IRS Issues New HSA and HRA limits
The IRS issued Revenue Procedure 2021-25 on May 10, 2021, to announce the 2022 inflation-adjusted amounts for health savings accounts (HSAs) under Section 223 of the Internal Revenue Code (Code) and the maximum amount that may be made newly available for excepted benefit health reimbursement arrangements (HRAs).
HSA Limits
HIGHLIGHTS:
Individuals with HDHP: $3,650
Family with HDHP: $7,300
ALL THE DETAILS:
For calendar year 2022, the HSA annual limitation on deductions for an individual with self-only coverage under a high deductible health plan is $3,650. The 2022 HSA annual limitation on deductions for an individual with family coverage under a high deductible health plan is $7,300. The IRS guidance provides that for calendar year 2022, a “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage, and the annual out-of-pocket expenses (deductibles, copayments, and other amounts, but not premiums) do not exceed $7,050 for self-only coverage or $14,100 for family coverage.
HRA Limits
HIGHLIGHTS:
Max Amount: $1,800
ALL THE DETAILS:
For plan years beginning in 2022, the maximum amount that may be made newly available for the plan year for an excepted benefit HRA is $1,800. Treasury Regulation §54.9831-1(c)(3)(viii)(B)(1) provides further explanation of the calculation.
4 ways to help employees master their HDHPs in 2019
Now is a great time to help your employees better understand their High Deductible Health Plans (HDHP) for 2019. Continue reading this blog post for steps HR can take to help employees stay on the right track.
As 2018 draws to a close, it’s a great time to give HDHP veterans and newbies at your company some help understanding — and squeezing more value out of — their plans in 2019.
Here are four simple steps your HR team can take over the next few months to put employees on the right track.
1. Post a jargon-free FAQ page on your intranet
When: Two weeks before your new plan year begins
Keep your FAQ at ten questions (and answers!), maximum. Otherwise, your employees can get overwhelmed by their health plans and by the FAQ.
When writing up the answers, pretend you’re talking directly to an employee who doesn’t know any of the insurance jargon you do. Keep it simple, straightforward, and free of insurance gobbledegook.
[Image credit: Bloomberg]
Make sure your questions reflect the concerns of different employee types: Millennials who haven’t had insurance before, older employees behind on retirement, employees about to have a new kid, etc. To get a clear sense of these concerns, invite a diverse group of 5-7 employees out for coffee and ask them.
Some sample questions for your FAQ might be:
• Is an HSA different from an FSA?
• Do I have to open an HSA?
• How much money should I put in my HSA?
• This plan looks way more expensive than my PPO. What gives?
2. Send a reminder email about setting up an HSA and/or choosing a monthly contribution amount
When: The first week of the new plan year
When your employees don’t take advantage of their HSA not only do they miss out on low-hanging tax savings, your company misses out on payroll tax savings, too.
So right at the start of the new year, send an email that explains why it’s important to set up a contribution amount right away.
A few reasons why it’s really important to do this:
- You can’t use any HSA funds until your account is fully set up and you’ve chosen how much you’re going to contribute.
- If you pay for any healthcare at all next year, and don’t contribute to your HSA, you’re doing it wrong. Why? You don’t pay taxes on any of the money you put into your HSA and then spend on eligible health care…which puts real money back in your pocket. (Last year, the average HSA user contributed about $70 every two weeks and saved $267 in taxes as a result!)
- There’s no “use it or lose it” rule! Any money you put into your HSA this year is yours to use for medical expenses the rest of your life. And once you turn 65, you can use it for anything at all. A Mediterranean cruise. A life-size Build-a-Bear. You name it!
3. Give your HDHP newbies tips on navigating their first visit to the doctor and pharmacy
When: The week insurance cards are mailed out
When employees who are used to PPO-style co-pays realize they have to pay more upfront with their HDHP, they can get…cranky. And start to doubt their plan choice — or worse, you as their employer choice.
So set expectations ahead of time to avoid employee sticker shock and to prevent you from getting an earful. Specifically, remind employees which types of visits are considered preventative care (and likely free) and which aren’t. Then explain their options when it comes to paying for — and getting reimbursed for — the visit.
