by admin | Jun 16, 2017 | HSA/HRA
The average employer contribution to an HSA is $474 for a single employee (down 3.5 percent from 2015 and 17.6 percent from five years ago) and $801 for a family (down 9.2 percent from last year and 13.7 percent from five years ago). There was a 26 percent increase in the number of individuals enrolled in HSAs, likely due to the increase in CDHP enrollment (which often have HSAs tied to them). Since 2013, there has been a 97.7 percent increase in enrollment, showing significant employer and employee interest in these plans over time.
Looking at contributions by group size, singles at companies with 200 to 499 employees receive the lowest HSA contributions ($409). Singles at some of the smallest companies (25 to 49 employees) receive the most generous contributions ($543), on average.
Like their single counterparts, families get more generous contributions from small employers. The average family HSA contribution in groups with 25 to 49 employees was $908 (though, in general, small employer contributions have been declining over time).
Last year, some of the smallest companies (10 to 24 employees) had the highest HSA enrollment (16.3 percent). However, rapid enrollment increases among large employers in recent years now places the largest companies (1,000+ employees) as HSA enrollment leaders with 19.1 percent enrolled.
For a detailed look at the prevalence and enrollment rates among HSA and HRA plans by industry and region, view UBA’s “Special Report: How Health Savings Accounts Measure Up”, to understand which aspects of these accounts are most successful, and least successful.
Benchmarking your health plan with peers of a similar size, industry and/or geography makes a big difference in determining if your plan is competitive. To compare your exact plan with your peers, request a custom benchmarking report.
For fast facts about HSA and HRA plans, including the best and worst plans, average contributions made by employers, and industry trends, download (no form!) “Fast Facts: HSAs vs. HRAs”.
By Bill Olson
Originally Posted By www.ubabenefits.com
by admin | Jun 13, 2017 | Benefit Plan Tips, Tricks and Traps, Human Resources
The Section 125 cafeteria plan regulations and the Patient Protection and Affordable Care Act (ACA) require employers to take certain actions when an employee reduces hours.
Consider this scenario: An employer has an employee who is reducing hours below 30 hours per week. The employee is performing the same job and duties. The employee was determined to be full-time during the most recent measurement period. The employee is currently in a stability period.
What happens when the employee reduces hours during a stability period?
Answer: The employee must be offered coverage through the entire stability period. The employee must remain classified as full-time for the rest of the stability period. An employee’s full-time status determined in the measurement period determines the employee’s status during the subsequent stability period. This is true regardless of why the individual’s hours were reduced, or who chose to reduce the hours.
By Danielle Capilla
Originally Posted By www.ubabenefits.com
by admin | Jun 9, 2017 | HSA/HRA, IRS
IRS Releases 2018 Amounts for HSAs
The IRS released Revenue Procedure 2017-37 that sets the dollar limits for health savings accounts (HSAs) and high-deductible health plans (HDHPs) for 2018.
For calendar year 2018, the annual contribution limit for an individual with self-only coverage under an HDHP is $3,450, and the annual contribution limit for an individual with family coverage under an HDHP is $6,900. How much should an employer contribute to an HSA? Read our latest news release for information on modest contribution strategies that are still driving enrollment in HSA and HRA plans.
For calendar year 2018, a “high deductible health plan” is defined as a health plan with an annual deductible that is not less than $1,350 for self-only coverage or $2,700 for family coverage, and the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $6,650 for self-only coverage or $13,300 for family coverage.
Retroactive Medicare Coverage Effect on HSA Contributions
The Internal Revenue Service (IRS) recently released a letter regarding retroactive Medicare coverage and health savings account (HSA) contributions.
As background, Medicare Part A coverage begins the month an individual turns age 65, provided the individual files an application for Medicare Part A (or for Social Security or Railroad Retirement Board benefits) within six months of the month in which the individual turns age 65. If the individual files an application more than six months after turning age 65, Medicare Part A coverage will be retroactive for six months.
Individuals who delayed applying for Medicare and were later covered by Medicare retroactively to the month they turned 65 (or six months, if later) cannot make contributions to the HSA for the period of retroactive coverage. There are no exceptions to this rule.
However, if they contributed to an HSA during the months that were retroactively covered by Medicare and, as a result, had contributions in excess of the annual limitation, they may withdraw the excess contributions (and any net income attributable to the excess contribution) from the HSA.
They can make the withdrawal without penalty if they do so by the due date for the return (with extensions). Further, an individual generally may withdraw amounts from an HSA after reaching Medicare eligibility age without penalty. (However, the individual must include both types of withdrawals in income for federal tax purposes to the extent the amounts were previously excluded from taxable income.)
If an excess contribution is not withdrawn by the due date of the federal tax return for the taxable year, it is subject to an excise tax under the Internal Revenue Code. This tax is intended to recapture the benefits of any tax-free earning on the excess contribution.
