This checklist is designed to help companies review the key reporting and notice requirements that may apply to their employer-sponsored group health plans under ERISA (the Employee Retirement Income Security Act). Please note that this list is for general reference purposes only and is not all-inclusive.
This article was published on November 6, 2018 on Employee Benefit News, written by Kathryn Mayer.
HSA: A savings account without the saving?
By and large, employees who are enrolled in a health savings account are using them as spending accounts rather than as tax-free long-term savings accounts, according to new research from Willis Towers Watson. Meanwhile, about one in four employees who can enroll in an HSA opted not to enroll, according to the consulting firm’s survey of more than 2,100 employees.
Here are 10 findings about health savings accounts from the report.
65% of workers are tapping their HSAs to pay for immediate healthcare expenses
27% use the money only when necessary and save the rest
8% are saving the money for the future
45% have more than $5,000 saved in their HSA
24% of employees are not enrolled in their employers’ HSA
57% don’t enroll in an HSA because they don’t see the advantages
24% don’t enroll in an HSA because they don’t have enough money to contribute
On Wednesday, the House of Representatives adopted two health care bills, H.R. 6199 and H.R. 6311, that expand tax-advantaged health care accounts, including Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and Health Reimbursement Arrangements (HRAs).
Previous versions of these bills were reported upon favorably by the House Ways and Means Committee on July 11th followed by the Committee on Rules on July 23rd.
The House-approved versions of these bills would have important implications for HSAs, FSAs, and HRAs. Some notable examples include:
- Individuals would now be able to purchase over-the-counter (OTC) medications with an HSA, FSA, or HRA without being required to obtain a prescription for eligibility purposes
- Menstrual care products would become qualified medical expenses that could be purchased with all tax-advantaged health care accounts
- Certain sports and fitness expenses – including gym memberships and the cost to participate in certain physical exercise programs – would be treated as qualified medical expenses up to a limit of $500 a year for an individual and $1,000 a year for a joint return
- HSA contribution would be raised to $6,650 for individuals and $13,300 for families – the combined annual limit on out-of-pocket and deductible expenses under an HSA-qualified insurance plan in 2018
- Working seniors participating in Medicare Part A and covered by a qualifying HDHP would now be able to contribute to an HSA
- Individuals would no longer be barred from contributing to an HSA if his/her spouse is enrolled in a medical FSA – a disqualifying scenario currently
- Spouses over the age of 55 would be able to make “catch-up” contributions to the same HSA
- At an employer’s discretion, employees with an FSA or HRA that enroll in a qualifying HDHP with an HSA would be permitted to transfer balances from their FSA or HRA to the HSA. Transfers would be capped at $2,650 for individuals and $5,300 for families
- Health FSA balances could be carried over to the following plan year. This rollover could not exceed three times the annual FSA contribution limit
“ConnectYourCare supports the modernization of Health Savings Accounts and other consumer directed health programs to allow more Americans to save for the current and future medical needs,” wrote Harrison Stone, General Counsel at ConnectYourCare, in a statement.
“The bills passed by the House of Representatives would allow a greater number of consumers to take advantage Health Savings Accounts by allowing more flexibility in the definition of a high deductible health plan. Also included in these bills are important changes that would allow greater flexibility in how consumers can spend their savings for individual and family medical needs. CYC supports passage of these improvements to the law surrounding health savings accounts and will continue working with its industry partners to encourage the Senate to take up and pass these measures.”
Changes in the approved legislation that would impact HSAs, FSAs, or HRAs if these bills were to become law are as follows, as originally described by the Committee on Rules:
- First Dollar Coverage Flexibility for High Deductible Health Plans. Health plans can provide coverage for services before the deductible is met up to $250 a year for an individual and $500 a year for family coverage. This change will allow insurers to provide coverage for and incentivize the use of services that can reduce health care costs more broadly, such as primary care visits and telehealth services.
- Treatment of Direct Primary Care Service Arrangements. Under this proposal, a Direct Primary Care (DPC) service arrangement would not be treated as a health plan that would disqualify an individual from contributing to an HSA. For this purpose, a DPC arrangement is an arrangement under which an individual is provided primary care services by primary care practitioners and the sole compensation for such care is a fixed periodic fee that does not exceed an aggregate of $150 a month for an individual and $300 a month for a family. In addition, the fees for the arrangement are treated as qualified medical expenses.