4. Share tips on saving money on care with all your HDHP users
When: Any time before the end of the first quarter of the year
Specifically, you might recommend that your employees:
- Check prescription prices on a site like Goodrx.com before they buy their meds
- Visit an urgent care center instead of the ER, if they’re sick or hurt but it’s not life-threatening
- Use a telemedicine tool (if your company offers one) to get free online medical advice without having to leave their Kleenex-riddled beds
Sure, following this communication schedule requires extra elbow grease. But if you defuse your employees’ stress and confusion early, they’ll feel more prepared to take control of their healthcare and get the most out of their plans. And as a bonus, you and your team get to spend less time answering panicked questions the rest of the year.
SOURCE: Calvin, H. (17 December 2018) "4 ways to help employees master their HDHPs in 2019" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/4-ways-to-help-employees-master-their-hdhps-in-2019?brief=00000152-14a5-d1cc-a5fa-7cff48fe0001
8 ways to maintain HSA eligibility
Is your high-deductible health plan still HSA qualified? Ensuring your high-deductible health plan remains HSA qualified is no easy task. Read this blog post for eight ways employers can maintain HSA eligibility.
For employers sponsoring high-deductible health plans with health savings accounts, ensuring that the HDHP continuously remains HSA qualified is no easy task. One challenge in this arena is that most of the rules and regulations are tax-related, and most benefit professionals are not tax professionals.
To help, we’ve created a 2019 pre-flight checklist for employers.
With 2019 rapidly approaching and open enrollment season beginning for many employers, now’s a great time to double-check that your HDHP remains qualified. Here are eight ways employers can maintain HSA eligibility.
1. Ensure in-network plan deductibles meet the 2019 minimum threshold of $1,350 single/$2,700 family.
To take the bumps out of this road, evaluate raising the deductibles comfortably above the thresholds. That way, you won’t have to spend time and resources amending the plan and communicating changes to employees each year that the threshold increases. Naturally, plan participants may not be thrilled with a deductible increase; however, if your current design requires coinsurance after the deductible, it’s likely possible on a cost neutral basis to eliminate this coinsurance, raise the deductible and maintain the current out-of-pocket maximum. For example:
| Current | Proposed | |
| Deductible | $1,350 single / $2,700 family | $2,000 single / $4,000 family |
| Coinsurance, after deductible | 80% | 100% |
| Out-of-pocket maximum | $2,500 single / $5,000 family | $2,500 single / $5,000 family |
This technique raises the deductible, improves the coinsurance and does not change the employee’s maximum out-of-pocket risk. The resulting new design may also prove easier to explain to employees.
2. Ensure out-of-pocket maximums do not exceed the maximum 2019 thresholds of $6,750 single/$13,500 family.
Remember that the 2019 HDHP out-of-pocket limits, confusingly, are lower than the Affordable Care Act 2019 limits of $7,900 single and $15,800 family. (Note to the U.S. Congress: Can we please consider merging these limits?) Also, remember that out-of-pocket costs do not include premiums.
3. If your plan’s family deductible includes an embedded individual deductible, ensure that each individual in the family must meet the HDHP statutory minimum family deductible ($2,700 for 2019).
Arguably, the easiest way to do so is making the family deductible at least $5,400, with the embedded individual deductible being $5,400 ÷ 2 = $2,700. However, you’ll then have to raise this amount each time the IRS raises the floor, which is quite the hidden annual bear trap. Thus, as in No. 1, if you’re committed to offering embedded deductibles, consider pushing the deductibles well above the thresholds to give yourself some breathing room (e.g., $3,500 individual and $7,000 family).
For the creative, note that the individual embedded deductible within the family deductible does not necessarily have to be the same amount as the deductible for single coverage. But, whether or not your insurer or TPA can administer that out-of-the-box design is another question. Also, beware of plan designs with an embedded single deductible but not a family umbrella deductible; these designs can cause a family to exceed the out-of-pocket limits outlined in No. 2.
Perhaps the easiest strategy is doing away with embedded deductibles altogether and clearly communicating this change to plan participants.
4. Ensure that all non-preventive services and procedures, as defined by the federal government, are subject to the deductible.
