2022 Open Enrollment Checklist

2022 Open Enrollment Checklist

2022 Open Enrollment Checklist

To download this entire document as a PDF, click here: Open Enrollment eBook

This Compliance Overview is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice.  Readers should contact legal counsel for legal advice. 

In preparation for open enrollment, Employers should review their plan documents in light of changes for the plan year beginning Jan 1, 2021. Below is an Employer 2 Open Enrollment Checklist including some administrative items to prepare for in 2020. 

Health plan sponsors should also confirm that their open enrollment materials contain certain required participant notices, when applicable—for example, the summary of benefits and coverage (SBC). There are also some participant notices that must be provided annually or upon initial enrollment. To minimize costs and streamline administration, employers should consider including these notices in their open enrollment materials.

PLAN DESIGN CHANGES

Out-of-pocket Maximum

Effective for plan years beginning on or after Jan. 1, 2014, non-grandfathered health plans are subject to limits on cost-sharing for essential health benefits (EHB). The ACA’s out-of-pocket maximum applies to all non-grandfathered group health plans, including self-insured health plans and insured plans.

  • $8,700 for self-only coverage and $17,400 for family coverage out-of-pocket maximum.
  •  $7,050 for self-only coverage and $14,100 for family coverage HSA Maximum. For 2021 plan years, the out-of-pocket maximum limit for HDHPs is $7,000 for self-only coverage and $14,000 for family coverage. 

Preventive Care Benefits 

The ACA requires non-grandfathered health plans to cover certain preventive health services without imposing cost-sharing requirements (that is, deductibles, copayments or coinsurance) for the services. Health plans are required to adjust their first-dollar coverage of preventive care services based on the latest preventive care recommendations. If you have a non-grandfathered plan, you should confirm that your plan covers the latest recommended preventive care services without imposing any cost-sharing.  

More information on the recommended preventive care services is available through the U.S. Preventive Services Task Force and www.HealthCare.gov.

Health FSA Contributions

The ACA imposes a dollar limit on employees’ salary reduction contributions to a health flexible spending account (FSA) offered under a cafeteria plan. An employer may impose its own dollar limit on employees’ salary reduction contributions to a health FSA, as long as the employer’s limit does not exceed the ACA’s maximum limit in effect for the plan year. 

The ACA set the health FSA contribution limit at $2,500. For years after 2013, the dollar limit is indexed for cost-of-living adjustments. For 2022 plan years, the health FSA limit is $2,850. The DFSA Rollover Maximum is $570. 

  • Communicate the health FSA limit to employees as part of the open enrollment process.

HDHP and HSA Limits for 2022

If you offer an HDHP to your employees that is compatible with an HSA, you should confirm that the HDHP’s minimum deductible and out-of-pocket maximum comply with the 2020 limits. The IRS limits for HSA contributions and HDHP cost-sharing increase for 2022. The HSA contribution limits will increase effective Jan. 1, 2022, while the HDHP limits will increase effective for plan years beginning on or after Jan. 1, 2022.

  • Check whether your HDHP’s cost-sharing limits need to be adjusted for the 2022 limits.
  • If you communicate the HSA contribution limits to employees as part of the enrollment process, these enrollment materials should be updated to reflect the increased limits that apply for 2022.

The following table contains the HDHP and HSA limits for 2022 as compared to 2021. It also includes the catch-up contribution limit that applies to HSA-eligible individuals who are age 55 or older, which is not adjusted for inflation and stays the same from year to year.

Type of Limit20212022Change
HSA Contribution LimitSelf-only$3,600$3,650Up $50
Family$7,200$7,300Up $100
HSA Catch-up Contributions (not subject to adjustment for inflation)Age 55 or older$1,000$1,000No change
HDHP Minimum DeductibleSelf-only$1,400$1,400No change
Family$2,800$2,800No change
HDHP Maximum Out-of-pocket Expense Limit (deductibles, copayments and other amounts, but not premiums)Self-only$7,000$7,050Up $50
Family$14,000$14,100Up $100

 

ACA EMPLOYER MANDATE AND OTHER REQUIREMENTS 

 

Applicable Large Employer Status (ALE)

Under the ACA’s employer penalty rules, applicable large employers (ALEs) that do not offer health coverage to their full-time employees (and dependent children) that is affordable and provides minimum value will be subject to penalties if any full-time employee receives a government subsidy for health coverage through an Exchange.

