2019 Limits for HSA and HDHP Health Plans

Michael Berwanger
By Michael Berwanger, JD, Director, Quality Management & Compliance

 

The IRS has released Revenue Procedure 2018-30, setting dollar limitations for health savings accounts (HSAs) and high-deductible health plans (HDHPs) for calendar year 2019. The contribution, deductible, and out-of-pocket limitations for 2019 are shown in the table below (2018 and 2017 limits are included for reference).

For guidance on HSAs, please review the IRS frequently asked questions pageMedCost

2019 Limits HSA

 

2019 Limits HSA

 

2019 Limits HSA

 

 

 

 

 

 

 

 

 

 

 

 

This blog post should not be considered as legal advice.

HSA 2018 Contribution Limits Adjusted by IRS

Michael Berwanger

By Michael Berwanger, JD, Director, Quality Management & Compliance

On March 5, 2018, as a result of the tax reform law (P.L. 115-97), the IRS released Bulletin No. 2018-10, adjusting dollar limitations for health savings accounts (HSAs) and high-deductible health plans (HDHPs) for 2018.

The only change impacting HSAs was to adjust the contribution limits for family coverage from $6,900 to $6,850.

HSA 2018 Contribution Limits

HSA 2018 Contribution Limits: FAQs

For guidance on HSAs, please review the IRS frequently asked questions pageMedCost

This blog post should not be considered as legal advice.

 

IRS Extends Deadline to Furnish 1095 Forms to Individuals

Michael BerwangerBy Michael Berwanger, JD, Director, Quality Management & Compliance

The IRS has announced good-faith transition relief for information reporting on Forms 1094 and 1095 for the 2017 tax year, mirroring guidance it provided for the 2016 tax year (see IRS Notice 2018-06 HERE).

Some notable highlights include:

Extension for Furnishing Statements to Individuals. 

The deadline for furnishing Forms 1095-B and 1095-C to individuals is extended by 30 days, from January 31 to March 2, 2018. There is no action necessary from self-funded health plans to take advantage of this extension, it is automatic.

Due to this extension, the discretionary 30-day extension is not available, and no further extensions may be obtained by application to the IRS.

No Extension for Filing Returns with the IRS.

The notice does not extend the due date for filing Forms 1094-B and 1094-C (and accompanying Forms 1095) with the IRS. Accordingly, the deadline remains February 28, 2018, for paper filings, and April 2, 2018, for electronic filings (see 2017 Forms 1094, 1095 B & C Released by IRS).

Please note, electronic filing is mandatory for entities required to file 250 or more Forms 1095. However, filers may obtain an automatic 30-day extension by filing Form 8809 on or before the regular due date.

2017 Forms 1094 1095Good Faith Penalty Relief.

The IRS will again provide penalty relief for entities that can show they have made good faith efforts at compliance.

The IRS reports that no penalties will be imposed on entities that report incorrect or incomplete information, either on statements furnished to individuals or returns filed with the IRS, if they can show they made good faith efforts to comply with the reporting requirements.

The notice specifies that the relief applies to missing and inaccurate taxpayer identification numbers and dates of birth, as well as other required information.

Penalty relief is not available to entities that fail to furnish statements or file returns, miss an applicable deadline, or are otherwise not making good faith efforts to comply.

Evidence of good faith efforts may include gathering necessary data and transmitting it to a third-party to prepare the required reports, testing the ability to transmit data to the IRS, and taking steps to ensure compliance for the 2018 tax year.

ACA deadlinesThose unable to meet the due dates are still encouraged to furnish and file as soon as possible, as the IRS says it will take such furnishing and filing into consideration when determining whether to abate penalties for reasonable cause.

Reasonable cause is distinct from good faith relief and requires, among other things, proof of significant mitigating factors or events beyond the reporting entity’s control.MedCost


MedCost is not a tax preparation company, and you may have additional tax obligations for other benefit plans that you offer to your employees. Please consult with your tax adviser for guidance.

This blog post should not be considered as legal advice.

2017 Forms 1094, 1095 (B & C) Released by IRS

2017 Forms 1094 1095

Michael BerwangerBy Michael Berwanger, JD, Director, Quality Management & Compliance

The IRS has released the final Forms 1094-B, 1095-B, 1094-C, and 1095-C for calendar year 2017 reporting. Employers are required to report in early 2018 for calendar year 2017. You can find the forms for calendar year 2017 reporting here:

 

What Changed?

For calendar year 2017, the 6055 and 6056 reporting process seems to have stabilized. One notable difference, please note the removal of the “Section 4980H Transition Relief” box from line 22 of Form 1094-C, as this transition relief is no longer available to employers.