- Certain Employment Related Services Not Treated as Disqualifying Coverage For Purposes of Health Savings Accounts. This section allows employers to offer free or discounted services at on-site or retail medical clinics without disqualifying an HDHP enrollee from contributing to an HSA so long as significant medical care benefits are not provided.
- Contributions Permitted If Spouse Has A Health Flexible Spending Account. Under current law, FSAs can be used to reimburse expenses for an individual and their spouses and dependents. This eligibility for FSA benefits disqualifies an otherwise eligible FSA enrollee’s spouse from contributing to an HSA, even when each spouse is covered under a separate health plan. This provision allows an otherwise eligible FSA enrollee’s spouse to maintain an HSA, so long as the aggregate expenses actually reimbursed from the FSA are limited exclusively to what the FSA enrollee would have been entitled to absent the spouse.
- FSA And HRA Terminations or Conversions to Fund HSAs. Employees are able, at the employer’s discretion, to convert their FSA and HRA balances into an HSA contribution upon enrolling in a high deductible health plan with an HSA. The conversion amount is capped at $2,650 for an individual and twice that for family coverage. Any conversion taking place during the same year as the FSA or HRA contribution was made will count towards an enrollees’ HSA contribution for that taxable year.
- Inclusion of Certain Over-The-Counter Medical Products as Qualified Medical Expenses. Removes Obamacare’s restriction on over-the-counter medicines for all tax-favored health accounts and adds “menstrual care products,” defined as a tampon, pad, liner, cup, sponge, or similar product used by women with respect to menstruation or other genital-tract secretions, as a qualified medical expense for the purposes of these accounts.
- Certain Amounts Paid for Physical Activity, Fitness, And Exercise Treated as Amounts Paid for Medical Care. Qualified sports and fitness expenses are treated as qualified medical expenses up to a limit of $500 a year for an individual and $1,000 a year for a joint return. This includes amounts paid for membership at a fitness facility, participation or instruction in a program of physical exercise or physical activity, or safety equipment for use in a program of physical exercise or physical activity.
- Carryforward of Health Flexible Spending Arrangement Account Balances. This provision allows FSA balances to be carried over to the succeeding plan year so long as the balance in an account does not exceed three times the annual FSA contribution limit.
- Individuals Entitled to Part A of Medicare By Reason of Age Allowed to Contribute to Health Savings Accounts. This provision allows working seniors that are covered by an HSA-eligible HDHP and enrolled in Medicare Part A to contribute to an HSA.
- Maximum Contribution Limit to Health Savings Account Increased to Amount of Deductible and Out-Of-Pocket Limitation. Under current law, annual HSA contributions are limited. In 2018, the limit is $3,450 for an individual and $6,900 for family coverage. These limits are updated annually for inflation and are significantly less than the combined legal limit on annual out-of-pocket and deductible expenses. This provision would allow HSA-eligible individuals to contribute an amount equal to the combined annual limit on out-of-pocket and deductible expenses under their HSA-qualified insurance plan, which is $6,650 for an individual and $13,300 for a family in 2018.
- Allow Both Spouses to Make Catch-Up Contributions to the Same Health Savings Account. Under current law, if both spouses are HSA-eligible and age 55 or older, they must open separate HSA accounts for their respective “catch-up” contributions (an extra $1,000 annually). This provision would allow both spouses to deposit their catch-up contributions into one account.
- Special Rule for Certain Medical Expenses Incurred Before Establishment of Health Savings Account. Under current law, taxpayers may use HSA funds only for qualified medical expenses incurred after the establishment of the HSA, which might occur after the establishment of the associated HDHP. If, for example, the taxpayer purchases an HDHP and then immediately incurs medical expenses before opening the HSA, the taxpayer may not use tax-favored HSA funds to pay the expenses. This provision would treat HSAs opened within 60 days after gaining coverage under a HDHP as having been opened on the same day as the HDHP. This would allow for a reasonable grace period between the time coverage begins through an HDHP and the establishment of an HSA.
- Allowance of Bronze and Catastrophic Plans in Connection with Health Savings Accounts. Under this provision, a new pathway for HSA eligibility is created by allowing health plans qualified as bronze and catastrophic to be eligible plans for the purpose of making HSA contributions.
- Allowing All Individuals Purchasing Health Insurance in The Individual Market the Option to Purchase A Lower Premium Copper Plan. Under current law, only those under age 30 or those that qualify for a hardship exemption are able to purchase catastrophic or “copper” health plans and the risk pool for catastrophic enrollees is segregated from the rest of the market. This section amends the law to allow anyone to purchase a lower-premium catastrophic plan and combines the risk pool with the rest of plans in the market.
