Exploring Benefits Lingo

Exploring Benefits Lingo

We all know how confusing and complex benefits and healthcare terms can be- the difference between deductible and co-insurance is a common question for many and there are plenty of others like it.  When you are comfortable and confident in how your plan works, you can make an informed decision on HOW to use and take advantage of your benefits!

We have created a list and explanation of the most common terms to help you understand and better utilize your health benefits:

  • Co-payment:  An amount you pay as your share of the cost for a medical service or item, like a doctor’s visit.  Co-pays are most common for emergency room, urgent care and prescription drugs. In some cases, you may be responsible for paying a co‐pay as well as a percentage of the remaining charges.
  • Co-insurance:  Your share of the cost for a covered health care service, usually calculated as a percentage (like 20%) of the allowed amount for the service. For example, if your plan has a 30% co-insurance rate, the carrier will pay 70% of the allowed amount while you pay the balance.
  • Deductible: The amount you owe for covered health care services before your health insurance or plan begins to pay.  For example, many plans require an individual to pay $1,000 in cumulative deductibles before they begin paying out.
  • Dependent coverage:  Health insurance coverage extended to the spouse and unmarried children up to age 26 who are totally or substantially reliant on their parents for support, thereby defined as “dependent children”.
  • Explanation of Benefits (EOB): Every time you use your health insurance, your health plan sends you a record called an “explanation of benefits” (EOB) or “member health statement” that explains how much you owe. The EOB also shows the total cost of care, how much your plan paid and the amount an in-¬network doctor or other healthcare professional is allowed to charge a plan member (called the “allowed amount”).
  • In-Network Provider: A provider who has a contract with your health insurer or plan to provide services to you at a discount. In-Network Providers have contracted with the insurance carrier to accept reduced fees for services provided to plan members. Using in-network providers will cost you less money. When contacting an In-Network Provider, remember to ask, “are you a contracted provider with my plan?” Never ask if a provider “takes” your insurance, as they will all take it. The key phrase is contracted.
  • Open Enrollment: A period during which a health insurance company is required to accept applicants without regard to health history.
  • Out-of-Network Provider: A provider who doesn’t have a contract with your health insurer or plan to provide services to you at a pre-negotiated discount. You’ll pay more to see an out-of-network provider, sometimes referred to as an out-of-network provider.
  • Out-of-Pocket Maximum: The limit or most you’ll pay out of your own pocket for services during your insurance plan period (usually one year).
  • Premium: The amount you pay for your health insurance or plan each month.
  • Qualifying Life Event (QLE): A change in your life that allows you to make changes to your benefits’ coverage outside of the annual open enrollment period. These changes include a change in marital status (marriage, divorce, death of spouse), a change in the number of eligible children (birth, adoption, death, aging-out), and a change in a family member’s benefits eligibility under another plan (losing a job, Medicare or Medicaid eligibility, etc.)

In addition to understanding these common terms, there are other ways to utilize your benefits, save money and make an informed decision based on your specific needs.

  • Flexible Spending Account (FSA): Funded through pre-tax payroll deductions, an FSA is a cost-savings tool that allows you to pay for qualified healthcare-related expenses with pre-tax dollars. Funds deposited in an FSA must be spent in the same year in which they are set aside, or they are forfeited. This rule is often referred to as “use it or lose it.”
  • Health Reimbursement Account (HRA): An employer-funded savings plan that will reimburse you for out-of-pocket medical expenses. Unlike an FSA, however, you don’t “use it or lose it” – unused balances will roll over and accumulate over time, though the account cannot be “cashed-out.”
  • Health Savings Account (HSA): A savings product that serves as a substitute for traditional health insurance. HSAs enable you to pay for current health costs. They also allow you to save for future medical and retiree health costs tax-free. Unlike an FSA, however, you don’t “use it or lose it” – unused balances will roll over and accumulate over time and can be “cashed-out.”

