HSA Limits and Out Of Pocket Maximums Released for 2015

The IRS has released HSA contribution limits as well as maximum out of pocket amounts for 2015.

The maximum HSA contribution will be $3,350 for individuals with self-only coverage, up from $3,300 for 2014. For those with family coverage, the maximum contribution will be $6,650, up from $6,550.

The maximum out of pocket expense will increase to $6,450 for single coverage from $6,350 and to $12,900, from $12,700, for family coverage. These changes will take effect in 2015, and will impact group health plans in both the small and large group markets.

Please reach out to your MedCon Benefit Systems representative with any questions.

Login to MedCon Connect for Live Updates

Your trusted advisors at MedCon Benefit Systems Group, Inc. would like to take this opportunity to remind our clients to login to MedCon Connect for live updates regarding health care reform and other compliance related issues. MedCon Connect is our company portal designed exclusively for clients so they may have access to a myriad of HR and Benefits related resources. Anything from wellness program design, health care reform related notices, employee handbook templates to benchmark surveys can be found within the portal, available to clients 24/7.

Although we attempt to update this blog on a regular basis, the portal and direct client communications via email are our primary avenues for compliance updates. As always, you may also contact us directly.

Self-Funded Plans Under Health Care Reform

The Affordable Care Act (ACA) includes numerous reforms affecting the health coverage that employers provide to their employees. Many of these reforms apply to all group health plans, regardless of their method of funding. Plans that have grandfathered status under ACA, however, are not required to comply with select health care reform requirements. In addition, self-insured plans are exempt from certain ACA requirements. This MedCon Benefit Systems, Inc. Legislative Brief summarizes how the health care reform law applies to self-insured plans.
REFORMS THAT APPLY TO SELF-INSURED PLANS

As noted above, many of ACA’s reforms affect all group health plans, regardless of whether they are fully insured or self-insured. For example, among many other reforms, self-insured and fully insured plans must comply with the following ACA provisions:

  • Dependent coverage for adult children up to age 26;
  • Coverage of preventive health services without cost-sharing (grandfathered plans are exempt);
  • No rescissions of coverage, except in the case of fraud or intentional misrepresentation of material fact;
  • No lifetime limits on essential health benefits and annual limits are restricted until 2014 (in 2014, all annual limits are prohibited); and
  • Improved internal claims and appeals process and minimum requirements for external review (grandfathered plans are exempt).

In addition, both self-insured and fully insured plans are subject to ACA’s requirement to provide participants and beneficiaries with the uniform summary of benefits and coverage. Sponsors of self-insured and fully insured plans alike must also comply with ACA’s requirement to report the aggregate cost of employer-sponsored group health plan coverage on their employees’ Forms W-2.

REFORMS THAT DO NOT APPLY TO SELF-INSURED PLANS

Essential Health Benefits Package
Beginning in 2014, non-grandfathered insurance plans in the individual and small group markets must offer a comprehensive package of items and services, known as essential health benefits. This requirement applies to plans offered inside and outside of the state insurance exchanges (Exchanges). ACA identified in broad terms 10 benefit categories that must be included as essential health benefits. Within these broad categories, the individual states have flexibility to select their own benchmarks for defining essential health benefits.

Self-insured group health plans, health insurance coverage offered in the large group market and grandfathered plans are not required to cover essential health benefits.

Medical Loss Ratio Rules

The medical loss ratio (MLR) rules became effective on Jan. 1, 2011. These rules require health insurance issuers to spend 80 to 85 percent of their premium dollars on medical care and health care quality improvement, rather than administrative costs. Issuers that do not meet these requirements must provide rebates to consumers beginning in 2012. The MLR rules do not apply to self-insured plans.

Small Employer Tax Credit

Beginning with 2010 tax years, ACA created a tax credit for eligible small employers that provide health care coverage to their employees. In order to be eligible for the health care tax credit, an employer must:

  • Have fewer than 25 full-time equivalent employees (FTEs);
  • Pay average annual wages of less than $50,000 per FTE; and
  • Pay at least half of employee health insurance premiums (based on single coverage).

For tax years 2010 through 2013, the maximum health care tax credit is 35 percent of premiums for small business employers and 25 percent of premiums for small tax-exempt employers. An enhanced version of the credit will be effective in 2014.

The tax credit is only available for the purchase of health insurance coverage, and so it does not apply to self-insured coverage.