There are no substantive changes to the B Forms for 2017, and the instructions are also mostly unchanged.

For purposes of determining affordability of employer-sponsored coverage when using the Qualified Offer method, the instructions note inflation adjustments to the 9.5% threshold, increasing the percentage to 9.66% for plan years beginning in 2016 and 9.69% for plan years beginning in 2017. (This percentage will drop to 9.56% for plan years beginning in 2018. See IRS Publication for details.)

Who Is Required to Report?

2017 Forms 1094-B and 1095-B:

These forms are used by insurers, self-insuring employers, and other parties that provide minimum essential health coverage (regardless of size, except for large self-insuring employers) to report information on this coverage to the IRS and to covered individuals.

Note: Self-insuring employers with less than 50 full-time or full-time equivalent employees will use these forms to report information on coverage to the IRS and to covered individuals. Self-insuring employers with 50 or more full-time or full-time equivalent employees will use the C forms—see below.

1094-C and 1095-C:

Applicable large employers (generally those with 50 or more full-time employees, including full-time equivalents or FTEs) will use Forms 1094-C and 1095-C to report information to the IRS and to their employees about their compliance with the employer-shared responsibility provisions (“pay or play”) and the health care coverage they have offered. Employers subject to both reporting provisions (generally self-insured employers with 50 or more full-time employees, including FTEs) will satisfy their reporting obligations using the C Forms.

Information Reporting Deadlines

The upcoming deadlines for submitting Forms 1094 and 1095 B or C are as follows:

To the IRS:

If filing on paper – February 28, 2018

If filing electronically – April 2, 2018

Any employer who would like to file electronically should refer to the IRS for more information on the AIR Program, which requires at least 30 days for testing for first-time users. Please note that employers submitting more than 250 forms must file electronically.

To Individuals:

Both Form 1095-B and 1095-C are due to the person identified as the “responsible individual” by January 31, 2018.MedCost

MedCost is not a tax preparation company, and you may have additional tax obligations for other benefit plans that you offer to your employees. Please consult with your tax advisor for guidance.This blog post should not be considered as legal advice.

Employee Open Enrollment: 5 Tips to Avoid the Chaos

Employee Open EnrollmentEmployee open enrollment for 2018 benefit plans is consuming the days of health care brokers, employers and Human Resources’ staff. But it is possible to conduct benefit plan enrollment without mountains of errors and frustrated employees.

Here are five tips to avoid the chaos and streamline sign-ups for next year:

1. Create a Realistic Schedule for Employee Open Enrollment. 

Employee Open Enrollment

  • Your open enrollment period should end no later than 30 days prior to the end of your plan year or renewal date. Once you determine the ending date of open enrollment, back up from there to schedule open enrollment meetings, print forms or materials, distribute or mail open enrollment packets, etc.
  • Will your members need new ID cards? New ID cards are typically issued due to the addition of new provisions or services, plan option or deductible/copay changes, change in pharmacy vendor, etc.*
  • Are your plan options changing? This is especially important if you are adding or deleting a plan. Allow time for employee education. Even if your plan is not changing, employees still must carefully review their options to ensure their choices will meet their health needs.

2. Collect All Required Information for Each Plan Participant (employee or dependent).

This may include information for each plan participant such as:

  • Last Name, First Name and Middle Initial (exactly as provided in previous enrollments).
  • Social Security Number (unique and accurate identifying information for each dependent).
  • Address.
  • Date of Birth (unique and accurate identifying information for each dependent).
  • Gender.
  • Hire Date (if an employee).
  • Coverage Effective Date.
  • Product Coverage (Medical, Dental, Flex).
  • Date of Termination, if applicable, and Reason for Term
       (especially needed for COBRA).
  • E-mail address (to promote programs and services available through benefits plan).

Unique and accurate identifying information must be entered for each dependent. Using member information to represent a dependent will create errors/issues with enrollment.

3. Remind Employees: “Good Data In = Good Data Out.”

Employee Open Enrollment

  • Stress the importance of completing all fields on any enrollment or waiver forms. It’s in every plan participant’s best interest to review and verify new and existing data during open enrollment since it directly affects coverage for the upcoming plan year.
  • Decisions regarding participants’ eligibility and coverage under the health plan—as well as that of their dependents—are made based on the information provided during open enrollment.

