband” and
“wife” include an individual married
to a person of the same sex, if the
individuals are lawfully married under
state law, and whether, for those
same purposes, the term “marriage”
includes such a marriage between
individuals of the same sex.
Yes. The term “spouse” (and husband/
wife) includes an individual married to a
person of the same sex if the individuals
are lawfully married under state law.
Also, the term “marriage” includes a
same-sex marriage. State law includes
any domestic or foreign jurisdiction
having the legal authority to sanction
marriages.
2. Whether the IRS recognizes a
marriage of same-sex individuals
validly entered into in a state whose
laws authorize the marriage of two
individuals of the same sex even if
the state in which they are domiciled
does not recognize the validity of
same-sex marriages.
Yes. The IRS adopted a general rule
recognizing a marriage of same-sex
individuals that was validly entered
into in a state[3] whose laws authorize
the marriage of two individuals of the
same sex even if the married couple
is domiciled in a state that does not
recognize same-sex marriages. This is
known as the “place of celebration rule.”
3. Whether the terms “spouse,”
“husband and wife,” “husband” and
“wife” include individuals (whether
of the opposite sex or same sex)
who have entered into a registered
domestic partnership, civil union
or other similar formal relationship
recognized under state law that
is not denominated as a marriage
under the laws of that state, and
whether, for those same purposes,
continued on page 3
Welcome to the BancorpSouth Insurance
Services, Inc. Newsletter!
We are pleased to present to you our agency newsletter. This newsletter is
designed to give you timely and important information regarding employee
benefits, government regulations, new products, and other areas of interest
to employers and their employees. We value you, your employees, and your
business and continue to strive to provide you with the very best products and
service available.
Thank you again for your business.
To locate an office near
you, please visit us
online at www.bxsi.com
or contact us at
info@bxsi.com.
Reducing Health Care Costs
Through HSAs
A recent survey looked at a major
employer in the United States offering a
single option high deductible health plan
(HDHP) with a health savings account
(HSA) for all employees. The study
observed and analyzed the employer’s
data over a span of five years.
During the initial year of implementing
the HSA, the employer’s aggregated
spending for health care was reduced
by more than $525 per worker. The
study showed a significant reduction in
spending during the first year of the HSA
plan including pharmacy, total claims
categories and medical costs. In addition
to this, the impact of the cost savings
was higher during the initial year and
remained steady at a slightly lower pace
over the following three years.
Total spending was reduced by
approximately 25 percent during the first
year for the full-replacement HSA plan.
During the first year of implementing the
plan there was a significant reduction
for each category of health spending.
Laboratory services and prescription
drug costs were the two categories with
the largest declines. Laboratory services
spending decreased by more than 35
percent and prescription drug spending
decreased by more than 30 percent.
When experts looked closely at each
component of the spending study
separately, they realized laboratory and
pharmacy costs were the two categories
that were lower over the span of four
years after the adoption of the HSA
plan. During the first year of the HSA
plan, individuals’ pharmacy costs were
reduced between 40 percent and 47
percent.
After replacing their current benefit
offering with the high deductible health
plan and HSA option, the employer
experienced a reduction in their
overall health care costs. This success
is attributable to holding employees
accountable and placing them in control
of their own health care decisions.
2014 HSA Limits
Reflecting adjustments for inflation and
cost of living, the contribution limits
to health savings accounts (HSAs) and
out-of-pocket spending under a high
deductible health plan will increase in
2014.
The Internal Revenue Service (IRS)
recently announced HSA contribution
limits will raise from $3,250 in 2013 to
$3,300 for individuals with self-only
coverage, and from $6,450 to $6,550
for family coverage. HSA catch-up
contributions for those aged 55 and older
will remain at $1,000.
High deductible health plan maximum
out-of-pocket expenses including
deductibles, co-payments and other
amounts other than premiums will
increase from $6,250 to $6,350 for
individuals and from $12,500 to $12,700
for families. There will be no change
in HDHP minimum deductibles, which
are limited to $1,250 for individuals and
$2,500 for families.
The increases of $50 in contribution
limits for individuals and $100 for
families, and $100 and $200 for out-ofpocket maximums are slightly lower
than those from 2012 to 2013. This is
in part due to a similarly lower inflation
rate calculated for 2014. In the previous
year, the high inflation rate caused
contribution limits to increase by $150
for individuals and $200 for families;
maximum out-of-pocket spending by
$200 and $400; and HDHP minimum
deductibles by $50 and $100.
