The fiscal cliff and employee benefits: Regulations that will affect offerings
Thursday, January 03, 2013
The recent avoidance of the fiscal cliff by the U.S. Congress has led businesses around the world to take a collective sigh of relief, but there are some changes that come from this deal that employers need to remain wary of in the near future.
The first changes will come as part of the American Taxpayer Relief Act, which passed as part of the fiscal cliff solution, according to Business Finance Magazine.
The news source noted that there are some changes that will influence benefits for employees, including education and mass transit options.
Permanent education benefits will be positively influenced by the changes outlined in the recent deal, as employers are allowed to provide up to $5,250 annually in tax-free undergraduate and graduate educational costs to staff members.
Employees will be able to receive necessary education, and pursue a master's or other graduate degree without employers incurring tax penalties for providing this funding.
Mass transit benefits will also be exempt from some of the proposed taxes that would have gone into effect if a fiscal cliff deal was not reached.
The new law will increase employees' maximum pretax contribution to mass transit expenses, upping the amount from $125 per month to $240 a month. This will allow for companies to adjust rates to deal with transportation costs increases, and will free up funding for other areas that require more money.
There is also some impact related to healthcare reform, as the deal outlined certain changes that will occur because of the deal reached in Washington.
According to the news outlet, the Internal Revenue Service released regulations on the alleged "shared responsibility penalties" that take hold in 2014 for large employers.
There are penalties that companies need to be wary of, if they are not planning on health coverage.
In general, businesses that fail to offer healthcare options may be subject to a $2,000 per-worker penalty. Employers that do not provide affordable coverage are subject to a $3,000 penalty, which is multiplied by the number of full-time staff members who enroll in coverage offered by a public exchange and receive a premium tax credit upon signing up for the program.
Employers need to be wary of these changes, as employee benefits plans will be increasingly tied to regulations thanks to the Affordable Care Act.