Monthly Archives:
February 2018

What You Need to Know About Your HSA at Tax Time

What You Need to Know About Your HSA at Tax Time

02/19/2018

 

While many of us are already planning how we’ll spend our tax refund, we have to get our returns filed first. Before you decide to spend it on a vacation or your next remodel project, how can you invest your money to go further and help you tackle the rising cost of healthcare? In this post, we offer a suggestion along with a few other things that health-savings accountholders should keep in mind during tax season:

 

HSA contributions and distributions are non-taxable—unless you withdraw money to pay for something other than a qualified medical expense. If this is the case, you will have to pay an additional tax of 20 percent on the taxable portion of your distribution. You will calculate this tax amount using Form 8889 and will need to report the taxable amount on the “other income” line of your tax return, writing “HSA” beside it.

 

You can direct-deposit your refund into your HSA.

 

The average tax return last year was $3,120. By directing your refund to deposit directly into your HSA account, you’ll be ahead of the game for saving for medical expenses in 2018—or for healthcare expenses during retirement. (The annual HSA contribution limit for individuals with single medical coverage in 2018 is $3,450.) While this may not be the most exciting use of your tax refund, it may be among the wisest, especially when planning for retirement, as retirees who take money out of an IRA or 401(k) to pay for medical expenses will be taxed on these withdrawals. When they pay medical bills from an HSA, however, they will never be taxed. E-filing and selecting the direct deposit option is also the quickest way to get your return. Ninety percent of returns that are filed this way are received within a few weeks, while mailing in a paper return can require a six- to eight-week wait.

 

You will need to file a Form 1099-SA if you’ve taken money out of your HSA for any reason.

 

To report distributions from an HSA, you must file this form, which the custodian of your HSA is required to file and send to you. The form essentially notifies the IRS that money has left your HSA account. Because the government will also want to be sure you’ve spent any money you’ve withdrawn from your account on qualified medical expenses, this is the form where you will note whether or not you’ve held up your end up the HSA bargain with the government, so to speak.

 

You will also need to file Form 8889 to verify that you spent your distributions on qualified medical expenses.

 

If you made contributions to, or received distributions from, an HSA in 2017, you will also need to attach Form 8889 to your tax return. On this form, you will report these deposits and withdrawals (including those made on your behalf or by an employer) and determine your HSA deduction and the amounts you must include in income. Form 8889 will also help you figure the tax you will owe if you withdrew money from your HSA to pay for things other than qualified medical expenses.

 

On the subject of tax returns, the Internal Revenue Service urged taxpayers again this week to watch out for erroneous deposits from the IRS in their accounts. Following a breach of tax practitioners’ computer files, scammers have now filed several thousand false returns, using taxpayers’ real bank accounts for the deposits. The taxpayers who receive the deposit then receive an automated call purported to be from the IRS. According to the IRS, “Thieves are then using various tactics to reclaim the refund from the taxpayers, and their versions of the scam may continue to evolve.”

 

Americans have until April 17, 2018, to file their 2017 tax returns—this year, we get two extra days because April 15 falls on a weekend and April 16 is Emancipation Day, a legal holiday recognized in Washington, D.C.

 

To determine how much you should contribute to your HSA each month, read this post by Jason Cook, WEX Health’s vice president of healthcare emerging market sales.

What Is a QSEHRA?

What Is a QSEHRA?

02/13/2018

by Becky Kinder

 

We know, there are far too many acronyms in healthcare, but QSEHRA is an important one! And since it’s on the newer side, it’s led more than a few people straight to the Google search bar.

 

QSEHRA stands for “Qualified Small Employer Health Reimbursement Arrangement” (HR 5447). Also known as “a small business HRA,” it’s becoming a popular employee health coverage option that was established and signed into law in December 2016 as part of the 21st Century Cures Act.

 

QSEHRAs have effectively provided small business owners with smarter healthcare options with less overhead and more cost effectiveness. These plans are designed to assist employees with insurance premiums from a plan of their choosing, and in some cases, the HRA will also cover other medical expenses.

 

It’s a great option for small employers: employers set the amount that they can afford to provide employees (as long as it falls within the legal limits) and employees are reimbursed for the expenses the plan allows for.

 

Employers who offer QSHRAs must have fewer than 50 full-time employees and must not offer traditional employer-sponsored group health offerings (including dental or vision) to any of its employees.

 

With its Notice 2017-67, the IRS issued further guidance on QSEHRAs, including the rules and requirements for providing a QSEHRA, the tax consequences of the arrangement and the requirements for providing employees with written notice of the arrangement.