Of note, certain states, including Maryland, Illinois and Oregon, passed laws mandating certain non-preventive services be covered at 100%. While some of these states have reversed course, the situation remains complicated. If your health plan is subject to these state laws, consult with your benefits consultant, attorney and tax adviser on recommended next steps.
Similarly, note that non-preventive telemedicine medical services must naturally be subject to the deductible. Do you offer any employer-sponsored standalone telemedicine products? Are there any telemedicine products bundled under any 100% employee-paid products (aka voluntary)? These arrangements can prove problematic on several fronts, including HSA eligibility, ERISA and ACA compliance.
Specific to HSA eligibility, charging a small copay for the services makes it hard to argue that this isn’t a significant benefit in the nature of medical care. While a solution is to charge HSA participants the fair market value for standalone telemedicine services, which should allow for continued HSA eligibility, this strategy may still leave the door open for ACA and ERISA compliance challenges. Thus, consider eliminating these arrangements or finding a way to compliantly bundle the programs under your health plan. However, as we discussed in the following case study, doing so can prove difficult or even impossible, even when the telemedicine vendor is your TPA’s “partner vendor.”
Finally, if your firm offers an on-site clinic, you’re likely well aware that non-preventive care within the clinic must generally be subject to the deductible.
5. Depending on the underlying plan design, certain supplemental medical products (e.g., critical illness, hospital indemnity) are considered “other medical coverage.” Thus, depending on the design, enrollment in these products can disqualify HSA eligibility.
Do you offer these types of products? If so, review the underlying plan design: Do the benefits vary by underlying medical procedure? If yes, that’s likely a clue that the products are not true indemnity plans and could be HSA disqualifying. Ask your tax advisor if your offered plans are HSA qualified. Of note, while your insurer might offer an opinion on this status, insurers are naturally not usually willing to stand behind these opinions as tax advice.
6. The healthcare flexible spending account 2 ½-month grace period and $500 rollover provisions — just say no.
If your firm sponsors non-HDHPs (such as an HMO, EPO or PPO), you may be inclined to continue offering enrollees in these plans the opportunity to enroll in healthcare flexible spending accounts. If so, it’s tempting to structure the FSA to feature the special two-and-a-half month grace period or the $500 rollover provision. However, doing so makes it challenging for an individual, for example, enrolled in a PPO and FSA in one plan year to move to the HDHP in the next plan year and become HSA eligible on day one of the new plan year. Check with your benefits consultant and tax adviser on the reasons why.
Short of eliminating the healthcare FSA benefit entirely, consider prospectively amending your FSA plan document to eliminate these provisions. This amendment will, essentially, give current enrollees more than 12 months’ notice of the change. While you’re at it, if you still offer a limited FSA program, consider if this offering still makes sense. For most individuals, the usefulness of a limited FSA ebbed greatly back in 2007. That’s when the IRS, via Congressional action, began allowing individuals to contribute to the HSA statutory maximum, even if the individual’s underlying in-network deductible was less.
7. TRICARE
TRICARE provides civilian health benefits for U.S Armed Forces military personnel, military retirees and their dependents, including some members of the Reserve component. Especially if you employ veterans in large numbers, you should become familiar with TRICARE, as it will pay benefits to enrollees before the HDHP deductible is met, thereby disqualifying the HSA.
8. Beware the incentive.
Employers can receive various incentives, such as wellness or marketplace cost-sharing reductions, which could change the benefits provided and the terms of an HDHP. These types of incentives may allow for the payment of medical care before the minimum deductible is met or lower the amount of that deductible below the statutory minimums, either of which would disqualify the plan.
SOURCE: Pace, Z.; Smith, B. (22 October 2018) "8 ways to maintain HSA eligibility" (Web Blog Post). Retrieved from https://www.employeebenefitadviser.com/opinion/8-ways-to-maintain-hsa-eligibility
3 things you should be telling employees about HSAs
HSAs can seem to be complicated but can save your employees an additional 20 percent on average compared to paying out of their pockets. Here are 3 tips for an employer to keep in mind about HSAs.