4. Educate Employees about the “Not-So Flexible” Guidelines of Flexible Spending Accounts (FSAs).

  • Educate your employees on the advantages of FSAs.
  • FSAs are “use-it-or-lose-it” accounts. Contributions made to an FSA during a calendar year can be used only for eligible expenses incurred during the same year—unless your plan provides for either a grace period or a carryover.
  • If your plan doesn’t provide for a carryover, employees need to be aware that any money remaining in an FSA account after the claim filing period at the end of the year (and after the grace period, if applicable) is forfeited in accordance with IRS regulations.

5. If Your Employees Have Flex Debit Cards, Remind Them to Save All Receipts for Card Purchases.

Employee Open Enrollment

  • Since a flex debit card deducts payment for an eligible health care expense directly from an FSA account, employees may think that saving health care receipts is unnecessary.
  • Some claims for reimbursement, however, may require substantiation. Encourage employees to save all receipts for flex debit card purchases in case they receive a substantiation request or their tax return is audited by the IRS.
  • Employees should hold on to their cards even if the allocated FSA total has already been spent.**

*This information should be entered exactly as it was provided in previous enrollments. If you discover an error, now is the time to make those changes. 

**The only exceptions to this would be if an employee no longer contributes to an FSA or if FSA participants receive new debit cards for the next plan year.MedCost

Sign up for blogOur next blog will contain five more tips to avoid chaos during employee open enrollment. Subscribe to our blog to receive it automatically (go to top of page). 

IRS Reposts Revised Form 720 for PCORI Fee: Deadline 7/30/17

Michael BerwangerBy Michael Berwanger, JD, Director, Quality Management & Compliance

The IRS recently reposted the April 2017 version of Form 720 (Quarterly Federal Excise Tax Return) on its website.* While the form’s primary purpose is to serve as the quarterly return for various federal excise taxes, it also is used to report PCORI fees imposed under health care reform. (For more information on PCORI, see  “PCORI Fee for Self-Funded Employers”.)

Please note, the portion of the form related to the PCORI fees is unaffected. While Form 720 is filed quarterly for other federal excise taxes, the PCORI fee reporting and payment are only required annually, by July 31 of the year following the calendar year in which the applicable policy or plan year ended. The change noted at the beginning of the form is related to the excise taxes.

IRS form 720As background, PCORI fees, used to fund research on patient-centered outcomes, apply to plan and policy years ending before October 1, 2019. They are payable by insurers and sponsors of self-insured health plans, and are calculated by multiplying the applicable dollar amount for the year by the average number of covered lives. As announced in IRS Notice 2016-64, the fees owed in 2017 are as follows:

  • For plan years** ending on or after October 1, 2015, and before October 1, 2016: $2.17 per covered life
  • For plan years** ending on or after October 1, 2016, and before October 1, 2017: $2.26 per covered life

If you have already filed and used the form posted prior to the most recent update, please contact a tax professional on whether refiling is necessary.MedCost

______________________________________________________________________________

*If you downloaded the Form 720 (Rev. April 2017) before July 3, 2017, please note that
on page 2, under IRS No. 33, the rate is corrected to 12% of the sales price, not 12%
of the sales tax.)

*’*Plan year’ is generally the 12-month period stated in the Summary Plan Description, or for plans filing a Form 5500, the plan year stated in that filing. NOTE: The plan year may be different from the benefit year or the renewal period.

______________________________________________________________________________

This blog post should not be considered as legal advice.

3 Compliance Areas for Self-Funded Employers (Video)

self-funded employer compliance

WATCH VIDEO NOW

“There are three primary areas that employers should keep in mind when thinking about compliance for their health plan,” said Brad Roehrenbeck, General Counsel and VP of Legal Services and Compliance at MedCost.

1. Employment Retirement Income Security Act 

“The first of those is the Employee Retirement Income Security Act of 1974 (ERISA), which governs employer-sponsored benefit plans. ERISA was a law created in the early 1970s that has been applied to basically set the rules for how an employer that creates their own health plan should do that.”

Michael Berwanger, Director of Quality Management and Compliance, agreed. “ERISA requires several things of plan sponsors and plan administrators. One of those things is to provide notices of what benefits are available to employees. The types of notices that you might expect with the summary plan document are any tax filing notices you might need to be aware of.

self-funded employer compliance“This is to make employees aware of the rights available to them under ERISA. And with the right service provider, employers can feel confident knowing they’re distributing the right notices in the right formats.

2. HIPAA Compliance

“The second area of compliance for self-funded employers is the Health Insurance Portability and Accountability Act of 1996 (HIPAA). HIPAA requires that you safeguard patient data. Employers might find themselves subject to certain HIPAA rules; and with the right service provider, it could be relatively easy to navigate those waters.”

