What you need to know about Flexible Spending Account contribution limits, itemized deductions, the Medicare tax rate increase and newly required Summary of Benefits and Coverage.
Flexible Spending Account (FSA) Contribution
In 2013, Section 125 flexible spending account contributions are limited to $2,500 per year.
FSAs are designed to pay for medical expenses not covered by insurance and offer several financial benefits. When employees set aside a portion of their salary through pre-tax deduction to pay for medical, dental, vision or dependent care for themselves, a spouse and dependents, they reduce their out-of-pocket expenses. Your company reduces your FICA tax liability and your employees reduce their federal income taxes, state income taxes and Social Security taxes, and they can budget for known out-of-pocket expenses over a 12-month period.
Also, please remember that beginning in 2011, non-prescription over the counter drugs, with the exception of insulin, are excluded from eligibility for Section 125 flexible spending accounts.
Itemized Deductions
In 2013, the threshold for deducting unreimbursed medical expenses from federal taxes increases from 7.5 percent to 10 percent.
Medicare Tax Rate Increase
For individuals who earn $200,000+ (family $250,000+), the Medicare tax rate will increase by .9 percent (1.45 percent – 2.35 percent) – for employee share only
Summary of Benefits and Coverage
All group plans and group and individual health insurers (including self-insured plans) must to provide a summary of benefits and a coverage explanation that meets specified criteria to all enrollees when they apply for coverage, when they enroll or re-enroll in coverage, when the policy is delivered and if any material modification is made to the terms of their coverage. Beginning October 2012, the summary and explanation can be provided electronically or in written form, and it must be no more than eight pages in length with print no smaller than 12 point font written in a culturally linguistically appropriate manner. Members enrolled in an SBAM-sponsored health plan will receive a complimentary Summary of Benefits and Coverage along with a Summary Plan Descriptions.
There is a $1,000 per enrollee fine for willful failure to provide the information.