Everyone wants to spend less on health care, but many employees don’t realize that an HDHP plan with an HSA might be the best deal they can get. Some people get scared off by an HDHP’s big deductible, some are accustomed to FSAs, and some just think an HSA seems too complicated.
But using an HSA to pay for health expenses can save your employees an additional 20 percent on average compared to paying out of their pocket. HSAs give them a way to pay for current and future medical expenses, and every dollar they save in their HSA saves you money on payroll taxes.
Here are three things you should be communicating about your HSAs:
1. FSAs are rubber, HSAs are glue
Many employees familiar with FSAs will expect that all health care accounts follow the “use it or lose it” rule. To them, saving a lot of money on health care will seem like a gamble since with an FSA, it can be better to save too little rather than way too much.
Make sure your employees understand that there’s no “use by” date on their HSA. The money they save will stick with them until they need it — this year, next year, or twenty years from now. Emphasize that the HSA is their account, and they’ll carry it with them even if they change jobs or retire. And speaking of retirement…
2. HSAs are a great way to save for retirement
Employees who understand their HSA may still only think of them as a way to cover their current medical expenses. The sobering reality is that the average couple will have over $240,000 in medical expenses during retirement. An HSA offers a great way to save for those expenses and other retirement costs.
Explain to your employees that HSA savings can be invested like a 401(k) and can grow year-after-year. An HSA actually offers better tax savings than an 401(k) when it’s used to cover medical expenses. Reassure your employees that there’s no downside to saving too much, because once they turn 65, their HSA savings can be spent on non-medical expenses, so they can use that HSA money to buy themselves those senior-discount skydiving lessons. And speaking of treating themselves…
3. You can pay yourself back with an HSA (thanks, self!)
Many employees worry that they’ll get no benefit from an HSA if they run into medical expenses before they’ve saved enough, so they choose an FSA, since their FSA annual contribution would be available immediately.
Let them know that they can use their HSA to “reimburse themselves” for any out-of-pocket money they spend on medical expenses. So if they spend $100 out-of-pocket on an X-ray in January, they can save some pre-tax money in their HSA during February, and write themselves a check for $100. Just remind them the medical expense has to be from afterthey opened the HSA—so setting it up right away is critical.
HSAs can save everybody money; employees just need to know how to make it work. Having a solid understanding of the benefits and flexibility of HSAs can help employees realize how easy it is to lower their taxes, cover their medical expenses, and save for the future.
SOURCE:
Schneider, C (2 July 2018) "3 things your clients should be telling employees about HSAs" [Web Blog Post]. Retrieved from https://www.benefitspro.com/2018/07/02/3-things-your-clients-should-be-telling-employees/
3 ideas to ease the transition to a high-deductible world
With high-deductible health plans rising, employers may not be thinking about the drastic changes happening in the future. Here are some tips to make a transition into a high deductible industry painless.
We’re all familiar with the necessary evils of today’s society: paying taxes, going to the dentist and sitting in rush-hour traffic. Now, there’s another one to add to the list — high deductible health plans (HDHPs). They’re on the rise due to increasingly unmanageable health care costs caused by factors such as increased carrier and hospital consolidation, unregulated pharmaceutical prices, and a lack of financial awareness among medical providers.
In response, prudent employers who want to continue providing health benefits but can’t keep up with the costs are turning to HDHPs to share the financial burden with employees and encouraging those employees to become more disciplined shoppers. This is predictably being met with resistance.
But there’s a more urgent matter at hand: until we find a way to flip the health-care system on its head, we’re anticipating a future where networks get narrower and significantly limit options and deductibles rise to catastrophic heights.
Employers may not be thinking ahead for these drastic changes, which is why brokers can be instrumental in helping clients guide their employees toward the necessary mental and financial preparations. Here are a few ideas to get them started.
1. Shift gears to plan beyond the calendar year.
For most, health care is an infrequent experience that’s handled reactively: you get sick, you go to the doctor, your insurance foots the bill. However, now that employees are on the hook for potentially thousands of dollars, it’s crucial that they plan ahead.
