Compliance Q&A: Orientation Period vs Waiting Period, Taxes on STD Benefits, HSA Contributions and Medicaid
- April 21, 2024
- Posted by: Gus Altuzarra
- Category: Compliance Q&A
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4.4.24 | WAITING PERIOD VS. ORIENTATION PERIOD
Q. My under-50-employees client has an orientation period for their employees, after which they offer medical benefits. What are the key differences between an orientation period and a waiting period?
A. The ACA permits a bona fide orientation period of one month before the 90-day waiting period limitation kicks in. These rules apply to employers of any size offering a group health plan.
A. The ACA permits a bona fide orientation period of one month before the 90-day waiting period limitation kicks in. These rules apply to employers of any size offering a group health plan.
3.21.24 | TAXES ON SHORT-TERM DISABILITY BENEFITS
Q. When an employee is on short-term disability (STD), should taxes be withheld from the STD check?
A. Short-term disability benefits are taxable if the premiums were paid by the employee with pre-tax dollars or if the employer paid the premiums and did not impute income to the employee. On the other hand, if premiums were paid by employees on an after-tax basis or if the employer included the premiums it paid in an employee’s taxable wages, then the STD benefits are not taxable. Basically, either the premiums or the benefits are taxable. The tax treatment of the premiums will drive the tax treatment of the benefits.
A. Short-term disability benefits are taxable if the premiums were paid by the employee with pre-tax dollars or if the employer paid the premiums and did not impute income to the employee. On the other hand, if premiums were paid by employees on an after-tax basis or if the employer included the premiums it paid in an employee’s taxable wages, then the STD benefits are not taxable. Basically, either the premiums or the benefits are taxable. The tax treatment of the premiums will drive the tax treatment of the benefits.
3.14.24 | HSA CONTRIBUTIONS AND MEDICAID
Q. If an employee carries her full family on a qualified high deductible health plan (QHDHP) but her children are mandated to also be enrolled in Medicaid, can she contribute the full family amount to her HSA?
A. If the HSA owner/employee is only eligible for the HDHP and the employee has enrolled in family coverage, the employee can contribute the full family limit to the HSA if the employee’s dependents are not otherwise eligible due to Medicaid.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
A. If the HSA owner/employee is only eligible for the HDHP and the employee has enrolled in family coverage, the employee can contribute the full family limit to the HSA if the employee’s dependents are not otherwise eligible due to Medicaid.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