To qualify as an ALE, an employer must employ, on average, at least 50 full-time employees, including full-time equivalent employees (FTEs), on business days during the preceding calendar year. All employers that employ at least 50 full-time employees, including FTEs, are subject to the ACA’s pay or play rules.

  • Determine your ALE status for 2022
  • Calculate the number of full-time employees for all 12 calendar months of 2020. A full-time employee is an employee who is employed on average for at least 30 hours of service per week.
  • Calculate the number of FTEs for all 12 calendar months of 2021 by calculating the aggregate number of hours of service (but not more than 120 hours of service for any employee) for all employees who were not full-time employees for that month and dividing the total hours of service by 120.
  • Add the number of full-time employees and FTEs (including fractions) calculated above for all 12 calendar months of 2021.
  • Add up the monthly numbers from the preceding step and divide the sum by 12. Disregard fractions.
  • If your result is 50 or more, you are likely an ALE for 2022.

Identify Full-time Employees

All full-time employees must be offered affordable minimum value coverage.  A full-time employee is an employee who was employed on average at least 30 hours of service per week. The final regulations generally treat 130 hours of service in a calendar month as the monthly equivalent of 30 hours of service per week. The IRS has provided two methods for determining full-time employee status—the monthly measurement method and the look-back measurement method.

  • Determine which method you are going to use to determine full-time status
  • The monthly measurement method involves a month-to-month analysis where full-time employees are identified based on their hours of service for each month. This method is not based on averaging hours of service over a prior measurement method. Month-to-month measuring may cause practical difficulties for employers, particularly if there are employees with varying hours or employment schedules, and could result in employees moving in and out of employer coverage on a monthly
  • The look-back measurement method allows an employer to determine full-time status based on average hours worked by an employee in a prior period. This method involves a measurement period for counting/averaging hours of service, an administrative period that allows time for enrollment and disenrollment, and a stability period when coverage may need to be provided, depending on an employee’s average hours of service during the measurement 

Audit FTEs for FMLA Compliance

Audit your FTEs to determine if you have reached or exceeded 50 employees and are required to comply with the Family Medical Leave Act (FMLA) in 2022. Employers covered by the FMLA are obligated to provide their employees with certain important FMLA notices, so both employees and the employer have a shared understanding of the terms of the FMLA leave. Note that FMLA compliance requirements are different from ACA compliance. 

Offer of Coverage 

An ALE may be liable for a penalty under the pay or play rules if it does not offer coverage to “substantially all” (95%) full-time employees (and dependents) and any one of its full-time employees receives a premium tax credit or cost-sharing reduction for coverage purchased through an Exchange. For employees who are offered health coverage that is affordable and provides minimum value are generally not eligible for these Exchange subsidies.  The IRS lowered the 2022 employer health plan affordability threshold, or cost-sharing limit, to 9.61% of an employee’s income. The threshold in 2021 was 9.83%. 

  • Offer minimum essential coverage to all full-time employees
  • Ensure that at least one of those plans provides minimum value (60% actuarial value)
  • Ensure that the minimum value plan offered is affordable to all full-time employees by ensuring that the employee contribution for the lowest cost single minimum value plan does not exceed 78% of an employee’s earnings based on the employee’s W-2 wages, the employee’s rate of pay, or the federal poverty level for a single individual.

Reporting of Coverage

The ACA requires ALEs to report information to the IRS and to employees regarding the employer-sponsored health coverage on Form 1095-C. The IRS will use the information that ALEs report to verify employer-sponsored coverage and to administer the employer shared responsibility provisions (Code Section 6056).

In addition, the ACA requires every health insurance issuer, sponsor of a self-insured health plan, a government agency that administers government-sponsored health insurance programs and any other entity that provides minimum essential coverage (MEC) to file an annual return with the IRS and individuals reporting information for each individual who is provided with this coverage (Code Section 6055). 