To facilitate this shift in mindset, employers should encourage employees to:
- Utilize a health savings account (HSA):When it comes to HSAs, people tend to fall into one of two schools of thought: “HSAs are a silver bullet” or “HSAs are a terrible excuse by politicians to allow the existence of HDHPs.” Rarely is a situation so black and white, and this one is no exception. HSAs aren’t the best choice for everyone. Certain demographics can’t afford to juggle the high costs of health care (and life) while also contributing funds to an account. However, it’s important to keep in mind that as costs continue to rise, more people will be pushed above the HSA qualification line and having an account may be the only life raft available when drowning in high deductibles — a trend we’re already starting to see.In an ideal world, the HSA wouldn’t exist. Out-of-control health care costs bear the blame for solutions like HDHPs — and the HSA is our consolation prize. The reason I advocate the utilization of these accounts for long-term planning is because they are the only health care benefit we have that encourages people to think beyond 12 months. Unlike the flexible spending account (FSA), the money in an HSA rolls over every year and grows over time, so it lets people save for years down the road (maybe when the pediatrician bills pile up, or you finally have that major surgery) vs. scrambling to spend their funds before the end of the year. Also, if an employer is contributing to an employee’s HSA, it’s leaving money on the table not to sign up for an account.
- Shop for the best “deals”:Unless someone is a frequent flyer in the health care system, they might brush off shopping for healthcare since it seems like a lot of effort for a single doctor’s visit. However, considering the fact that the cost of an ACL surgery can vary as much as $17,000, those numbers certainly add up over time. (Even more so if a patient fails to find care that’s in network.) Helping employees understand this concept, and pairing it with an easy-to-use transparency solution, can save them tons of money in the long run — especially if the cost savings from each doctor’s visit are deposited into an HSA for future use.
2. Recognize that options are still available.
I’m not going to try to frame high deductibles in a positive light. It’s not the ideal situation for consumers or employers. But sometimes, just knowing there are options in a seemingly bleak situation can provide temporary relief. Here are some tips for employers to share with employees when they’re frustrated about their HDHPs:
- Ask questions:Employees shouldn’t be afraid to ask questions. Healthcare is known for being convoluted, so it’s likely they’re not alone in any confusion they experience. They should start with health insurance and take time with the HR manager to understand the specifics of their coinsurance, copays, deductibles, and benefits so they’re aware of all their options, such as free preventive services. Another great place for questions is at the doctor’s office. Asking about and negotiating costs (yes, you can do that!) can have huge payoffs — Consumer Reports found that only 31 percent of Americans haggle with doctors over medical bills but that 93 percent of those who did were successful, with more than a third of those saving more than $100.
- Stay educated:“Education” can be a tired term for brokers and employers. Employees never seem to read the emails and collateral materials that teams painstakingly curate each year. While disheartening, I think the focus on education is a long but ultimately rewarding process. Consider the 401(k). These plans struggled through the recessions in the early 2000s, but through constant behavioral reinforcement (helped largely by policies such as The Pension Protection Act, which made it easier for companies to automatically enroll their employees in 401(k) plans) and continued efforts by employers, 401(K)s bounced back and hold $4.8 trillion in assets today.The same lesson can be applied to your education efforts as well. That is, eventually the education will stick. So help create a new ecosystem for employees to navigate by getting timely information and resources out there about maximizing HDHPs and utilizing HSAs.
3. Stay optimistic because change is coming.
This point is a bit more abstract. Worrying about health care costs is exhausting, and things are likely to get worse before they get better. However, there’s been a lot of news in the health care space that should bring a glimmer of optimism.
For instance, we heard about the partnering of three industry powerhouses to create a new health care company for their employees. It’s been fascinating to see how much chatter this announcement has already generated and will likely keep traditional employer health care vendors on their toes.
While the trend of employers building coalitions to tackle health care costs is nothing new and it’s too early to tell how successful this initiative will be, the bigger point is that this is a strong signal that change is desperately needed. More and more companies — regardless of what industry they’re in — are starting to realize that they’re all in the business of health care. And as we gain power in numbers, I believe we will build the momentum to create some serious change.
It’s tough to win in today’s health care world, and it’s likely going to get even more challenging over the next few years. But if brokers and employers can provide the right level of guidance, education, and resources, they can help employees better mentally and financially manage their high-deductible futures.