Keeping track of privacy obligations with documents that contain patient information is very important, said Brad Roehrenbeck. “Another thing that HIPAA requires is that anyone who handles that information, particularly if it’s electronic, must keep it secure. That basically means that you have to have systems in place that control who has access to that type of information, if you’re keeping it on your systems.

“HR directors want to make sure that they work with their IT departments to look at what kind of controls are in place, who has access to any folders where patient data is maintained, or anything else in relation to running the health plan. The HR department keeps that sensitive member information for the plan.

3. Internal Revenue Service Compliance

“The third primary area of the law that impacts health plans is tax laws. Like other types of benefit plans, health plans come with a tax benefit to both employees and employers. As dollars go in to support the plan, those dollars are provided on a tax-free basis.”

self-funded employer compliance“There are certainly tax advantages when you’re considering self-funding your health plan,” Michael Berwanger said. “To take advantage of those, you need to be aware of your compliance obligations -things like making sure you’re not discriminating unfairly in favor of your highly compensated employees.”

“There’s one other area of the tax laws that actually provides some additional benefit to employers and employees, and that is this concept of a Health Savings Account (HSA). Health savings accounts are a great vehicle under the tax laws where employees can set aside dollars and employers can contribute dollars on a tax-free basis. Those monies can be used toward deductibles and the payment of claims. Employees can keep that money for the rest of their lives or until such time as they need to use that for their medical expenses.

HSAs are a great asset for employees and a great savings vehicle. More importantly, it’s a great avenue for employers to engage with participants in the health plans to be conscious of where their health plan dollars are spent and to use them in a way that not only promotes their own health, but also the financial stability and viability and strength of both their dollars and the health plan dollars,” Mr. Roehrenbeck said.

self-funded employer compliance“As the markets continue to move towards a consumer-driven economy, it’s important for employees to be mindful of their options and how to best take advantage of the benefits available through their employers,” Mr. Berwanger noted.

“We find ourselves in a challenging environment. It’s important to be able to offer great incentives and great packages to employees. A self-funded health plan is a great opportunity to be able to do that.

“The risk can be worth the reward. Managing those compliance obligations isn’t as complicated as you might think, once you have a good trusted advisor to help you navigate that.”MedCost

(This post is a transcript from the video, “3 Compliance Areas for Self-Funded Employers.”)

 

 

PCORI Fee for Self-Funded Employers: Due July 2017

By Michael Berwanger, JD, Director, Quality Management & Compliance

 PCORI Required by ACA

PCORI due datesThe Affordable Care Act (ACA) includes provisions to promote research by the Patient-Centered Outcomes Research Institute (PCORI) that will provide information on the relative strengths and weaknesses of various medical interventions. This initiative is being funded by a tax that must be paid by insurers and plan sponsors of self-funded health plans. Per IRS Guidance, for self-insured and/or self-funded plans ending in 2016, filing and payment must be submitted to the IRS by July 31, 2017. The fees owed in 2017 are as follows:

  • For plan years* ending on or after October 1, 2015, and before October 1, 2016: $2.17 per covered life
  • For plan years* ending on or after October 1, 2016, and before October 1, 2017: $2.26 per covered life

*’Plan year’ is generally the 12-month period stated in the Summary Plan Description, or for plans filing a Form 5500, the plan year stated in that filing. NOTE: The plan year may be different from the benefit year or the renewal period.

 PCORI Fee Payments

PCORI due dateUnder the Internal Revenue Service (IRS) final rule, plan sponsors are responsible for paying the fee, which is treated as an excise tax by the IRS. A Quarterly Federal Excise Tax Return (Form 720) must be used when reporting liability for the fee. The form can be accessed at http://www.irs.gov/pub/irs-pdf/f720.pdf. Instructions for completing and filing the form can be accessed at http://www.irs.gov/pub/irs-pdf/i720.pdf. Completion of the form is relatively simple.  As described here, only the relevant parts of the form need to be completed, which include:

  • Identifying information at the beginning of the form
  • Part II, line 133 (“Applicable self-insured plans” line)
  • Part III, items 3 and 10
  • The signature section
  • The voucher form, if the form is mailed
  • The form may be filed electronically or mailed to:

Department of the Treasury
Internal Revenue Service
Cincinnati, OH 45999-0009

Additional Tips

The following information may be helpful in determining your tax obligation under the PCORI provision:

  • The plan sponsor must apply a single calculation method in determining the average number of lives covered under the plan for the entire plan year. However, the plan sponsor is not required to use the same method from one plan year to the next.
  • HRA and Self-Insured Plans: A self-insured Health Reimbursement Account (HRA) is not subject to a separate fee if the HRA is integrated with another applicable self-insured health plan that provides major medical coverage. The HRA and the other plan must be established or maintained by the same plan sponsor with the same plan year.
    • However, if a self-insured HRA is integrated with an insured group health plan, then the fee must be paid for both the self-insured product and the insured product.
  • Excepted Benefits: Excepted benefits (as defined under section 9832c of the U.S. Code) are exempt from the fee, as is a health Flexible Spending Account (FSA) that satisfies the requirements of an excepted benefit.
  • All plans that provide medical coverage to employees owe this fee. The insurer/carrier for fully-insured plans will pay the fee (typically, the fee is passed on to the plan). The plan sponsor for self-funded plans will pay the fee. Note, there is no exception for small employers, government, church or not-for-profit plans, nor for grandfathered plans or union plans. The fee is tax-deductible.
  • For more information, see: IRS FAQ or IRS chart that shows which plans owe the fee.

NOTE: MedCost is not a tax preparation company, and you may have additional tax obligations for other benefit plans that you offer to your employees. Please consult with your tax advisor for guidance. This blog post should not be considered as tax or legal advice.MedCost

 

2018 HSA and HDHP Dollar Limits Released by IRS

By Michael Berwanger, JD, Director, Quality Management & Compliance

The IRS has released Revenue Procedure 2017-37, setting the 2018 dollar limitations for health savings accounts (HSAs) and high-deductible health plans (HDHPs).

The contribution, deductible and out-of-pocket limitations for 2018 are shown in the table below. All of these amounts are scheduled to increase from 2017. (The 2017 limits are included for reference.)

2018 HSA HDHP

For guidance on HSAs, please review the IRS frequently asked questions’ page at https://www.irs.gov/publications/p969/ar02.html.MedCost

This blog post should not be considered as legal advice.

 

Is Your Company Making These 4 Errors with Health Care Data?

errors health care dataThe United States wastes $275 billion annually on health care spending through inefficient record-keeping, duplicated files, fraud or abuse, according to Truven Health Analytics. Nearly $9,000 per second is lost on illegible writing, incomplete entries or inaccurate interpretations of data.[i]

In this era of massive data generation, how can companies ensure accurate analyses of their employees’ population health? Here are four common data errors to avoid:

1. Making business decisions based on “uncleansed” data.

Electronic health records today overflow with complex treatments, prescriptions, lab results and other tests. Incorrect synthesis of these outcomes can obscure a 360-degree view of past medical history and future potential problems.

MedCost creates detailed reporting with Deerwalk software to help clients identify both medical and financial trends. Sophisticated analytics identify areas of data where misinterpretation may occur. When data is integrated and “scrubbed,” employers may then be assured of making accurate decisions based on those results.

 2. Assuming that claims are processed correctly.

Data integrity is key to avoiding skewed results. Were monthly premiums accidentally included in claim expenses? Have claims been duplicated? Were pharmacy costs integrated with the right patient’s claim?

errors health care dataNo one would try to calibrate a car’s multiple computer systems without the right training and equipment. Not using standard query entries will produce data sets of unreliable results for financial and medical decisions. The company that manages your health plan benefits should do rigorous quality assurance audits before releasing “cleansed” data to you.

3. Failing to use technology to protect your group of covered members.

The operating rule of today’s digital health care is that if it can’t be measured, it can’t be managed. How can a company uncover excessive medical costs or emerging health issues for employees, unless clinical and claims data is tracked?

Smart businesses track profit and loss columns. Smart businesses also keep a close eye on cost trends to reduce medical spend and improve population health for employees. MedCost as a benefits administrator delivers monthly reports with specific cost analyses and recommendations to each of our clients.

4. Ignoring cost trends that are wasting your health care dollars.

Health care, despite the tsunami of data generated, is still about people. How can an employer know when an employee’s blood pressure is out of control? When blood glucose levels have gone sky-high? When prescribed meds are no longer being taken? Without careful analysis of gaps in care, expensive treatments won’t be avoided. And employee health conditions may worsen that could also have been prevented.

errors health care dataAre these errors with your health care data costing your company thousands of dollars? Consider using quality analysis by a reputable benefits administrator to clarify complex data, while managing population health and more efficient health care spending.

Download our free white paper, “Transforming Data into Dollars, with proven practices of how employers can achieve cost-effective outcomes and healthier employees.MedCost

 

[i] “Claims Audit Solutions,” Truven Health Analytics™, http://truvenhealth.com/portals/0/assets/emp_12181_0113_auditsuiteoverviewbrochure.pdf (accessed April 13, 2017).