  • Determine which reporting requirements apply to you and your health plans
  • Determine the information you will need for reporting and coordinate internal and external resources to help compile the required data for the   1094-C and 1095-C
  • Complete the appropriate forms for the 2020 reporting year. Furnish statements to individuals on or before January 31, 2021 has been extended to March 2, 2021 IRS Notice 2020-76., and file returns with the IRS on or before February 28, 2020 (March 31, 2020, if filing electronically).
ACA RequirementDeadline
1095 forms delivered to employeesJan. 31 (extended to March 2)
Paper filing with IRS*Feb. 28
Electronic filing with IRSMarch 31

Comparative Effectiveness Research Fee (PCORI)

Sponsors of self-funded plans and health insurance issuers of fully insured plans are required to pay a fee each year, by July 31st, to fund comparative effectiveness research. Fees will increase to $2.45 per covered life in 2020 and are next due July 31, 2021.

W-2 Reporting

Healthcare Reform requires employers to report the aggregate cost of employer-sponsored group health plan coverage on their employees’ Forms W-2. This reporting requirement was originally effective for the 2011 tax year. However, the IRS later made reporting optional for 2011 for all employers.

The IRS further delayed the reporting requirement for small employers (those that file fewer than 250 Forms W-2) by making it optional for these employers until further guidance is issued. For the larger employers, the reporting requirement was mandatory for the 2012 Forms W-2 and continues.

ACA DISCLOSURE REQUIREMENTS

Summary of Benefits and Coverage 

The ACA requires health plans and health insurance issuers to provide an SBC to applicants and enrollees to help them understand their coverage and make coverage decisions. Plans and issuers must provide the SBC to participants and beneficiaries who enroll or re-enroll during an open enrollment period. The SBC also must be provided to participants and beneficiaries who enroll other than through an open enrollment period (including those who are newly eligible for coverage and special enrollees).

The SBC template and related materials are available from the Department of Labor (DOL).

  • In connection with a plan’s 2020 open enrollment period, the SBC should be included with the plan’s application materials. If coverage automatically renews for current participants, the SBC must generally be provided no later than 30 days before the beginning of the new plan year.
  • For self-funded plans, the plan administrator is responsible for providing the SBC. For insured plans, both the plan and the issuer are obligated to provide the SBC, although this obligation is satisfied for both parties if either one provides the SBC. Thus, if you have an insured plan, you should confirm that your health insurance issuer will assume responsibility for providing the SBCs.

Grandfathered Plan Notice

If you have a grandfathered plan, make sure to include information about the plan’s grandfathered status in plan materials describing the coverage under the plan, such as SPDs and open enrollment materials. Model language is available from the DOL. 

Notice of Patient Protections

Under the ACA, non-grandfathered group health plans and issuers that require designation of a participating primary care provider must permit each participant, beneficiary and enrollee to designate any available participating primary care provider (including a pediatrician for children). Also, plans and issuers that provide obstetrical/gynecological care and require a designation of a participating primary care provider may not require preauthorization or referral for obstetrical/gynecological care.

If a non-grandfathered plan requires participants to designate a participating primary care provider, the plan or issuer must provide a notice of these patient protections whenever the SPD or similar description of benefits is provided to a participant. If your plan is subject to this notice requirement, you should confirm that it is included in the plan’s open enrollment materials. Model language is available from the DOL.

 

OTHER NOTICES 

Group health plan sponsors should consider including the following enrollment and annual notices with the plan’s open enrollment materials. 

  • Initial COBRA Notice 

The Consolidated Omnibus Budget Reconciliation Act (COBRA) applies to employers with 20 or more employees that sponsor group health plans.  Plan administrators must provide an initial COBRA notice to new participants and certain dependents within 90 days after plan coverage begins. The initial COBRA notice may be incorporated into the plan’s SPD.  A model initial COBRA notice is available from the DOL.