Public comments on the IRS’s guidance were accepted through Jan. 19. The notice also established that the deadline to submit initial notices for 2017 QSEHRAs and 2018 QSEHRA plans beginning Jan. 1, 2018, is Feb. 19, 2018.

 

To learn more about QSEHRAs and the QSEHRA-related guidance issued by the IRS, review our post here.


What Is a QSEHRA? by Becky Kinder

Becky Kinder

Product Manager, WEX Health

As a seasoned member of our Product Management team, Becky drives the definition and development of features for several different functional areas of the software, serving as the voice of our partners, employers, and consumers to our development teams. Specific areas of focus include notional accounts, debit card, admin operations, and the consumer and employer portals. Becky has over 15 years’ experience collaborating on the delivery of technology solutions for the IT and healthcare industries. Since joining the team in 2007, she has defined and launched hundreds of features on WEX Health Cloud platforms.

 

What You Need to Know About Data Security and Wearable Devices in the Workplace

What You Need to Know About Data Security and Wearable Devices in the Workplace

02/02/2018

 

Now that wearables and smart technology devices are frequently used to incentivize and measure participation in workplace wellness programs, activity trackers have emerged as an important—and sometimes debated—link between employee and employer.

 

Concerns about personal data and activity trackers made the news (again) this week, with reports that U.S. soldiers may have inadvertently revealed the locations of remote military bases in Iraq, Afghanistan and Syria by publicly sharing their jogging routes via the Strava fitness app.

 

And during a series of meetings last year between Apple and Aetna, Aetna employees’ questions about the safety of the data on their employer-provided Apple Watches ended up dominating the discussion—and the news media’s coverage of that discussion. By way of background, Aetna partnered with Apple in 2016 to provide select large employers and individual customers with Apple Watches, as well as offering to reimburse all 50,000 of its own employees for the watches. Apple has stressed that health information is only shared with user consent, and Aetna is continuing to gather feedback from its employees about whether or not the watches have had an impact on their nutrition and exercise habits.

 

Of the Apple/Aetna meetings, CNBC reported, “One of the biggest concerns with companies like Apple and Fitbit collecting health information, like steps and heart rate, is that it could get into the wrong hands. These fears are amplified as technology companies strike deals with self-insured employers and health plans.”

 

So what are employers and health insurers doing with the data they collect from activity trackers? The large majority of those employers are doing nothing with it and are providing employees and/or their customers with wearable devices only to encourage health and wellness in hopes of increased productivity and engagement and decreased healthcare costs.

 

Though it’s now common across industries, the trend of doling out activity trackers to employees and customers was popularized by healthcare companies. Back in 2014, tech startup Oscar made headlines when it partnered with Misfit, a wearable device company, to link its customers’ biometric information straight to their health insurance, presenting Amazon gift cards to those who met their fitness goals.

 

Since 2016, UnitedHealthcare has awarded employees who meet fitness goals (as measured by their wearable devices) with monetary prizes and credits that can be applied to a health savings account or health reimbursement account. The company’s vice president of emerging products recently reported that its program, which it calls “Motion F.I.T.”, has yielded “very impressive” engagement and activity rates. And, as part of its Wellvolution program, Blue Shield of California leverages the Walkadoo app, which keeps track of activity and allows employee participants to earn awards such as Fitbits and Visa gift cards. It has since also invited some of its plan participants to engage with the app in exchange for awards. OptimaHealth, Cigna, Humana and other insurers additionally offer their members discounts and rewards tied to activity trackers.

 

Even as activity trackers have provided impetus for some corporate employees to prioritize their health, the practice of incentivizing with them has, in some ways, heightened the tension between personalized medicine and private information. Workplace wellness programs that are offered by group health plans to group health plan participants only are covered by Health Insurance Portability and Accountability Act (HIPAA) privacy and security rules, while wellness programs offered to all employees, however, are likely not covered by HIPAA.

 

Just last week we reported on a new ruling from a federal district court in Washington, D.C., in which the U.S. Equal Employment Opportunity Commission (EEOC) has been ordered to alter its rules on employer-sponsored wellness programs that financially penalize employees who refuse to provide personal medical and genetic information. As wearable healthcare technology grows more sophisticated, we suspect that the number of questions it raises will continue to grow, as will the opportunities it creates.

 

For more on the role of smartphones and apps in personal health management, read our blog about trends in remote health monitoring.