Understanding all of the terms and acronyms can feel like learning a new language, so it’s helpful to have a basic reference chart.  With a good understanding of what some healthcare “benefits lingo” means, it will be easier to find a plan that meets your needs and budget. To explore more healthcare terms, visit https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/common-health-benefit-terms-glossary.aspx

IRS Announces HSA Limits for 2022

IRS Announces HSA Limits for 2022

On May 10, 2021, the Internal Revenue Service (IRS) released Revenue Procedure 2021-25 announcing the annual inflation-adjusted limits for health savings accounts (HSAs) for calendar year 2022. An HSA is a tax-exempt savings account that employees can use to pay for qualified health expenses.

To be eligible for an HSA, an employee:

  • Must be covered by a qualified high deductible health plan (HDHP);
  • Must not have any disqualifying health coverage (called “impermissible non-HDHP coverage”);
  • Must not be enrolled in Medicare; and
  • May not be claimed as a dependent on someone else’s tax return.

The limits vary based on whether an individual has self-only or family coverage under an HDHP. The limits are as follows:

  • 2022 HSA contribution limit:
  • Single: $3,650 (an increase of $50 from 2021)
  • Family: $7,300 (an increase of $100 from 2021)
  • Catch-up contributions for those age 55 and older remains at $1,000
  • 2022 HDHP minimum deductible*
  • Single: $1,400 (no change from 2021)
  • Family: $2,800 (no change from 2021)
  • 2022 HDHP maximum out-of-pocket limit:
  • Single: $7,050 (an increase of $50 from 2021)
  • Family: $14,100** (an increase of $100 from 2021)

*   The deductible does not apply to preventive care services nor to services related to testing for COVID-19. An HDHP also may choose to waive the deductible for coverage of COVID-19 treatment, and/or telehealth and other remote care services.

**   If the HDHP is a non-grandfathered plan, a per-person limit of $8,700 also will apply due to the Affordable Care Act’s cost-sharing provision for essential health benefits.

By Kathy Berger

Originally posted on Mineral.com

Tips to Maximize Your HSA Benefits

Tips to Maximize Your HSA Benefits

Health Savings Accounts (HSA) are great ways to save tax-free money for medical expenses both in the current term, and for your retirement years. By making wise choices, you can maximize the benefit of these fantastic savings accounts. Let’s take a quick look at the basics and then explore some tips on how to make your HSA money grow.
What is an HSA?
According to the website HealthCare.gov, a Health Savings Account is a type of savings account that lets you set aside money on a pre-tax basis to pay for qualified medical expenses. By using untaxed dollars in an HSA to pay for deductibles, copayments, coinsurance, and some other expenses, you may be able to lower your overall health care costs. HSA funds generally may not be used to pay premiums.
In order to contribute to an HSA, you must be enrolled in a High Deductible Health Plan (HDHP). A HDHP is defined as a plan with a higher deductible than a traditional insurance plan. The monthly premium is usually lower, but you pay more health care costs yourself before the insurance company starts to pay its share (your deductible). A high deductible plan (HDHP) can be combined with a health savings account (HSA), allowing you to pay for certain medical expenses with money free from federal taxes.
HSA vs Traditional Insurance
As mentioned, you are able to open a Health Savings Account when you enroll in your employer’s High Deductible Health Plan. A HDHP is different from traditional insurance in that with traditional insurance, you and your employer both contribute to the cost of your health insurance each month—otherwise known as the premium. You then have a fixed cost—a “co-pay”—that you pay when you visit a doctor, pay for prescriptions, or have a health procedure. With a HDHP, the patient is incentivized to shop around for lower cost doctor visits and procedures since they are paying for those costs out of their pocket at the full amount from the beginning until the high deductible amount is met.
Now, when used in tandem, the two components of the HDHP and the HSA have the potential to save the insured party money on their health care expenses. Here’s how it works:

  1. Contribution Limits

Each year, the government puts a cap on the amount of money that an individual and a family can contribute to their HSA. For 2020, an individual can contribute up to $3550 and a family can add in $7100 to their account. In 2021, the amounts both increase: individuals will be $3600 and families will be able to deposit $7200.