SOURCE:
Vivero, D (2 July 2018) "3 ideas to ease the transition to a high-deductible world" [Web Blog Post]. Retrieved from https://www.benefitspro.com/2018/02/08/3-ideas-to-ease-the-transition-to-a-high-deductibl/
These 3 industries are leading the way in HDHP adoption
Interested in knowing which industries are leadig the way in HDHP adoption? Check out this blog article.
Employers in the education, health care, manufacturing and retail sectors are using a variety of tactics to drive selection of HDHPs, with varying levels of adoption from employees, so says the report, based on anonymous employee benefit election data on the Benefitfocus Platform from more than 540 large employers in those sectors.
In the education sector, HDHPs are becoming less the exception, more the rule.
“Back in 2016, traditional health plans like PPOs and HMOs represented an overwhelming majority of health plan offerings and elections among employers in the education industry,” the authors write. “But just two short years later, things look completely different. In an industry known historically for its generous health insurance benefits, the HDHP has made remarkable gains in popularity.”
The share of employers in the education sector offering at least one HDHP has more than doubled since 2016, from 23 to 50 percent, according to the report. Employers have done a lot to make HDHPs attractive — they now pay 87 percent of the total HDHP premium and have doubled their contribution to employees’ HSAs since 2016. Their efforts have worked — 34 percent of employees selected an HDHP when given the choice for 2018, up from 20 percent two years ago.
In the health care sector, employers are encouraging consumer-driven plans with moderate success, according to the report.
“Over the past two years, employers in the health care industry have taken steps to shift more health insurance costs onto employees, while providing ways to help them manage the additional burden,” the authors write. “But there remains a long runway of opportunity for these organizations to boost adoption of the consumer-driven health care model.”
The number of employers offering HDHPs has nearly doubled in two years, with 73 percent offering at least one in 2018, up from 41 percent in 2016. However, despite there efforts, only 27 percent of employees selected an HDHP for 2018. Health care employers are likely trying to raise the adoption rate by transferring more PPO plan costs onto workers — the average employee premium contribution for a single-coverage PPO is up 24 percent from 2016.
In the manufacturing sector, despite boom in HDHP offerings among those employers, more of their workers are still opting for PPOs. “Manufacturing employers have displayed a particularly strong and growing enthusiasm for HDHPs in recent years,” the authors write. “But cost-sharing dynamics appear to be driving employees away from these plans and back into traditional health plans. Meanwhile, voluntary benefits maintain above-average popularity among both employers and employees.” The majority (88 percent) of employers in manufacturing now offer an HDHP, up from 54 percent in 2016. However, the percentage of employees electing an HDHP continues to decrease, while PPO participation grew from 36 percent in 2016, to 57 percent for 2018.
The report also found that voluntary benefits have become increasingly prevalent among manufacturers, with nearly 60 percent of employers offering at least one for 2018, up from 34 percent in 2016.
In the retail sector, employees shoulder more health plan costs, while more employers offer voluntary benefits to supplement coverage, according to the report.
“As employers in the retail industry look to keep benefit costs under control, health care is getting more expensive for their employees,” the authors write. “And while voluntary benefits offer additional financial protection for the majority of these workers, there remains a long runway of opportunity for health spending accounts to help them manage their out-of-pocket liabilities.”
Retail employers offering at least one HDHP increased from 55 percent in 2016 to 76 percent. Nearly half (40 percent) of their employees elected HDHPs, but premiums for these plans are rising, with the average annual employee contribution for a single-coverage HDHP up nearly 20 percent since 2016.
Despite HDHP prevalence, retail employers contributed 40 percent less to HSAs than the average for all employers, and employees contributed 20 percent less than peers in other industries. To supplement coverage, 56 percent of employers offered at least one voluntary benefit, up from 43 percent in 2016.
“Everywhere you turn there’s a story about rising health care costs,” says Ray August. “What employers in every industry have in common is the struggle to economically provide the best plans and care for their employees.”
