2012 Annual Benefit Plan and Social Security Limits

2012 Annual Benefit Plan Amounts
Contribution & Benefit Limits 2011 Limit 2012 Limit
Section 401(k), 403(b), or 457(b) annual deferral $16,500 $17,000
SIMPLE plan annual deferral $11,500 $11,500
Section 415 maximums
— annual benefit from                 
   defined benefit plan
$195,000 $200,000
— annual additions to defined
   contribution plan
$49,000 $50,000
Maximum IRA contribution $5,000 $5,000
Catch-up contribution limits
— retirement plan $5,500 $5,500
— SIMPLE plan $2,500 $2,500
— IRA $1,000 $1,000
Compensation Amounts
Annual compensation limit $245,000 $250,000
Grandfathered governmental plan participants $360,000 $375,000
Highly compensated employees
— any employee* $110,000 $115,000**
— 5-percent owner no minimum no minimum
*Employer may elect to limit to top-paid 20%**Due to the look-back rule, first applies in determining HCEs in 2013.
Key employees
— officer $160,000 $165,000
— 1-percent owner $150,000 $150,000
— 5-percent owner no minimum no minimum
Social Security/HSA Limits
Social Security 2011 Limit 2012 Limit
— OASDI taxable wage base $106,800 $110,100
— OASDI tax rate – employer 6.2% 6.2%
— OASDI tax rate – employee 4.2% 6.2%#
— maximum monthly benefit at
$2,366 $2,513
— cost of living adjustment 0% 3.6%
Maximum income without reducing Social Security retirement benefits
— SSRA* or over no limit no limit
— year individual attains SSRA* $3,140/mo^ $3,240/mo^
— under SSRA* $14,160/yr $14,640/yr
#Subject to legislative change.
*Social Security Retirement Age (age at which an individual may receive an unreduced monthly benefit). 
^No limit on earnings beginning the month an individual attains SSRA.
HSA Limits
Maximum HSA contribution
— individual $3,050 $3,100
— family $6,150 $6,250
Minimum HDHP deductible
— individual $1,200 $1,200
— family $2,400 $2,400
Catch-up contribution limit $1,000 $1,000


Federal Workplace Poster Requirements

Some of the statutes and regulations enforced by agencies within the Department of Labor require that posters or notices be posted in the workplace. The Department provides electronic copies of the required posters and some of the posters are available in languages other than English.

Please note that posting requirements vary by statute; that is, not all employers are covered by each of the Department’s statutes and thus may not be required to post a specific notice. For example, some small businesses may not be covered by the Family and Medical Leave Act and thus would not be subject to the Act’s posting requirements. For information on coverage, visit the Employment Laws Assistance for Workers and Small Business (elaws) Poster Advisor. You may also contact the Office of Small Business Programs, for assistance with these notice requirements.

To see a detailed chart of these requirements go to:


To obtain posters or for more information about poster requirements or other compliance assistance matters, you may contact the U.S. Department of Labor at (866) 4-USA-DOL.

New Excise Tax Reporting Effective January 1, 2010 for Violations of COBRA, HIPAA and Other Health Plan Mandates

Effective January 1, 2010, employers who sponsor group health plans now will be required to report and pay excise taxes for failing to satisfy certain federal group health plan mandates, unless timely corrected. The Internal Revenue Service (IRS) issued final regulations regarding new reporting requirements. Starting in 2010, employers (and certain third parties) must self-report and pay excise taxes for failing to comply with the following:

  1. COBRA
  2. HIPAA portability, access, renewability and nondiscrimination rules
  3. The Genetic Information Nondiscrimination Act (GINA)
  4. Mental health parity rules
  5. Minimum hospital stays under the Newborns’ and Mothers’ Health Protection Act
  6. Continued group health plan coverage of postsecondary dependent children on a medically necessary leave of absence under Michelle’s Law
  7. Health savings account (HSA) comparable employer contributions rules, see IRS Regs
  8. Archer medical savings account (MSA) comparable employer contributions rules, see IRS Regs

Affected parties must report the excise taxes on Form 8928, “Return of Certain Excise Taxes under Chapter 43 of the Internal Revenue Code.” Failure to file Form 8928 and pay excise taxes may lead to the imposition of penalties and interest. Form 8928 is available on the IRS Web site.

Employer Practice Points

Dipa N. Sudra of Davis Wright and Tremaine, LLP suggests;

Employers should have procedures in place to identify potential excise tax issues; and relevant employees, such as human resources personnel, should be familiar with the excise taxes noted above. Employers should consider creating checklists of potential excise tax violations and periodically review the checklists.

For example, employers should work with their advisors or COBRA administrators to ensure that there are no COBRA violations.

