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Regulatory Roundup May 2021

June 07, 2021 Blog Post

Along with a compliance vote in California, the month of May was full of IRS updates on programs ranging from HSAs to COBRA assistance credits.

San Francisco Employer Reporting Requirements

With summer around the corner, the city of San Francisco waived a 2020 reporting requirement and a couple of federal programs bloomed with updated information from the U.S. Internal Revenue Service (IRS). Read below to find out which blossomed the most in May.

In early May, the San Francisco Board of Supervisors voted to waive a requirement that employers must provide reports showing compliance with the local Health Care Security Ordinance (HCSO). The HCSO itself requires employers to provide a certain amount per hours worked in 2021 towards employee health care coverage, based on the number of employees at said company. Those with 20–99 employees must pay $2.12 per hour worked, while those with 100 or more employees must provide $3.18 per hour worked.

Health Savings Accounts and Dependent Care

Just a few weeks before we reach the halfway point for 2021, the IRS also released new, inflation-adjusted limits for Health Savings Accounts (HSAs) in 2022. Detailed in Procedure 2021-25, the new limits are effective for the 2022 calendar year and cover both annual contribution limits and High Deductible Health Plan (HDHP) requirements.

In addition to the new limits, the IRS also released guidance on the taxability of Dependent Care Assistance Programs (DCAP) for both 2021 and 2022. Notice 2021-26 states that carryover amounts, and amounts associated with extended claim periods, are not taxable, and explains how this guidance interacts with annual contribution limits. The notice also describes how the temporary increase in maximum DCAP contribution under the American Rescue Plan Act of 2021 (ARP) affects non-calendar-year plans.

COBRA Q&A

Finally, the IRS also released new guidance on COBRA premium assistance components of the ARP. Notice 2021-31 provides 86 question and answer pairs that cover the calculation of the credit, eligibility requirements, the premium assistance period, and other important information about the credit for employers, plan administrators, and insurers.

Get more details on these compliance and tax alerts from May here:

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This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney, or Advisor.

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