  1. Triple Tax Benefits

When you contribute to your HSA, your money gets a triple tax benefit. There is a 0% tax on deposited money, your money grows tax-free while in the account, and, when used for qualified medical expenses, you can withdraw the money tax-free.

  1. Roll-over

The money that you deposit into your HSA is yours to keep–forever. If you change jobs, the money follows you. If you don’t use the money you’ve contributed by the end of the year, it rolls over to the next year with no penalty.
Tips to Maximize the Benefits of Your HSA This Year
Don’t be complacent to let your tax-free hard-earned money simply sit in your HSA all year! You can by making some wise choices. Here’s some tips on how to do this:

  1. Do you get a bonus at the end of the year? You can use that bonus money to bulk up your HSA until April 15 of the following calendar year. Just make sure you don’t contribute more than the annual allowed amount or you will pay a 6% tax on the overage.
  2. Once you hit the minimum contribution amount for your particular plan, you can invest a portion of the contributions in an IRA account and watch your tax-free dollars grow even more! Check with your plan manager regarding the minimum amount required.
  3. There is a once-in-a-lifetime allowance for you to move money over from a traditional or Roth IRA to your HSA. This allows you to kickstart that HSA so that you can begin using that money for expenses right away. The annual contribution limit still applies to this scenario for the individual and family amount.
  4. Long term care insurance is expensive and you can use your HSA money to help pay for those insurance premiums. Again, check with your plan manager to make sure you are staying within the allowed range for using this money for those premiums.
  5. Finally, name your spouse as the beneficiary of your account. When you pass away, your spouse will have access to these funds with the same tax benefits as you did. In fact, your HSA money can even continue to grow tax-free after you pass.

Finding ways to save money is always a good idea. Finding ways to maximize the benefit of your already saved money is even better!

IRS Releases 2019 Inflation-Adjusted Limits

IRS Releases 2019 Inflation-Adjusted Limits

The Internal Revenue Service (IRS) released its inflation-adjusted limits for various benefits. For example, the maximum contribution limit to health flexible spending arrangements (FSAs) will be $2,700 in 2019. Also, the maximum reimbursement limit in 2019 for Qualified Small Employer Health Reimbursement Arrangements will be $5,150 for single coverage and $10,450 for family coverage.
Read more about the 2019 limits.

By Karen Hsu
Originally posted on UBABenefits.com

IRS Changes Course (Again) and Restores 2018 HSA Family Limit to $6,900

IRS Changes Course (Again) and Restores 2018 HSA Family Limit to $6,900


Friday, April 27, the Internal Revenue Service (IRS) announced that the 2018 annual contribution limit to Health Savings Accounts (HSAs) for persons with family coverage under a qualifying High Deductible Health Plan (HDHP) is restored to $6,900. The single-coverage limit of $3,450 is not affected.
This is the final word on what has been an unusual back-and-forth saga. The 2018 family limit of $6,900 had been announced in May 2017. Following passage of the Tax Cuts and Jobs Act in December 2017, however, the IRS was required to modify the methodology used in determining annual inflation-adjusted benefit limits. On March 5, 2018, the IRS announced the 2018 family limit was reduced by $50, retroactively, from $6,900 to $6,850. Since the 2018 tax year was already in progress, this small change was going to require HSA trustees and recordkeepers to implement not-so-small fixes to their systems. The IRS has listened to appeals from the industry, and now is providing relief by reinstating the original 2018 family limit of $6,900.
Employers that offer HSAs to their workers will receive information from their HSA administrator or trustee regarding any updates needed in their payroll files, systems, and employee communications. Note that some administrators had held off making changes after the IRS announcement in March, with the hopes that the IRS would change its position and restore the original limit. So employers will need to consider their specific case with their administrator to determine what steps are needed now.