Contributors younger than 65 years old,
with the exception of the disabled, must
be reminded to use their HSA funds
strictly for qualified medical expenses.
Non-qualified spending will be subjected
The study showed
a significant
reduction in
spending during
the first year of the
HSA plan including
pharmacy, total
claims categories
and medical costs.
not only to a 20 percent penalty but also
to income tax.
Under the Patient Protection and
Affordable Care Act (PPACA), also known
as health care reform, parents can add
children up to age 26 to their medical
plans. Children include sons, daughters,
stepsons or stepdaughters of the
taxpayer, or eligible foster children of the
taxpayer. An individual who is legally
adopted by the taxpayer or placed with
the taxpayer for legal adoption shall be
treated as a child by blood. An eligible
foster child is an individual who is placed
with the taxpayer by an authorized
placement agency or by judgment,
decree or other order of any court of
competent jurisdiction.
Before implementing changes to your
benefit offering, make sure to fully
discuss and evaluate the impact on
your workforce. For more information
on health savings accounts, contact
your BancorpSouth Insurance Services
representative.
continued from page 1 ... Same Sex Marriage Guidance - Impact on
Employee Benefits
the term “marriage” includes such
relationships.
No. The terms “spouse,” “husband and
wife” and “marriage” do not include
individuals (whether the same or
opposite sex) who have entered into
a domestic partnership, civil union or
other formal relationship recognized
under state law that is not denominated
as a marriage under the laws of that
state.
The Ruling may also be applied
retroactively provided the limitations
period (generally 3 years or 2010
forward) has not expired. This Ruling
applies to an employer’s tax returns (e.g.,
Form 941-X) and an employee’s income
tax returns (e.g., Form 1040-X).
The Ruling applies with respect to any
employee benefit plan for purposes of
filing original returns, amended returns,
adjusted returns or claims for credit
or refund of an overpayment of tax
concerning employment tax and income
tax with respect to employer-provided
health coverage or fringe benefits that
were provided by the employer and
excludable from income. If relief is
sought by the employer, it should be
done on a consistent basis.
The Windsor decision has and will
continue to have an impact on employee
benefit plans. Additional guidance
is expected in the future, including
guidance on cafeteria and qualified
plans.
Action Steps for Retirement Plans:
l
Begin treating same-sex spouses
as “spouses” for plan purposes no
later than September 16, 2013 (e.g.,
beneficiary forms)
l
Review and update plan forms and
procedures
l
Communicate changes to participants
and request they update records
individuals married to a person of the
same sex who were legally married in
a state that recognizes such marriages.
The state of domicile is not controlling.
This “place of celebration” guidance
mirrors the above IRS guidance and
appears to essentially require Employee
Retirement Income Securities Act
(“ERISA”) plan sponsors to cover samesex spouses if the above requirement is
met and if the plan provides coverage
for spouses.
The DOL also issued regulatory
guidance on the Family Medical Leave
Act regarding benefits for same-sex
marriages. The guidance comes in the
form of an updated Fact Sheet #28F:
Qualifying Reasons for Leave Under
the Family Medical Leave Act. The
new guidance now defines “spouse”
as a “husband or wife as defined or
recognized under state law for purposes
of marriage in a state where the
employee resides, including . . . same-sex
marriage.”
The updated guidance clarifies that an
employee in a same-sex marriage who
was married and resides in a state that
allows same-sex marriage is entitled
to take FMLA leave to care for the
employee’s same-sex spouse with a
serious health condition. Please note
that this guidance adheres to a “place of
residence” rule as opposed to the IRS’s
and ERISA’s “place of celebration” rule.
The Windsor decision has and will
continue to have an impact on employee
benefit plans. Additional guidance is
expected in the future.
Action Items for Health Plans:
have to report to the IRS but also
disclose similar information to their
employees.
The Internal Revenue Service (IRS)
will provide guidance about notices
of their revenue requirement
sections in the IRS code. Information
gathering is set to start in 2015,
which means the first reporting
of 6055 and 6056 will not happen
until 2016. The proposed regulation
should have the information
regarding reporting requirements to
the IRS before a final ruling is made.
This will give employers ample time
for preparing payroll information.