During the House Ways and Means Committee meeting earlier this month, Chairman Kevin Brady (R-TX) spoke in his opening remarks about the ability of HSAs to expand consumer choice in the marketplace and drive down premiums.
“Health Savings Accounts are an important tool for families to set aside money that’s tax-free to pay for needed health care expenses,” Brady said. ”This helps reduce the burden of high health care costs and enables families to plan ahead for events like the birth of a child. It’s no wonder why so many families think HSAs are so great. They give choice and lower costs.”
IRS ACA Patient Centered Outcomes Research Institute (PCORI) Fees Due July 31st.
For 2018, the annual fee to fund the federal Patient-Centered Outcomes Research Institute (PCORI), paid by employers that sponsor self-insured health plans and by commercial group health insurance providers, will go up by about 10 cents per employee or dependent enrolled in the health plan. The fees are due by July 31. The chart below shows the fees to be paid in 2018, which rose slightly from the fees owed in 2017.
The chart below shows the fees to be paid in 2018, which rose slightly from the fees owed in 2017:
|Jan. 1, 2017, through Sept. 30, 2017||$2.26 (up from $2.17) per Covered Life (including spouse & children)|
|Oct. 1, 2017, through Dec. 31, 2017 (including calendar year plans)||$2.39 (up from $2.26) per Covered Life (including spouse & children)|
For self-funded plans, the self-insured employer is responsible for submitting the fee and accompanying paperwork to the IRS. PCORI fees are reported on IRS Form 720, Quarterly Federal Excise Tax Return. On page two of Form 720, under Part II, the employer needs to designate the average number of covered lives under its applicable self-insured plan. Although the fee is paid annually, employers should indicate on the Payment Voucher (720-V)—located at the end of Form 720—that the tax period for the fee is the second quarter of the year. Failure to properly designate ‘2nd Quarter’ on the voucher will result in the IRS’s software generating a tardy filing notice.
The PCORI fee will not be assessed for plan years ending after Sept. 30, 2019, which means that for a calendar-year plan, the last year for assessment is the 2018 calendar year.
ATTENTION DIVERSIFIED GROUP CLIENTS:
Clients who have elected to have Diversified Group assist with PCORI fee calculation can expect an email by June 25th that will include a copy of the completed Form 720 along with the PCORI calculation worksheet with supporting documentation. Clients will need to file Form 720 with payment by July 31, 2018.
In October, a bipartisan group of senators introduced a bill that would ease the ACA reporting mandates for employer-sponsored health plans. The bill would roll back the reporting requirements of Section 6056 and replace them with a voluntary reporting system. The bill would also allow payers to transmit employee notices electronically rather than having to send paper statements by mail.
While self-funded health plans must now comply with Sections 6055 and 6056, it is not yet clear how the bill would affect Section 6055 requirements. Senators Rob Portman of Ohio and Mark Warner of Virginia, sponsors of the bill, say their proposal would give the government a more effective way of applying premium tax credits to consumers who purchase insurance through an Exchange, something the administration has been trying to accomplish.
The article below was published on January 3, 2018 by DigitalDealer, written by Contributing Writer Steve Kelly.
We came across this article written by Steve Kelly, co-founder and CEO of ELAP Services. It discusses one common theme that all of us at Diversified Group hear more and more from not only our auto dealer clients, but from a growing number of our clients – the fact that amidst increasing healthcare costs, employers are seeking out better, less expensive ways to offer healthcare to their employees. Making the switch from a traditional health insurance plan to self-insurance creates the opportunity to achieve the savings they are looking for. We have been proud to partner with ELAP Services for many years and can attest to the results discussed in his article, which can be read below.
January is the month of new beginnings, and of course, New Year’s resolutions. But beyond setting a personal goal this year, what if you decided to use your energy to set your dealership up for success instead? What if your New Year’s resolution was to finally find a better, less expensive way to offer healthcare to your employees?
Each year auto dealers around the country feel the squeeze of rising healthcare costs. Insurance premiums for family coverage have increased by 55 percent since 2007, and while these costs are felt by the individuals and families on the plan, the employer who sponsors the health plan often carries the financial burden. Meanwhile, the total operating profit for the average dealership decreased 43.5 percent from 2016 to 2017, proving that healthcare costs and profits are out of sync, and healthcare costs have a substantial impact on dealers trying to run profitable businesses.