Source:
Kuehner-Hebert K. (7 May 2018). "These 3 industries are leading the way in HDHP adoption" [web blog post]. Retrieved from address https://bit.ly/2FUf4Ii
HDHP Use Doubles for Nonprofits
Originally posted by Kathryn Mayer on https://www.benefitspro.com
For many nonprofits, just having traditional medical coverage is so 2009. Consumer-driven plans, like HDHPs, are the new rage.
According to a survey from benefits administration firm PPI Benefit Solutions, among nonprofits, the use of traditional medical plans has decreased from 96 percent in 2009 to 83.6 percent in 2013. Meanwhile, the use of high-deductible health plans has nearly doubled, increasing from 22 percent in 2009 to 43.5 percent in 2013.
PPI surveyed more than 250 small to mid-sized nonprofit organizations nationwide.
“Nonprofits are really struggling to maintain a comprehensive benefits package, and consumer-driven plans like HDHPs, health savings accounts and flexible spending accounts can be great, lower-cost options,” said Karen Greco, director of marketing for PPI Benefit Solutions. “The growth in these plan types, combined with the appeal of a predictable benefits budget, is also driving a lot of interest in alternative funding and enrollment solutions like defined contribution with an online marketplace that offers a wide array of product options.”
More nonprofits also are adding voluntary benefits, the report found. More employers, since 2012, are offering voluntary dental (offered by 20.3 percent of employers), life (49.7 percent), critical illness (9.6 percent), accident (34.5 percent) and transit reimbursements (24.3 percent) to their employees.
Other findings from the PPI report include:
Increased importance on automated benefits administration and enrollment: 77.2 percent of employers (up from 28.8 percent in 2012) consider benefits administration platforms to be very important and the 44.3 percent of employers (up from 9.6 percent in 2012) who believe employee self-service portals to be very important.
Help needed with understanding PPACA: 60.5 percent of nonprofits said they haven’t calculated the cost of compliance with regulations under the Patient Protection and Affordable Care Act.
Brokers wanted? Nearly 85 percent of nonprofit employers said they’re committed to delivering health and welfare benefits to their employees but are “seeking solutions to help manage costs and improve employee engagement.”
IRS Releases 2015 Amounts for HSAs, HDHPs, and Out-Of-Pocket Limits
Source: https://www.shrm.org
The Internal Revenue Service announced higher limits for 2015 on contributions to health savings accounts (HSAs) and for out-of-pocket spending under high-deductible health plans (HDHPs) linked to them.
In Revenue Procedure 2014-30, issued April 24, 2014, the IRS provided the inflation-adjusted HSA contribution and HDHP minimum deductible and out-of-pocket limits, effective for calendar year 2015. The higher rates reflect a cost-of-living adjustment and rounding rules under Internal Revenue Code Section 223.
A comparison of the 2015 and 2014 limits is shown below:
|
2015 HSA
|
2014 HSA
|
2015 PPACA (non-grandfathered plans)
|
2014 PPACA (non-grandfathered plans)
|
|
|---|---|---|---|---|
| Out-of-pocket maximum | $6,450 single $12,900 family |
$6,350 single $12,700 family |
$6,600 single $13,200 family |
$6,350 single $12,700 family |
| Minimum deductible | $1,300 single $2.600 family |
$1,250 single $2,500 family |
None | None |
| Maximum deductible | None | None | None (this requirement has been repealed) | None (this requirement has been repealed) |
| Maximum contribution | $3,350 single $6,650 family |
$3,300 single $6,550 family |
None | None |
| Catch-up limit (age 55 or older) | $1,000 (unchanged) | $1,000 | Not applicable | Not applicable |
IRS Issues Higher Limits for HSA Contributions for 2014
Original article https://www.shrm.org
By Stephen Miller
The Internal Revenue Service announced higher limits for 2014 on contributions to health savings accounts (HSAs) and for out-of-pocket spending under high-deductible health plans (HDHPs) linked to them.
In Revenue Procedure 2013-25, issued May 2, 2013, the IRS provided the inflation-adjusted HSA contribution and HDHP minimum deductible and out-of-pocket limits, effective for calendar year 2014. The higher rates reflect a cost-of-living adjustment and rounding rules under Internal Revenue Code Section 223.
