This is a good time for organizations and employees to do a little fall cleaning and run through a healthcare checklist to make sure they are aware of the most current HSA/FSA benefit information. Continue reading
Getting geared up for open enrollment? Organizations everywhere are reviewing benefit offerings and preparing their process for this annual fall ritual. Employers are seeking to balance their healthcare spend with providing the support their diverse workforce needs.
A key strategy that remains popular with organizations is offering consumer directed health plans (CDHP). These plans are often paired with a health savings account or a flexible spending account. The percentage of employees enrolling in HDHPs has been increasing steadily over the past five years. Driving the trend, is the savings employees see with the average monthly paycheck deduction for individual-only coverage in a HDHP at about $90, compared to $140 for a PPO plan.
Health Savings Accounts have received a lot of attention over the past few months as the accounts manifest themselves as a leading option for certain employees enrolled in a high-deductible health plan, allowing these employees to contribute money pre-tax for healthcare expenses in the short- and long-term.
A health savings account a tax-favored account that allows eligible individuals covered by a qualified High-Deductible Health Plan (HDHP) to pay for current and future qualifying medical expenses tax-free. Defined contribution healthcare dollars are commonly used to fund health savings accounts. Signed into law in 2003, these accounts have grown in importance over the years and are expected to be a lynchpin of future healthcare reforms.
May 4, 2017: IRS Announces Contribution Limits for HSAs in 2018
On May 4, 2017, the Internal Revenue Service released Revenue Procedure 2017-37, providing the 2018 inflation adjusted amounts for Health Savings Accounts (HSAs) as determined under § 223 of the Internal Revenue Code. The contribution limits for 2018 are as follows, alongside contribution limits for 2017, graphed by the Society for Human Resources Management:
|Contribution and Out-of-Pocket Limits
for Health Savings Accounts and High-Deductible Health Plans
|For 2017||For 2018||Change|
|HSA contribution limit (employer + employee)||Self-only: $3,400
|HSA catch-up contributions (age 55 or older)*||$1,000||$1,000||No change**|
|HDHP minimum deductibles||Self-only: $1,300
|HDHP maximum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums)||Self-only: $6,550
|* Catch-up contributions can be made any time during the year in which the HSA participant turns 55.
** Unlike other limits, the HSA catch-up contribution amount is not indexed; any increase would require statutory change.
Difference Between IRS and HHS Limits
Additionally, the IRS limits differ from those set by the Affordable Care Act and announced by the Department of Health and Human Services on December 22, 2016:
|Out-of-pocket limits for ACA-compliant plans (set by HHS)||Self-only: $7,150
|Out-of-pocket limits for HSA-qualified HDHPs (set by IRS)||Self-only: $6,550
Related Resources: Health Savings Accounts
We’ve been talking about the evolution of HSAs alongside the Affordable Care Act, offering key insights into the best practices for employers, employees, and servicers like banks and other financial institutions. Learn more by reading our resources below:
It’s been a tumultuous few years for the healthcare benefits community, and as the Trump administration takes office, the changes are just beginning. To address this, the Healthcare Trends Institute recently completed a survey of benefits professionals from across the United States to learn more about the trends, preparations and expectations for the coming year.
Trends in Healthcare Benefits: 2017 Healthcare Benefits Benchmark Study
The 2017 Healthcare Benefits Benchmark Study was completed by over 250 human resources executives, benefit specialists and other benefit decision makers from organizations ranging in employee size from less than 50 to over 2,500. Below, we will share some of the key insights and what they mean for employer groups in 2017.
Among the notable considerations for employers heading into 2017:
Employers Buying into Healthcare Consumerism
Since the passing of the Affordable Care Act in 2010, employers have been encouraging their employees to take more control of their own healthcare decisions by offering a high-deductible health plan (HDHP).
The Move to HDHP
High deductible health plans are plans that have minimum deductibles of $1,300 for individuals and $2,600 for families. One of the main selling points of an HDHP is that it combats rapid increases to monthly premiums for employers and employees, as shown by the relatively flat Medical Cost Trend over the past 4 years. The increasing popularity of these plans grew as a result of rising healthcare costs and the passing of the ACA, and pose benefits for both employers and employees:
- For employees, high deductible health plans were designed to help them to lower premiums, focus on preventive care, shop around for affordable care, use emergency rooms only for emergencies, and ultimately take more control of their healthcare decisions.
- For employers, HDHPs helped to combat rising premiums while shielding them from the Cadillac Tax, which was initially set to begin in 2018.
With all of this in mind, 2016 marked a milestone for healthcare consumerism, with the amount of organizations offering HDHPs jumping from 28% four years ago to 39% in last year’s survey to 53% in this year’s survey.
Pairing HDHP with Consumer-Oriented Accounts (HSA, HRA, FSA)
With this rise in HDHPs came an increase in the number of employees being enrolled in a Health Savings Account, Healthcare Reimbursement Arrangement, or Flexible Spending Account, as this year’s survey found that 51.5% of respondents’ employees are enrolled in one or more of these plans/arrangements.
By offering one or more of these arrangements, employers are demonstrating that they are committed to helping employees afford out-of-pocket healthcare expenses if and when they arise, making people-first decisions rather than money-first ones.
Notably, however, the move to HDHP does require effective communication, as there is a great deal of misunderstanding among consumers about why these plans help them and how they can use them effectively. Learn more about common misunderstandings in 5 Benefits Problems Employees Face and how to address concerns in How to Talk About Healthcare Consumerism with Your Employees.
Focusing on the Advantages
Organizations are relying heavily on their benefits programs to recruit, retain, and engage employees. Even if many employers have moved away from the traditional forms of healthcare benefits that were prevalent in the industry decades ago, the benefits offerings of today still can represent a significant investment in happier, healthier, and more engaged employees. Additionally, a well-defined benefits strategy can play a major role in improving company reputation as a leader and one that cares about its employees. In BenefitsPro’s Analysis of our whitepaper:
Respondents were asked to rank on a scale of 1 to 10 how strongly they agree with the statement “the quality of a benefits package impacts the reputation of my company,” with 10 being “strongly agree.” Not surprisingly, given that such packages are looked upon as recruiting tools, 67 percent put the statement at 7 or higher, with nearly a quarter choosing “strongly agree.”
Learn More: Download the Entire 2017 Healthcare Benefits Trends Benchmark Study
The entire 2017 Healthcare Benefits Trends whitepaper takes a much deeper look into the trends to look out for in 2017, including plans and insights from other employer groups. The national survey went to over 250 human resources executives, benefit specialists and other benefit decision makers from organizations ranging in employee size from less than 50 to over 2,500. Click Here to Download.