HSA Summary

An HSA is a tax-exempt savings account employees can use to pay for qualified health expenses. To be eligible to contribute to an HSA, an employee:

  • Must be covered by a qualified high deductible health plan (HDHP);
  • Must not have any disqualifying health coverage (called “impermissible non-HDHP coverage”);
  • Must not be enrolled in Medicare; and
  • May not be claimed as a dependent on someone else’s tax return.

HSA 2018 Limits

Limits apply to HSAs based on whether an individual has self-only or family coverage under the qualifying HDHP.
2018 HSA contribution limit:

  • Single: $3,450
  • Family: $6,900
  • Catch-up contributions for those age 55 and older remains at $1,000

2018 HDHP minimum deductible (not applicable to preventive services):

  • Single: $1,350
  • Family: $2,700

2018 HDHP maximum out-of-pocket limit:

  • Single: $6,650
  • Family: $13,300*

*If the HDHP is a nongrandfathered plan, a per-person limit of $7,350 also will apply due to the ACA’s cost-sharing provision for essential health benefits.

Originally posted on thinkHR.com

All About Medical Savings Accounts

All About Medical Savings Accounts


Taking control of health care expenses is on the top of most people’s to-do list for 2018.  The average premium increase for 2018 is 18% for Affordable Care Act (ACA) plans.  So, how do you save money on health care when the costs seems to keep increasing faster than wage increases?  One way is through medical savings accounts.
Medical savings accounts are used in conjunction with High Deductible Health Plans (HDHP) and allow savers to use their pre-tax dollars to pay for qualified health care expenses.  There are three major types of medical savings accounts as defined by the IRS.  The Health Savings Account (HSA) is funded through an employer and is usually part of a salary reduction agreement.  The employer establishes this account and contributes toward it through payroll deductions.  The employee uses the balance to pay for qualified health care costs.  Money in HSA is not forfeited at the end of the year if the employee does not use it. The Health Flexible Savings Account (FSA) can be funded by the employer, employee, or any other contributor.  These pre-tax dollars are not part of a salary reduction plan and can be used for approved health care expenses.  Money in this account can be rolled over by one of two ways: 1) balance used in first 2.5 months of new year or 2) up to $500 rolled over to new year.  The third type of savings account is the Health Reimbursement Arrangement (HRA).  This account may only be contributed to by the employer and is not included in the employee’s income.  The employee then uses these contributions to pay for qualified medical expenses and the unused funds can be rolled over year to year.
There are many benefits to participating in a medical savings account.  One major benefit is the control it gives to employee when paying for health care.  As we move to a more consumer driven health plan arrangement, the individual can make informed choices on their medical expenses.  They can “shop around” to get better pricing on everything from MRIs to prescription drugs.  By placing the control of the funds back in the employee’s hands, the employer also sees a cost savings.  Reduction in premiums as well as administrative costs are attractive to employers as they look to set up these accounts for their workforce.  The ability to set aside funds pre-tax is advantageous to the savings savvy individual.  The interest earned on these accounts is also tax-free.
The federal government made adjustments to contribution limits for medical savings accounts for 2018.  For an individual purchasing single medical coverage, the yearly limit increased $50 from 2017 to a new total $3450.  Family contribution limits also increased to $6850 for this year.  Those over the age of 55 with single medical plans are now allowed to contribute $4450 and for families with the insurance provider over 55 the new limit is $7900.
Health care consumers can find ways to save money even as the cost of medical care increases.  Contributing to health savings accounts benefits both the employee as well as the employer with cost savings on premiums and better informed choices on where to spend those medical dollars.  The savings gained on these accounts even end up rewarding the consumer for making healthier lifestyle choices with lower out-of-pocket expenses for medical care.  That’s a win-win for the healthy consumer!