A comparison of the 2014 and 2013 limits is shown below:
|
|
Calendar Year 2013 |
Calendar Year 2014 |
||
|
Self-only |
Family |
Self-only |
Family |
|
|
Annual Contribution Limit |
$3,250 |
$6,450 |
$3,300 |
$6,550 |
|
HDHP Minimum Deductible |
$1,250 |
$2,500 |
$1,250 (no change) |
$2,500 (no change) |
|
HDHP Out-of-Pocket Limit |
$6,250 |
$12,500 |
$6,350 |
$12,700 |
The increases in contribution limits and out-of-pocket maximums from 2013 to 2014 were somewhat lower than the increases a year earlier, reflecting the government's calculation of a more modest inflation rate. From 2012 to 2013 the contribution limit rose $150 for individual coverage and $200 for family plans, while maximum out-of-pocket amounts rose $200 for individuals and $400 for families, and HDHP minimum deductible amounts rose $50 for individuals and $100 for families.
Penalties for Nonqualified Expenses
Those under age 65 (unless totally and permanently disabled) who use HSA funds for nonqualified medical expenses face a penalty of 20 percent of the funds used for such expenses. Funds spent for nonqualified purposes are also subject to income tax.
Coverage of Adult Children
While the Patient Protection and Affordable Care Act allows parents to add their adult children (up to age 26) to their health plans, the IRS has not changed its definition of a dependent for health savings accounts. This means that an employee whose 24-year-old child is covered on his HSA-qualified high-deductible health plan is not eligible to use HSA funds to pay that child’s medical bills.
If account holders can't claim a child as a dependent on their tax returns, then they can't spend HSA dollars on services provided to that child. According to the IRS definition, a dependent is a qualifying child (daughter, son, stepchild, sibling or stepsibling, or any descendant of these) who:
- Has the same principal place of abode as the covered employee for more than one-half of the taxable year.
- Has not provided more than one-half of his or her own support during the taxable year.
- Is not yet 19 (or, if a student, not yet 24) at the end of the tax year or is permanently and totally disabled.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Employers Take Another Look at CDHPs
While consumer-driven health plans (CDHPs) have been shown in the past to generate savings for employers and workers alike, the CDHP movement now might be losing some steam, according to a pair of industry studies.
CDHPs -- high-deductible health plans (HDHPs) often paired with health savings accounts -- made up 22.5 percent of all health care plans offered in the U.S. in 2012, according to the latest release from the UBA Health Plan Survey. That figure compares with 22.9 percent in 2011 -- the first decline since 2007.
There's no shortage of research that points to the positives of these types of plans. A recent study by the Kaiser Family Foundation found that HDHPs had average premiums of just under $5,000 for single coverage in 2012 -- about 15 percent less than preferred provider organization (PPO) plans, according to a report in MarketWatch. Another report by the RAND Corp. noted that patients with CDHPs tended to see significantly lower overall medical costs and used fewer brand-name drugs.
Statistics like those -- and a challenging economic outlook -- have moved more employers to offer CDHPs, said Helen Darling, president of the National Business Group on Health, in the MarketWatch report.
"Now that there's been this economic crunch and wages are flat, the increased costs of health care are harder to take," Darling said.
Yet at the same time, employers are starting to see some downsides to consumer-based care, the RAND study notes. Patients with chronic conditions often see much higher out-of-pocket expenses than those without a chronic disease. The plans also may discourage employees from obtaining medical care, which can lead to bigger costs down the road.
"The concern is that [those enrolled in CDHPs are] forgoing care that they need," said Amelia M. Haviland of the Carnegie Mellon University and co-author of the RAND study in MarketWatch.
CDHPs also aren't achieving as much first-year savings for some employers. The 2012 UBA Health Plan Survey found that the savings created by CDHPs in their first year over the plans they were replacing averaged 1.75 percent in 2012, a significant reduction from prior years.
Still, the survey spotted a few bright spots for these types of plans. The negative trend of CDHPs renewing at higher rates compared with other plans did not repeat in 2012, and CDHPs continue to remain popular in particular regions of the U.S. -- especially in the Northeast, where 27.8 percent of all plans were CDHPs.