  • Notice of HIPAA Special Enrollment Rights

At or prior to the time of enrollment, a group health plan must provide each eligible employee with a notice of his or her special enrollment rights under HIPAA.  This notice may be included in the plan’s SPD.   Model language for this disclosure is available on the DOL’s website.

  • Annual CHIPRA Notice

Group health plans covering residents in a state that provides a premium subsidy to low-income children and their families to help pay for employer-sponsored coverage must send an annual  notice about the available assistance to all employees residing in that state. The DOL has provided a model notice.

  • WHCRA Notice

Plans and issuers must provide notice of participants’ rights to mastectomy-related benefits under the Women’s Health and Cancer Rights Act (WHCRA) at the time of enrollment and on an annual basis.  Model language for this disclosure is available on the DOL’s website.

  • NMHPA Notice

Plan administrators must include a statement within the Summary Plan Description (SPD) timeframe describing requirements relating to any hospital length of stay in connection with childbirth for a mother or newborn child under the Newborns’ and Mothers’ Health Protections Act. Model language for this disclosure is available on the DOL’s website.

  • Medicare Part D Notices

Group health plan sponsors must provide a notice of creditable or non-creditable prescription drug coverage to Medicare Part D eligible individuals who are covered by, or who apply for, prescription drug coverage under the health plan. This creditable coverage notice alerts the individuals as to whether or not their prescription drug coverage is at least as good as the Medicare Part D coverage. The notice generally must be provided at various times, including when an individual enrolls in the plan and each year before Oct. 15th (when the Medicare annual open enrollment period begins).  Model notices are available on the Centers for Medicare and Medicaid Services’ website.

  • HIPAA Privacy Notice

The HIPAA Privacy Rule requires covered entities (including group health plans and issuers) to provide a Notice of Privacy Practices (or Privacy Notice) to each individual who is the subject of protected health information (PHI). Health plans are required to send the Privacy Notice at certain times, including to new enrollees at the time of enrollment. Also, at least once every three years, health plans must either redistribute the Privacy Notice or notify participants that the Privacy Notice is available and explain how to obtain a copy.

Self-insured health plans are required to maintain and provide their own Privacy Notices. Special rules, however, apply for fully insured plans. Under these rules, the health insurance issuer, and not the health plan itself, is primarily responsible for the Privacy Notice.

Model Privacy Notices are available through the Department of Health and Human Services

  • Summary Plan Description (SPD)

Plan administrators must provide an SPD to new participants within 90 days after plan coverage begins. Any changes that are made to the plan should be reflected in an updated SPD booklet or described to participants through a summary of material modifications (SMM).

Also, an updated SPD must be furnished every five years if changes are made to SPD information or the plan is amended. Otherwise, a new SPD must be provided every 10 years. 

Summary Annual Report

Plan administrators that are required to file a Form 5500 (> 100 participants in plan) must provide participants with a narrative summary of the information in the Form 5500, called a summary annual report (SAR). The plan administrator generally must provide the SAR within nine months of the close of the plan year. If an extension of time to file the Form 5500 is obtained, the plan administrator must furnish the SAR within two months after the close of the extension period.

Wellness Program Notices 

Group health plans that include wellness programs may be required to provide certain notices regarding the program’s design. As a general rule, these notices should be provided when the wellness program is communicated to employees and before employees provide any health-related information or undergo medical examinations.

  • HIPAA Wellness Program Notice—HIPAA imposes a notice requirement on health-contingent wellness programs that are offered under group health plans. Health-contingent wellness plans require individuals to satisfy standards related to health factors (for example, not smoking) in order to obtain rewards. The notice must disclose the availability of a reasonable alternative standard to qualify for the reward (and, if applicable, the possibility of waiver of the otherwise applicable standard) in all plan materials describing the terms of a health-contingent wellness program. Final regulations provide sample language that can be used to satisfy this requirement.
  • ADA Wellness Program Notice—Employers with 15 or more employees are subject to the Americans with Disabilities Act (ADA). Wellness programs that include health-related questions or medical examinations must comply with the ADA’s requirements, including an employee notice requirement. Employers must give participating employees a notice that tells them what information will be collected as part of the wellness program, with whom it will be shared and for what purpose, the limits on disclosure and the way information will be kept confidential. The Equal Employment Opportunity Commission (EEOC) has provided a sample notice to help employers comply with this ADA requirement.

