SABC Newsletter

IRS DECREASES MILEAGE ALLOWANCE FOR TRANSPORTATION TO OBTAIN MEDICAL CARE

The IRS announced that the standard mileage rate for use of an automobile to obtain medical care (as described in Code Section 231) will decrease from $0.13 to $0.12 per mile for 2003. Unreimbursed medical spending accounts will be subject to the new rate. The decrease is based on an annual study of the costs of operating an automobile; the primary reason cited by the IRS for the mileage rate decrease is the decline in fuel prices during the study period, which ended June 30.

To claim mileage for medical care you must record your beginning mileage before leaving home and ending mileage upon return from the medical provider. In addition, a statement of services from the provider must accompany the claim.

PRE-PAYING PREMIUMS DURING FAMILY MEDICAL LEAVE ACT (FMLA)

If a participant knows that they are going on FMLA and would like to pre-pay their premiums through the Cafeteria Plan they may do so. IRS regulations permit three payment options for employees who continue their group health coverage during an unpaid FMLA leave.

1). They may pre-pay their payment(s) through the Cafeteria plan to pay their share that will incur during the leave period.

2). They can pay as they go, which of course would be with after tax dollars.

3). They could catch up their deductions upon their return on pre-tax basis should your plan allow it.

It is important to remember that if the employee's leave straddles two plan years, payments attributable to the second plan year must be made on an after tax basis to avoid the cafeteria plan "no-deferred-compensation" rule that prohibits one year's contributions from funding benefits in a subsequent year.

REPORTS BY EMAIL

Many of customers have asked if the various reports we mail employers through out the year could be emailed. We are happy to report that effective in November 2002, we now have the option to email the following Cafeteria reports:

1). Deposit edits

2). Monthly check edits

3). Balance letters

4). Dependent Care reporting

We will be contacting each employer over the next couple of weeks to offer this option and to obtain the email address of the preferred recipient. In order to prepare, recipients may wish to set up files within their email system to store these reports. This will eliminate the large paper files that you currently maintain.

We will also be able to email other information, such as employee deduction edits and unreimbursed medical reports. We hope you find this new service helpful and would appreciate your feedback once this is implemented.

COBRA CHANGES FOR THOSE THAT LOSE COVERAGE DUE TO FOREIGN TRADE

Employees who lose their jobs due to foreign trade, such as steelworkers and other industries, now have favored status under the Federal Cobra law thanks to Congress who enacted a new Cobra subsidy by amending H.R. 3009, the Trade Act of 2002.

Under the trade law, the government will provide direct subsidies of COBRA premiums to individuals who lose their jobs due to foreign competition. The government will subsidize 65% of the COBRA premium through a tax credit which will also be available for use in certain other insurance plans, such as special state coverage risk pools. The Dept. of Labor is still working out the details, and more information should be available soon.