By Danielle Capilla
Originally Posted By www.ubabenefits.com
by admin | Jun 6, 2017 | Employee Benefits, IRS
Under Internal Revenue Code Section 105(h), a self-funded medical reimbursement plan must pass two nondiscrimination tests. Failure to pass either test means that the favorable tax treatment for highly compensated individuals who participate in the plan will be lost. The Section 105(h) rules only affect whether reimbursement (including payments to health care providers) under a self-funded plan is taxable.
When Section 105(h) was enacted, its nondiscrimination testing applied solely to self-funded plans. Under the Patient Protection and Affordable Care Act (ACA), Section 105(h) also applies to fully insured, non-grandfathered plans. However, in late 2010, the government delayed enforcement of Section 105(h) against fully insured, non-grandfathered plans until the first plan year beginning after regulations are issued. To date, no regulations have been issued so there is currently no penalty for noncompliance.
Practically speaking, if a plan treats all employees the same, then it is unlikely that the plan will fail Section 105(h) nondiscrimination testing.
What Is a Self-Insured Medical Reimbursement Plan?
Section 105(h) applies to a “self-funded medical reimbursement plan,” which is an employer plan to reimburse employees for medical care expenses listed under Code Section 213(d) for which reimbursement is not provided under a policy of accident or health insurance.
Common self-funded medical reimbursement plans are self-funded major medical plans, health reimbursement arrangements (HRAs), and medical expense reimbursement plans (MERPs). Many employers who sponsor an insured plan may also have a self-funded plan; that self-funded plan is subject to the Section 105 non-discrimination rules. For example, many employers offer a fully insured major medical plan that is integrated with an HRA to reimburse expenses incurred before a participant meets the plan deductible.
What If the Self-Insured Medical Reimbursement Plan Is Offered Under a Cafeteria Plan?
A self-funded medical reimbursement plan (self-funded plan) can be offered outside of a cafeteria plan or under a cafeteria plan. Section 105(h) nondiscrimination testing applies in both cases.
Regardless of grandfathered status, if the self-funded plan is offered under a cafeteria plan and allows employees to pay premiums on a pre-tax basis, then the plan is still subject to the Section 125 nondiscrimination rules. The cafeteria plan rules affect whether contributions are taxable; if contributions are taxable, then the Section 105(h) rules do not apply.
What Is the Purpose of Nondiscrimination Testing?
Congress permits self-funded medical reimbursement plans to provide tax-free benefits. However, Congress wanted employers to provide these tax-free benefits to their regular employees, not just to their executives. Nondiscrimination testing is designed to encourage employers to provide benefits to their employees in a way that does not discriminate in favor of employees who are highly paid or high ranking.
If a plan fails the nondiscrimination testing, the regular employees will not lose the tax benefits of the self-funded medical reimbursement plan and the plan will not be invalidated. However, highly paid or high ranking employees may be adversely affected if the plan fails testing.
What Are the Two Nondiscrimination Tests?
The two nondiscrimination tests are the Eligibility Test and Benefits Test.
The Eligibility Test answers the basic question of whether there are enough regular employees benefitting from the plan. Section 105(h) provides three ways of passing the Eligibility Test:
- The 70% Test – 70 percent or more of all employees benefit under the plan.
- The 70% / 80% Test – At least 70 percent of employees are eligible under the plan and at least 80 percent or more of those eligible employees participate in the plan.
- The Nondiscriminatory Classification Test – Employees qualify for the plan under a classification set up by the employer that is found by the IRS not to be discriminatory in favor of highly compensated individuals.
The Benefits Test answers the basic question of whether all participants are eligible for the same benefits.
By Danielle Capilla
Originally Posted By www.ubabenefits.com
by admin | Jun 1, 2017 | Benefit Management, ERISA, HSA/HRA, IRS
Certain small employers have the option to reimburse individual health coverage premiums up to a dollar limit through Qualified Small Employer Health Reimbursement Arrangements (QSE HRAs) under the 21st Century Cures Act (Cures Act).
The Cures Act amends the Employee Retirement Income Security Act of 1974 (ERISA) to exclude QSE HRAs from the ERISA definition of group health plan; however, the Cures Act does not specifically exclude QSE HRAs from the rest of ERISA.
Small employers that plan to offer QSE HRAs should be cautious before presuming that ERISA would not apply to a reimbursement arrangement. Because QSE HRAs are new, the issue of whether the remainder of ERISA applies to QSE HRAs remains undetermined by an administrative agency or court. In consideration of the limited ERISA group health definition exclusion and the law’s legislative history, a risk-averse small employer should treat a QSE HRA as an employee welfare benefit plan covered under ERISA and comply with applicable ERISA requirements such as having a written plan document and summary plan description as well as following ERISA’s fiduciary and other rules.
Request UBA’s Compliance Advisor, “Qualified Small Employer Health Reimbursement Arrangements and ERISA” for a discussion of ERISA’s definitions of “group health plan,” as well as the law’s legislative history governing exclusions. A small employer who intends to offer a QSE HRA without complying with ERISA’s employee welfare benefit plan requirements should consult with its attorney before proceeding.
By Danielle Capilla
Originally Posted By www.ubabenefits.com
