Category:
Legislation

Employers, These are the Current Benefits Issues You Need to Know About

Employers, These are the Current Benefits Issues You Need to Know About

3/20/2018

by Chris Byrd

 

We’ve just returned from Capitol Hill, where WEX Health attended the nonprofit Employers Council on Flexible Compensation (ECFC) 37th annual conference, March 14-16, to promote choice in benefit solutions. Much of the conversation in D.C. this year was around three major issues which affect tax-advantaged health benefit accounts that are a central element of a Consumer-Directed Health strategy:

 

  1. The Excise Tax on High-cost Health Plans.

Commonly known as the Cadillac Tax, this provision of the Affordable Care Act has been delayed yet again until 2022. Although this is helpful for employers concerned by the implications of this tax – especially those in high-cost states – a delay only defers this issue and does not represent a final resolution.  Given that many employers set their benefit strategies years in advance, 2022 is not terribly far away.  Among the actions employers are already taking or evaluating is curtailing or eliminating Flexible Spending Accounts (FSA) and Health Savings Accounts (HSAs) from their benefit offerings.  Employee contributions to these accounts are counted toward the computation of whether the employee’s benefit plan exceeds the excise tax threshold.  Efforts continue to repeal the tax entirely, but if full repeal cannot be accomplished, to reform the tax by excluding employee contributions to CDH accounts.

 

  1. Strengthening HSAs.

Numerous bills have been introduced in both chambers of Congress to increase the availability and utility of HSAs to help individuals and families plan for and fund their health care needs.  The focal point of discussion is around the HSA “gold standard” bills – S. 403 and H.R. 1175.  These bills include a broad range of important provisions, including an increase in contribution amounts, allowing Medicare-eligible workers to continue contributing to an HSA, and restoring the tax-advantaged treatment of over-the-counter drugs and medicines.  In addition to these bills, there is increased discussion regarding a proposal to allow HSA-qualified health insurance plans to cover certain chronic-care conditions below the deductible.  This idea actually originated with the employer community and is now gaining traction.

 

  1. Supporting and Enhancing FSAs.

As are an important option for employees, particularly since surveys indicate the vast majority of employers offer traditional health insurance that is not HSA-qualified as one of their options in their benefit plans. H.R. 1204 would raise the limit that an employee may contribute to an FSA from $2,650 to $5,000.  This would benefit individuals and families with high healthcare costs, particularly those dealing with chronic conditions.

 

Based on what we heard in D.C., prospects for near-term action on these issues are somewhat limited.  It is, after all, an election year, and as the calendar advances, the ability to move legislation that isn’t “must pass” becomes more challenging.  In the healthcare arena, the biggest issues are the opioid crisis, stabilizing the individual insurance market, and prescription drug pricing/affordability.  In addition, the administration continues to advance regulatory reform, including supporting innovation and flexibility in plan design, distribution, and state regulation and programs (e.g. Medicaid).  With all this said, however, HSAs also continue to occupy an important place in the administration’s healthcare policy, and so there may be an opportunity to advance provisions that would strengthen these accounts.

 

As we have seen in the past, the healthcare landscape in Washington is highly fluid, so the best advice is to stay tuned for updates and developments as they happen

 


Chris Byrd

Executive Vice President, WEX Health Operations & Corporate Development Officer

Chris Byrd brings more than 25 years of experience in employee benefits and banking to his role at WEX Health. A founder of Evolution Benefits in 2000, Chris played a key role in designing the proprietary architecture for the company’s prepaid benefits card.

Chris oversees the daily execution of WEX Health’s business and leads the company’s operations and service delivery, corporate development, merger and acquisition activity, and legal, industry, and government relations efforts.

He began his career in commercial banking, and prior to 2000, he focused on finance, strategy, and business development for Value Health and two start-up healthcare companies. He joined WEX Health in July 2014.

Chris, who serves on numerous industry boards, is a frequent speaker on emerging trends in financial services and benefits and is active in industry and government relations. He earned a degree in economics from Brown University.  


The IRS Has Lowered the HSA Family Contribution for 2018

New: The IRS Has Lowered the HSA Family Contribution for 2018

03/07/2018

 

On Monday, March 5th the IRS said in a service bulletin that it has recalculated the maximum amount that a family can contribute to a health savings account (HSA) in calendar year 2018, reducing it by $50 to $6,850. It had previously announced the 2018 figure would be increased to $6,900.

 

This change was made, effective immediately, to reflect the Tax Cuts and Jobs Act of 2017, signed into law on Dec. 22, 2017. The law ties HSA limits and other employee benefits such as health flexible spending accounts (FSA), commuter plans and adoption assistance benefits to the chained consumer price index (chained CPI), reflecting a change in the way it previously calculated cost-of-living increases.

 

The HSA contribution limit change only applies to family-level coverage, leaving the individual contribution limit for HSAs in 2018 at $3,450. FSA limits were also not affected.

