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Don't HR Alone #9 - CDHP's, Tax Penalties, and Texarkana

Michigan interest rate increased for second half of 2017 — MICHIGAN — Interest Rates

The annual rate of interest due on Michigan tax deficiencies and overpayments for the period from July 1, 2017, through December 31, 2017, is increased from 4.5% to 4.7%. The effective annual rate of 4.7% was established at one percentage point above the adjusted prime rate charged by three commercial banks to large businesses.

(Revenue Administrative Bulletin 2017-9, Michigan Department of Treasury, May 26, 2017.)

Arkansas discusses withholding requirements for nonresidents — ARKANSAS — Withholding and Reporting

The Arkansas Department of Finance and Administration issued an opinion clarifying that residents of Texarkana, Texas, are exempt from personal income tax on the portion of income earned from employment or business activity in Texarkana, Arkansas, but not on income earned elsewhere in Arkansas. Further, an Arkansas-based employer making payments of wages to employees is required to deduct and withhold tax from the portion of their wages earned for services performed in the state. Lastly, the department clarified that a nonresident employee having income from activities in Arkansas must file the state income tax return reporting his/her income and allocating the portion of such income on that return.

(Revenue Legal Counsel Opinion No. 20170508, Arkansas Department of Finance and Administration, May 16, 2017.)

CDHPs continue to gain popularity — SURVEY RESULTS

Consumer-driven health plans (CDHPs) are continuing to gain market share in the U.S., and are having the intended effect of making people more involved in their own health care, according to recent research from the Employee Benefit Research Institute (EBRI) and Greenwald & Associates. The Consumer Engagement in Health Care Survey found that 14 percent of privately insured adults were enrolled in a CDHP (defined as enrollment in a high-deductible health plan (HDHP) combined with a health savings account (HSA) or health reimbursement arrangement (HRA)). An additional 14 percent were enrolled in an HDHP not linked to an HSA or HRA.

The survey found that more than half (56 percent) of CDHP enrollees opened an HSA, taking advantage of growing employer contributions. Among individuals enrolled in CDHPs, 56 percent (16.3 million) opened an HSA, 19 percent (5.5 million) were in an HRA, and 25 percent (7.3 million) were enrolled in an HSA-eligible health plan but had not opened an HSA. It’s more common for employers to contribute to HSA than in the past, and the dollar amount is also increasing. Seventy-eight percent of CDHP enrollees reported that their employer contributed to the account in 2016, up from 67 percent in 2014. Furthermore, 20 percent of CDHP enrollees reported an employer contribution of at least $2,000 in 2016, up from 10 percent in 2014. Similarly, 42 percent reported an employer contribution of $1,000‒$1,999 in 2016, up from 36 percent in 2014.

Cost-conscious behaviors. Adults in a CDHP and those in an HDHP were more likely than those in a traditional plan to exhibit a number of cost-conscious behaviors. For example, those in a CDHP were more likely to say that they had checked whether the plan would cover care (54 percent CDHP vs. 44 percent traditional); asked for a generic drug instead of a brand name (48 percent CDHP vs. 37 percent traditional); and that they had used an online cost-tracking tool provided by the health plan (31 percent CDHP vs. 20 percent traditional). CDHP and HDHP enrollees were also more likely than traditional-plan enrollees to report that they tried to find cost information before getting care. Nearly one-half of HDHP enrollees, and 43 percent of CDHP enrollees searched for the cost information, compared with 32 percent among traditional-plan enrollees.

“This survey found that high deductibles are associated with new behaviors often encouraged by employers and insurers,” said Paul Fronstin, director of EBRI’s Health Research and Education Program and co-author of the report. “CDHP enrollees and HDHP enrollees were more likely than traditional-plan enrollees to report that they tried to find cost information. They are also more likely to participate in wellness programs.”


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