Review of Premium Increases

ACA required the Department of Health and Human Services (HHS) to establish a process for the annual review of unreasonable increases in premiums for health insurance coverage. HHS’s process provides that effective Sept. 1, 2011, issuers seeking rate increases of 10 percent or more for nongrandfathered plans in the individual and small group markets must publicly disclose the proposed increases, along with justification for the increases. Starting Sept. 1, 2012, the 10 percent threshold will be replaced with a state specific threshold to reflect insurance and health care cost trends particular to that state. The increases will be reviewed by either state or federal experts to determine whether they are unreasonable. This review process for rate increases applies to issuers in the small group and individual markets. However, it does not apply to grandfathered health plan coverage or to excepted benefits (for example, liability insurance, workers’ compensation insurance, limited scope dental or vision benefits, long-term care or nursing home benefits and hospital indemnity insurance). It also does not apply to self-insured plans.

Annual Insurance Fee

ACA’s revenue raising provisions require certain health insurance providers to pay an annual fee beginning in 2014. Issuers with net premiums in a calendar year of $25 million or less are exempt from the fee. Employers that self insure their employees’ health coverage are also exempt from the fee.

Methods to Allocate Insurance Risk

ACA includes reforms related to the allocation of insurance risk through reinsurance, risk corridors and risk adjustment. The purpose of these reforms, which become effective in 2014, is to protect against risk selection and market uncertainty as insurance changes and the Exchanges are implemented.

Self-insured plans are not subject to some of these provisions, such as the risk adjustment charges that states may impose on non-grandfathered plans in the individual and small group market. However, under ACA, each state must establish a transitional reinsurance program to help stabilize premiums for coverage in the individual market during the first three years of Exchange operation (2014-2016). Administrators of self-insured plans will be required to contribute to this program.

Insurance Market Reforms

Effective for 2014, health insurance issuers must comply with a new set of market reforms. Market reforms that are inapplicable to self-insured arrangements include:

  • Guaranteed Issue and Renewability – Health insurance issuers offering coverage in the individual or group market in a state must accept every employer and individual in the state that applies for coverage and must renew or continue to enforce the coverage at the option of the plan sponsor or the individual.
  • Insurance Premium Restrictions – Health insurance issuers will not be permitted to charge higher rates due to heath status, gender or other factors. Premiums will be able to vary based only on age (no more than 3:1), geography, family size and tobacco use.

Should you have questions about self-funded plans, health care reform, or any employee benefits, please feel free to contact the professionals at MedCon.

Confused About The W-2 Reporting Guidelines?

On January 3, 2012, the IRS released additional guidance for employers regarding the W-2 health benefits cost reporting. Questions previously voiced about voluntary benefits and how they fit have been answered:

Q&A number 37 in IRS Notice 2012-9 explains:

Only when employers make some contribution to the cost of coverage, or employees purchase coverage on a pre-tax basis under a Section 125 cafeteria plan, will employers have to include the value of supplemental health benefits, such as hospital indemnity, critical illness, cancer or other specified disease insurance, in their W-2 reporting.

Employers do not have to include the cost of supplemental health benefits that the employees pay entirely with after-tax dollars, according to the notice.

What Must You Report?

  • Medical plans
  • Medicare supplemental policies
  • Prescription drug plans
  • Dental or vision plans that are integrated into a group health plan so that they are part of the same insurance policy, contract or certificate of insurance.

It will be reported in Box 12 under Code DD. In general, the W-2 reporting requirements mean employers will need to explain the benefits reporting employees see on their W-2s, so employees understand they are not being taxed on their benefits coverage.

*This is informational only, it does not cover all the guidance, issues and requirements surrounding the W-2 health plan cost reporting, nor does it constitute legal or accounting advice.

Unum Survey Reveals “Caring Culture, Better Benefits Are More Important Than High Pay”

Unum recently commissioned research from Charles River Associations. The report quantified the economic and social value of the financial benefits provided by many of our clients.

As cited in the study, access to group disability benefits protects as many as 500,000 families a year from impoverishment. It translates into direct savings of up to $4.5 billion a year to the government and ultimately to you, the tax payer. The study also showed that every dollar spent by employers on programs such as disability, life, long term care, critical illness and accident, returned a significantly larger economic value to workers who receive them.

As the government faces continued budget challenges it becomes clear public dollars will not be available to provide resources. As a result, the workplace will become an even more important delivery system for benefit options that offer types of financial stability.

As the research concluded, currently nearly 70% of the working population does not have access to disability at work. With 30+ years in the disability marketplace we are happy to help you begin discussions about how to give your employees access to those valuable coverages.