 

2018 Contribution and Out-of-Pocket Limits
for Health Savings Accounts and High-Deductible Health Plans

  2018
HSA contribution limit (employer + employee) Self-only: $3,450
Family: $6,850*
HSA catch-up contributions (age 55 or older)* $1,000
HDHP minimum deductibles Self-only: $1,350
Family: $2,700
HDHP maximum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums) Self-only: $6,650
Family: $13,300

*IRS announced change on Monday, March 5, to the family HSA contribution limit.

 

Ensure your employees aren’t taxed for excess contributions

Any contribution to a family HSA account over $6,850 in 2018 will be considered an excess contribution, and will be hit by a 6 percent excise tax. To ensure that none of your employees are taxed in this way, you need to be able to identify those who have already contributed the maximum amount into a family account for 2018 (the excess contribution will need to be refunded). There is no grandfathering in for HSA accounts that were fully funded at $6,900 prior to the March 5, 2018 IRS notice.

 

There are two options for those that have already fully funded their family HSA account in 2018 at the previously announced 2018 amount of $6,900:

  • Leave the full amount ($6,900) in the HSA account and include the $50 as other income and pay the penalty
  • Take a distribution for HSA excess contribution for the $50, leaving the HSA balance at the new IRS family maximum of $6,850

 

You should also evaluate your employees’ payroll elections to determine if their contribution amounts need to be adjusted so that they don’t end up exceeding the annual limit.

In its recent bulletin, the IRS additionally defined a high-deductible health plan as a 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. This definition has not changed since its previous announcement.

 

Stay up to date on the latest HSA news by following WEX Health on Twitter @wexhealthinc. And learn more about HSAs with our blog post that tells you everything you need to know about these tax-advantaged accounts.

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.

 

IRS Issues Guidance on Small Employer HRAs

IRS Issues Guidance on Small Employer HRAs

11/03/2017

by Chris Byrd

 

This week, the IRS released guidance (Notice 2017-67) addressing qualified small employer health reimbursement arrangements (QSEHRA).

In the form of 79 questions and answers, the IRS explains the rules and requirements for providing a QSEHRA under section 9831(d) of its code, the tax consequences of the arrangement and the requirements for providing written notice of the arrangement to employees. A qualified small employer HRA may be offered by employers that have fewer than 50 full-time employees and do not offer group health plans to any of their employees.

The proposed guidance attempts to respond in part to President Trump’s executive order of Oct. 12, which called for expanded availability and permitted use of HRAs. It should be noted, however, that the response is only in the context of QSEHRAs and does not address potential further expansion of HRAs. The primary purpose of the proposed guidance is to address many questions that have arisen since QSEHRAs were created last December.

The guidance is intended to be incorporated into proposed regulations to be issued by the IRS and Treasury Department. It provides for public comments on the guidance and the proposed regulations through Jan. 19, 2018.

Chris Byrd, WEX Health’s executive vice president of operations, says, “The IRS ruling is proposed and not final. It answers many, if not most, of the questions that the industry had asked it to. That’s good, as it eliminates some of the uncertainty about how these accounts are to be administered, which should help adoption of QSEHRAs. Much of what is outlined is helpful, but it’s not perfect, and I would expect we and other industry participants will provide input during the comment period.”

HRAs were created by the IRS in 2002 to allow employers to fund medical care expenses for their employees on a pre-tax basis. In December 2016, the 21st Century Cures Act additionally created QSEHRAs, amending the IRS code, Patient Protection and Affordable Care Act and other laws to exempt QSEHRAs from certain requirements that apply to group health plans.

To read the IRS’s notice in full, go here.

 


Chris Byrd

Executive Vice President, WEX Health Operations & Corporate Development Officer

Chris Byrd brings more than 25 years of experience in employee benefits and banking to his role at WEX Health. A founder of Evolution Benefits in 2000, Chris played a key role in designing the proprietary architecture for the company’s prepaid benefits card.

Chris oversees the daily execution of WEX Health’s business and leads the company’s operations and service delivery, corporate development, merger and acquisition activity, and legal, industry, and government relations efforts.

He began his career in commercial banking, and prior to 2000, he focused on finance, strategy, and business development for Value Health and two start-up healthcare companies. He joined WEX Health in July 2014.

Chris, who serves on numerous industry boards, is a frequent speaker on emerging trends in financial services and benefits and is active in industry and government relations. He earned a degree in economics from Brown University.  