 

 

 

Enhance Your Employee Benefits Package.  A competitive benefits package is key to keeping and attracting top talent.  Assess your current benefits package and consider making necessary adjustments to include options, such as expanded mental health support, for example. 

GENERAL HR  

Review Employee Records.  The fourth quarter is a good time to review your employee records and check record retention guidelines. Don’t forget to dispose of outdated termination and outdated job applications properly. With W2s around the corner, make sure all addresses and information are updated.

Develop and Distribute Your 2022 Calendar.  Create and distribute a calendar outlining important dates, vacation time, pay dates, and company-observed holidays for 2022. 

Review and Update Employee Handbook. Review your employee handbook to make sure it is up-to-date and addresses areas, such as employment law mandates, new COVID-related policies, guidelines for remote working, privacy policies, compensation and performance reviews, social media policies, attendance, and time-off, break periods, benefits, and procedures for termination, discipline, workplace safety, and emergency procedures.

PLEASE NOTE: This information is for general reference purposes only. Because laws, regulations, and filing deadlines are likely to change, please check with the appropriate organizations or government agencies for the latest information and consult your employment attorney and/or benefits advisor regarding your responsibilities. In addition, your business may be exempt from certain requirements and/or be subject to different requirements under the laws of your state. (Updated Oct. 3, 2021)

Contact us at (855) 667-4621 or email us at info@medicalsolutionscorp.com

 

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HSA 2022 Limits Released

HSA 2022 Limits Released

HSA 2022 Limits Released

The IRS has released the 2022  Health Savings Account (HSA) inflation adjustments. To be eligible to make HSA contributions, an individual must be covered under a high deductible health plan (HDHP) and meet certain other eligibility requirements.

New HSA 2022 limits are as follows:

 

2022

2021

HSA Annual Contribution Limit
$3,650;  $7,300
$3,600 – Single; $7,200 – Family
HDHP Minimum Annual Deductible
$1,400;  $2,800
$1,400 – Single; $2,800 – Family
HDHP Out-of-Pocket Maximum
$7,050;  $14,100
$7,000 – Single; $14,000 – Family
Age 55+ Catch-Up Provision
$1,000;  $2,000
$1,000- Single; $2,000 – H/W 

Age 55 Catch Up Contribution

As in 401k and IRA contributions, you are allowed to contribute extra if you are above a certain age. If you are age 55 or older by the end of the year, you can contribute an additional $1,000 to your HSA. If you are married, and both of you are age 55, each of you can contribute an additional $1,000. A savvy strategy for high-income earners is to invest the money in your HSA for the long haul. Once you’re 65, you can take out tax-free distributions to cover Medicare premiums. If you withdraw money at that point for non-medical uses, you pay the same tax as you would on withdrawals from a pretax 401(k). But you can also take money out tax-free to reimburse yourself for prior years’ out-of-pocket medical expenses if you have the old receipts.


COVId-19 Update: 

You can even use an HSA to save on a typical trip to the CVS. Thanks to a tax relief provision tucked in the last Covid-19 stimulus package, you can use the money you stash in an HSA or FSA (more on those later) for over-the-counter medications like Tylenol or Flonase as well as menstrual products like tampons and pads. That reverses Obamacare restrictions on OTC meds requiring a doctor’s prescription for them to be eligible for reimbursement.

 

HSA/HDHP Market Growth

HSA holders own the assets in the accounts and can build up substantial sums over time.  Enrollment in HSA-compatible insurance plans has increased to 10 million earlier this year, from 1 million in March 2005, according to, America’s Health Insurance Plans (AHIP), a trade group.

FSA Store

HSAs were authorized starting in January 2004. Since then, AHIP has conducted a periodic census of health plans participating in the HSA/HDHP market.