Every employer should consider
these requirements to avoid
unwanted attention from the
Internal Revenue Service (IRS),
Department of Labor (DOL) and the
Health and Human Services (HHS).
To learn more about these PPACA
notice requirements, contact your
BancorpSouth Insurance Services
representative.
enrollment rights apply to all spouses
including same-sex spouses
[1] Additional action steps will be
required as guidance is published.
[2] Interestingly, the Court’s decision
did not address Section 2 of DOMA
which permits a state to not recognize
marriages performed in other states. This
is an open issue that we will continue to
monitor.
l
Review summary plan description and
other plan documents of all ERISA
plans to confirm “spouse” is defined as
intended
[3] As of the date of this memo, the
following states issue same-sex marriage
licenses: CA, CT, DE, IA, ME, MA, MD, MN,
NH, NY, RI, VT, WA and DC.
l
Stop imputing income for benefits
currently provided to same-sex
spouses no later than September 16,
2013
l
For cafeteria plans, clarify that “spouse”
includes a same-sex spouse (additional
guidance is expected)
l
If benefits are provided to spouses,
clarify that COBRA and HIPAA special
This publication is provided for
educational and informational
purposes only and does not contain
legal advice. You should not act on
any information provided without
consulting legal counsel. To comply
with U.S. Treasury Regulations, we also
inform you that, unless expressly stated
otherwise, any tax advice contained
in this communication is not intended
to be used and cannot be used by any
taxpayer to avoid penalties under the
Internal Revenue Code.
DOL
On September 18, 2013, the Department
of Labor (“DOL”) issued Technical Release
2013-04 stating “spouse” will be read
to refer to any individuals who are
lawfully married under any
state law, including
continued from page 4 ...
Important PPACA Notices that
Every Employer Needs to Know
About
Important PPACA Notices that Every
Employer Needs to Know About
The Patient Protection and Affordable
Care Act (PPACA) will bring plenty of
changes for human resource departments
everywhere. Now more than ever payroll
and human resource departments
will have to work together providing
and maintaining documentations and
notifying employees of upcoming
changes. Employers should be aware
of the following important notices
associated with the act.
Exchange Notice
The exchange notice stated all business
owners must notify their employees
about exchanges. The initial notice
was required to be sent before the first
day of October in 2013. However, if a
company has new hires, the notice must
be provided to them within 14 days of
being hired. With this notice, employees
are able to learn how to obtain coverage
through exchanges. Three-page model
exchange notices are provided by the
Department of Labor.
Summary of Benefits and Coverage
(SBCs)
Employers are now required to provide a
summary of benefits and coverage (SBC)
to each worker annually. These forms
are intended to simplify the process of
comparing benefit plans making it easier
for participants to choose the health plan
best meeting their family’s needs.
Revised COBRA Notice
The Department of Labor (DOL) has
also updated the model election notice.
It informs beneficiaries about PPACA
coverage options.
W-2 Forms
Although employers are
already supposed to be including the cost
of coverage on W-2 forms, many have
not yet started doing so. Employers who
have less than 250 W-2s from the past
year are exempt. This is subject to change
from one year to the next, so even small
business owners should check every
year to see if they need to include this
information.
6055 And 6056 Forms
Anyone who offers minimum essential
coverage reports with a 6055 and
6056 coverage is applicable to larger
employers. Experts state there are
overlaps between the two types
of reporting. However, all sizes of
businesses will be affected by the notice
requirements. The 6055 and 6056
will also have disclosure counterparts
meaning employers will not only
continued on page 3
Information contained in this newsletter about product offerings, services, or benefits is illustrative and general in description, and is not intended to be relied on as complete
information. While every attempt is made to ensure the accuracy of the information provided, we do not warranty the accuracy of the information. Therefore, information
should be relied upon only when coordinated with professional tax and legal advice.
BancorpSouth Insurance Services is powered by BancorpSouth Bank; a wholly-owned subsidiary
of BancorpSouth Inc., a $13.4 billion-financial holding company based in Tupelo, Mississippi.
BancorpSouth Insurance Services is annually ranked as one of the nation’s largest brokers
by Business Insurance magazine. Equipped to service clients across the globe through our
Worldwide Broker Network relationship, we have over 30 offices with almost 600 insurance and
risk management professionals ready to serve.
Benefit
Insights