Retirement Savings Account Limits to Increase in 2018, as Tax Reform Brings Talk of Capping 401(k) Contributions to Forefront

Retirement Savings Account Limits to Increase in 2018, as Tax Reform Brings Talk of Capping 401(k) Contributions to Forefront

10/27/2017

 

Last week, two notable retirement savings stories made the news: First, the IRS announced that it would increase the annual 401(k) contribution limit to $18,500—up $500 from this year’s limit. To reflect an increase in the cost-of-living index, new contribution limits will also apply to 403(b), most 457 plans and the federal government’s Thrift Savings Plan. Continue reading

Why the Latest Healthcare Reform Defeat Shouldn’t Be a Distraction from Your Health Benefits Strategy

Why The Latest Healthcare Reform Defeat Shouldn’t Be a Distraction from Your Health Benefits Strategy

10/09/2017

by Chris Byrd

 

Now that the Graham-Cassidy healthcare bill has failed, Congress will move on. We can expect it to concentrate instead on some pressing items on the calendar—things like agreeing on a continuing resolution to keep the government operating, raising the debt ceiling and reauthorizing programs like the Children’s Health Insurance Program. And of course, as we all know, congressional leadership is poised to take on the very complex issue of tax reform. In other words, after a six-month-long healthcare debate during which politicians expended a considerable amount of political and emotional energy, healthcare is largely off the table for now, barring the (unlikely) inclusion of healthcare in a tax reform package.

 

This means the Affordable Care Act remains the law of the land. While it is far from a perfect framework (and both sides of the aisle agree on that), the employer market has adjusted to it. The repeal and replace efforts of the past six months led some employers to place their benefit strategies on hold pending an understanding of what a new world order might look like. My advice: Don’t put off making decisions about your benefits strategy any longer. The deliberation and debate over a wholesale overhaul of the present system is finished. There will be some targeted efforts, most notably to stabilize the individual market, but the employer market framework is known—more of the same.

 

If there is disappointment among supporters of consumer-directed healthcare approaches, it is over the missed opportunity to pass reforms that would have expanded HSAs, restored the OTC tax benefit, eliminated the cap on FSA contributions and further delayed the implementation of the Cadillac Tax. In the absence of a broad reform bill, these supporters will continue to advocate for these provisions in separate pieces of legislation. But much of that effort may have to wait until after the end of the year, given that the attention of the tax-writing committees is fully focused on tax reform. The industry’s biggest priority continues to be to repeal, reform or delay the Cadillac Tax.

 

The market forces that are causing employers to continue to move toward consumer-directed, higher-deductible healthcare plans haven’t changed, and the trend of consumers having more skin in the game is inexorable because it works. Even without the legislative changes that would have been favorable to consumers with tax-advantaged accounts had the broad healthcare reform bills passed, these accounts will remain a very effective and attractive tool for both employers and consumers. Consumers should be making use of them, as they provide a significant benefit by helping them save money and become wise stewards of their healthcare dollars. Consumer-directed health approaches—and the tools and products that have sprung up around them—continue to be an effective part of the answer to the challenges presented by healthcare’s ever-increasing costs. As Congress gathers its energy for another round of discussion and debate—this time around tax reform—employers and consumers should not be distracted by what’s happening in Washington as it relates to their health benefits strategy.

 


Chris Byrd

Executive Vice President, WEX Health Operations & Corporate Development Officer

Chris Byrd brings more than 25 years of experience in employee benefits and banking to his role at WEX Health. A founder of Evolution Benefits in 2000, Chris played a key role in designing the proprietary architecture for the company’s prepaid benefits card.

Chris oversees the daily execution of WEX Health’s business and leads the company’s operations and service delivery, corporate development, merger and acquisition activity, and legal, industry, and government relations efforts.

He began his career in commercial banking, and prior to 2000, he focused on finance, strategy, and business development for Value Health and two start-up healthcare companies. He joined WEX Health in July 2014.

Chris, who serves on numerous industry boards, is a frequent speaker on emerging trends in financial services and benefits and is active in industry and government relations. He earned a degree in economics from Brown University.  


Tax Reform Is the Next Hot Ticket for Healthcare Regulation

Why Tax Reform Is the Next Hot Ticket for Healthcare Regulation

10/03/2017

In spite of the many headlines and healthcare bills that have centered on repealing or replacing the Affordable Care Act (ACA), the healthcare landscape in the United States today looks remarkably similar to the way it did when the ACA was passed seven years ago: The majority of Americans still receive insurance through their employers. Continue reading

Proposed Bill Looks to Allow Employee Genetic Screening

Employers are on the hunt for some fresh approaches to containing employee healthcare costs. Medical inflation and utilization are both expected to increase this year. And debate seems to continue around the American Health Care Act (AHCA). So most companies recognize they need new strategies that move beyond tweaking plan designs and adding HDHPs. Continue reading

IRS Offers Guidance on Small Employer HRAs in Notice 2017-20

As we’ve been discussing at length recently, the 21st Century Cures Act (Cures Act) was a game changer for healthcare, research and development, and a small business’ ability to offer smarter healthcare options with less overhead and more cost effectiveness, among many other provisions in the nearly-1000-page law. Continue reading