Becoming fed-up with the increasing costs year over year, more businesses are looking for viable, cost-saving alternatives to PPOs and are increasingly turning to self-funded or self-insured plans. Self-insurance is when an employer takes the money it would pay an insurance company and instead pays healthcare providers directly for medical claims.
According to the Employee Benefit Research Institute, the number of businesses offering self-insured health plans has increased by nearly 37 percent from 1996 to 2015. This huge increase proves that employers are trying to find the right, less expensive healthcare solution for their business. But, if you are considering self-insurance to forgo the hassles and costs of a PPO, you are missing the key component to assisting with risks of self-insurance. Self-insurers can really only maximize their health plans when paired with the reference-based pricing method.
The reference-based pricing method is the assessment and payment of medical claims based on the provider’s actual cost to deliver the service or by utilizing Medicare cost data as a benchmark. This means that rather than paying a discount off of an unknown price, an employer knows the true cost and pays a fair price for the service. Reference-based pricing helps remove the curtain of PPO “discounts,” leaving you with a fair and reasonable price to pay for a medical service.
Quite frankly, changing from a traditional healthcare plan to self-insurance with reference-based pricing could be a total game changer for your dealership. Self-insurers who use reference-based pricing benefit from significant cost savings in comparison to their PPO discounts. With the help of a partner, employers pay their healthcare bills going line by line through the expenses and with an understanding of the actual cost it takes to provide a medical service, like they would any other business cost—and in the way healthcare was meant to be paid for. On average, with the right strategic partner, you can expect to save up to 30 percent off your total healthcare spend in the first year.
So, this year, rather than throwing in the towel a few weeks in, like we often do for New Year’s resolutions, resolve to empower yourself by learning the facts and evaluating if your current healthcare plan is truly offering you the value it promises. Identifying a better, less expensive way to offer healthcare to your employees will allow you to do something novel like put the savings back into running your dealership.
About the Author
Steve Kelly is the co-founder and CEO of ELAP Services, a leading healthcare solution for self-funded employers across the U.S. He is a recognized expert and frequently called-upon speaker in the insurance, employee benefits and risk management industry, bringing more than three decades of experience solving his clients’ complex healthcare challenges.
The article below was published on October 17, 2017 by PRWEB, written by Chevy Chase, MD.
The Society of Professional Benefit Administrators (SPBA) has released its State of the TPA Industry & Forecast for 2018. Developed annually for the last 37 years, this report shares current happenings in health benefits and self-funding along with projections for the future.
In preparing for the year ahead, the Society of Professional Benefit Administrators (SPBA) has released its State of the TPA Industry & Forecast for 2018.
Fred Hunt, SPBA’s active past president, has been writing this report annually for the past 37 years with the intent to shed light on what is happening with third party administrators (TPAs) and the self-funded industry.
As with years past, the 2018 Forecast shares a candid perspective on current issues affecting the health benefits landscape as well as projections for the future. In it, Hunt describes the state of the TPA industry as “very good” amid the uncertainty in health care regulation the U.S. is facing and the ever-changing compliance requirements.
Some of his main projections include:
- TPA growth – TPAs are positioned for a growth expansion as employers will continue to move to self-funding for the ability to design and fully customize health plans that fit their specific work populations.
- State-level health care – With solutions for health care being debated, there will be more interest in exploring a state-centric approach as the 2018 Congressional and 2020 Presidential elections draw closer. Education will become key as careful consideration must be taken to address the many complications that would arise for the large number of companies with multi-state operations and plan participants.
- Increase in “well-being” services – Employees will be looking for more benefits that enhance their well-being – things like wellness solutions (whole health and niche), student loan assistance, pension management, work-schedule management, etc. They will also rely on employers for help in overseeing these solutions.
“Fred has become such a trusted source for these forecasts based on his many years of experience in the self-funded industry and the fact that he stays so well-connected to regulators, policymakers and TPAs,” explained Anne Lennan, SPBA president. “He has a unique vantage point as he sees what is happening with health benefits from so many different angles.”
In sharing the 2018 Forecast, SPBA also includes background on the history of self-funding, why these health plans have become so widely adopted among companies of all sizes and formats and how ERISA serves as the main source of regulation. It also provides definitions of TPAs, including comprehensive service, specialty, minimal, ASOs and TPAs-of-convenience.
“Year after year, these forecasts provide a helpful, insightful look at the big picture for TPAs and self-funding,” Lennan said. “SPBA is happy to make them available to the public.”