Cafeteria Plans Publication 15b
Cafeteria Plans Publication 15b
Business Expenses Publication 535
Business Expenses Publication 535 – Cafeteria Plans Page 3

Question

Background

There is a company whose  goal is to educate business owners on a regulation passed by ACA that allows them to implement Wellness Programs that fall under Section 125 Cafeteria Plans  and Post reimbursement under §106.

The selling point is a Fica Saving Tax program that allows the employer to save per employee that participates and completes an HRA – Health Reimbursement Account, and money that is left over or Flex Credit, can be used to purchase Supplemental Insurance at no reduction in take home pay.  This is self funded health plans that provides gap insurance to help offset the medical cost.  The fee that the employer pays comes out of the savings, and the fee each employee pays is $35 for single and $55 for family.

The million dollar question is.

Is this compliant with the IRS 125 and IRS 106.?

And can I look at a business owner with a clear conscious?

 

Research

Please send the brochures and information for this program.

I found the website solara benefits.com * and the 4 page brochure *  but thye only gives hype, very little to nothing about how or why the program works and under what tax code laws.

What kind of a Wellness Program?  None! ?

Where is the premium discount coming from?

Are we talking about HRA plans or Wellness Programs?  Looks like §125 only – using the funds to purchase supplemental plans.

FICA Tax Savings Calculator

Wellness Programs Rules & Authorization

Final Regulations will increase the greatest permissible reward under a health-contingent wellness program from 20 percent to 30 percent of the cost of health coverage, and that further increase the largest reward to as much as 50 percent for programs designed to prevent or cut tobacco use.

(Fact Sheet)

Health Net Q&A 8.9.2013  

Kaiser Health Reform Summary last page   

Dubai is paying $40/pound of weight loss CNN

 

Insurance Company Wellness Web Pages

 

Excerpt of Solara Brochure
Excerpt of Solara Brochure

 

 

Topic 751 – Social Security and Medicare Withholding Rates

Taxes under the Federal Insurance Contributions Act (FICA) are composed of the old-age, survivors, and disability insurance taxes, also known as social security taxes, and the hospital insurance tax, also known as Medicare taxes. Different rates apply for these taxes.

Social Security and Medicare Withholding Rates

The current tax rate for social security is 6.2% for the employer and 6.2% for the employee, or 12.4% total. The current rate for Medicare is 1.45% for the employer and 1.45% for the employee, or 2.9% total. Refer to Publication 15(Circular E), Employer’s Tax Guide, for more information; or Publication 51(Circular A), Agricultural Employer’s Tax Guide, for agricultural employers.

Additional Medicare Tax Withholding Rate

Additional Medicare Tax applies to an individual’s Medicare wages that exceed a threshold amount based on the taxpayer’s filing status. Employers are responsible for withholding the 0.9% Additional Medicare Tax on an individual’s wages paid in excess of $200,000 in a calendar year, without regard to filing status. An employer is required to begin withholding Additional Medicare Tax in the pay period in which it pays wages in excess of $200,000 to an employee and continue to withhold it each pay period until the end of the calendar year. There’s no employer match for Additional Medicare Tax. For more information, see Questions and Answers for the Additional Medicare Tax.

Wage Base Limits

Only the social security tax has a wage base limit. The wage base limit is the maximum wage that’s subject to the tax for that year. For earnings in 2017, this base is $127,200. Refer to “What’s New” in Publication 15 for the current wage limit for social security wages; or Publication 51 for agricultural employers.

There’s no wage base limit for Medicare tax. All covered wages are subject to Medicare tax. Copied from IRS.gov

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