Employers must also ensure that relevant employees are familiar with recent changes, such as:

  • The two new events under HIPAA permitting special enrollment in a group health plan for loss of eligibility for coverage, or entitlement to a state premium assistance subsidy, under Medicaid or a state child health plan. (Employers should watch out for model notices expected to be issued in 2010 regarding these new events, and should update the notice of special enrollment rights given to employees.)
  • Prohibitions under GINA against using genetic information for underwriting or certain other purposes. In particular, note that there may be violations of GINA if genetic information was obtained before, but used after, its effective date (such as information collected as part of a health risk assessment).
  • Parity requirements for medical benefits and mental health or substance use disorder benefits.
  • Michelle’s Law.

Final Regulations on Excise Taxes for Group Health Plans Released

Group health plans are responsible for compliance with a number of federal laws governing issues such as continuation coverage and portability of health coverage. If a group health plan does not comply with applicable group health plan requirements, the employer maintaining the plan is subject to an excise tax. Employers are also subject to an excise tax if they do not satisfy comparable contribution rules for health savings accounts (“HSAs”) and Archer medical savings accounts (“MSAs”). The Internal Revenue Service (IRS) has issued final regulations on reporting and paying the applicable excise tax, which are effective January 1, 2010

Group Health Plan Rules Subject to Excise Tax

Generally, an excise tax of $100 per individual per day will apply to violations of the following rules (“Group Health Plan Requirements”):

  • Continuation coverage (COBRA);
  • Portability and nondiscrimination for health coverage (HIPAA);
  • Genetic information nondiscrimination (GINA);
  • Parity between mental health benefits and medical/surgical benefits (Mental Health Parity and Addiction Equity Act);
  • Minimum hospital lengths of stay in connection with childbirth (Newborns’ and Mothers’ Health Protection Act); and
  • Continued coverage for post-secondary students with a serious medical condition (Michelle’s Law).

For violations of the comparable contribution rules for HSAs and Archer MSAs, the excise tax will generally be 35 percent of the amount contributed by the employer to the Archer MSAs or the HSAs of all employees within the applicable calendar year.

For more information got to the IRS Regs

Congress Introduces COBRA Subsidy Expansion Bills

Two separate bills have been introduced, one which is more expansive than the other. The smaller of the two bills is HR 3966, which would only extend the ARRA subsidy for involuntary terminations and loss of coverage occurring through June 30, 2010.  However, the larger bill is HR 3930, and includes the following provisions:

Qualifying events with the 18-month COBRA period would be extended to 24 months for any termination of employment (voluntary or involuntary) or reduction of hours that occurred during the 21-month period starting on April 1, 2008, and ending on December 31, 2009. Further, if an individual’s COBRA coverage already expired before the law is passed, affected qualified beneficiaries would have a second election right to obtain the additional six months of coverage.

The ARRA subsidy would be extended for involuntary terminations and loss of coverage occurring through June 30, 2010. Further, all ARRA subsidies would continue for up to 15 months (current 9 months plus an additional 6 months under the proposal), but all subsidies would end by December 31, 2010 regardless of the new 15-month rule.

These bills have been introduced in the House and are currently in committee; however, they have not reached the House floor for a full vote.  The Senators Brown and Casey have introduced S.2730 in the Senate, a bill which extends COBRA as would HR 3930, but would also increae the subsidy from 65% TO 75%.  Stay tuned to the Health and Wellness as a Business Strategy blog for updates on these bills.

Updated information provided by Joanne Flora.

Governor Paterson Signs Legislation to Make Health Insurance More Affordable and Improve Access to Health Care

Governor David A. Paterson signed into law three Governor’s Program bills that will make health insurance more affordable and improve access to health care for New Yorkers. The first extends the period of time for COBRA coverage from 18 to 36 months; the second permits families to cover their young adult dependents through age 29 under their job-based insurance; and the third enacts a series of managed care reforms to make health insurance work better for consumers and permit timely access to necessary health services. The effective date of these changes is September 1, 2009.

Summary of New York Dependent Extension to Age 29

DOL creates website on COBRA coverage under the American Recovery and Reinvestment Act of 2009

All employers and employees now have a site that answers questions about the COBRA coverage under ARRA. Individuals who request treatment as an assistance eligible individual and are denied such treatment by their group health plan may have the right to appeal to the DOL. The DOL is currently developing a process and an official application form that will be required to be completed for appeals. According to the website, The DOL is actively working to issue additional guidance regarding the COBRA premium reductions.  I expect to see the DOL’s final notices regarding changes under ARRA next week.  Important IRS forms are also available in spanish and english at this site.  Stay tuned for more information.


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