  • The number of people with HSA/HDHP coverage rose to more than 11.4 in January 2011, up from 10.0 million in January 2010, 8.0 million in January 2009, and 6.1 million in January 2008.
  • 30 percent of individuals covered by an HSA plan were in the small group market, 50 percent were in the large-group market, and the remaining 20 percent were in the individual market.
  •  14% of all workers in the private sector have access to a Health Savings Account acc. to the Bureau of Labor Statistics.
  • States with the highest levels of HSA/HDHP enrollment were California, Ohio, Florida, Texas, Illinois, and Minnesota.

HSA Advantages:

  • Opportunity to build savings – Unused money stays in your account from year to year and earns tax-free interest. The HSA also gives you an investment opportunity.
  • Tax-free contributions and earnings – You don’t pay taxes on contributions or earnings.
  • Tax-Free Money allowed for non-traditional Medical coverage– As per IRS Publication 502, unused money can be used for dental, vision, Lasik eye surgery, acupuncture, yoga, infertility, etc.  Popular Examples
  • Portability – The funds belong to you, so you keep the funds if you change jobs or retire.

Our overall experience with HSAs has been positive when employer funding is at a minimum 50% using either the HSA or an HRA (Health Reimbursement Account-employer keeps unspent money).  Traditional plans trend of higher copays and new in-network deductibles has also led to the popularity of an HSA.

Next Steps

Plan sponsors should update payroll and plan administration systems for the 2022 cost-of-living adjustments and should incorporate the new limits in relevant participant communications, such as open enrollment and communication materials, plan documents, and summary plan descriptions.

RESOURCE:

Is your HSA compliant?  Which pre-tax qualified HSAFSAHRA spending card is right for you? Please contact our team at Millennium Medical Solutions Corp (855)667-4621 for immediate answers.  Stay tuned for updates as more information gets released.  Sign up for the latest news updates.

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PPE Expenses May Be Reimbursable Under HSA

PPE Expenses May Be Reimbursable Under HSA

PPE Expenses May Be Reimbursable Under Health Spending Accounts – Video

During the COVID-19 pandemic, you may have purchased masks or PPE for the purpose of preventing the spread of the COVID-19. Now, according to a recent announcement from the IRS, those purchases may be deductible from your income for tax purposes and eligible to be paid or reimbursed under certain savings accounts. This video explains further:

If you’re interested in hearing more about the advantages of partnering with a PEO, we’d love to talk to you. Fill out the form below or email info@medicalsolutionscorp.com for a FREE Consultation Today!

The information provided on this website is intended for informational purposes only.  Millennium Medical Solutions Corp. does not offer legal or medical guidance.  Those with legal or medical questions should seek appropriate assistance from a licensed professional.  Stay up to date by signing up for Newsletter and Coronavirus Dashboard below.

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2021 Dollar Limits

2021 Dollar Limits

The IRS & SSA announced the 2021 dollar limits for various benefits and compensation levels for retirement plans and IRAs. There are incremental changes but nonetheless worth bookmarking.

 

The contributions and retirement benefits for qualified retirement plans and individuals. Retirement Arrangements (IRAs) are subject to certain limits that are adjusted by the Secretary of the Treasury annually subject to cost-of-living. Highlighted below are the various 2020 and 2021 limits that impact IRA and retirement plans.

 

Compensation Limits

 

 

 

2020

2021

Compensation Limit

285,000$$290,000

Defined Benefit §415 Limit

$230,000

$230,000

Defined Contribution §415 Limit

$57,000$57,000

Key Employee Officer

$185,000$185,000

Highly Compensated Employee

$130,000$130,000

Governmental. Plan Compensation

Limit

$425,000$435,000

ESOP §409(o) Limits

$1,150,000

$230,000

$1,165,000

$230,000

 

 

 

Deferral and Catch-up Contribution Limits

 

 

2020

2021

401(k), 403(b), 457(b) Nan Deferral. Limi

$19,500$19,500

401(k), 403(b), Governmental. 457(b) Catch-up Limi

$6,500

$6,500

SIMPLE Plan Deferral Limi

$13,500$13,500

Key Employee Officer

$185,000$185,000

SIMPLE Plan Catch-up Limit

$3,000$3,000

 


IRA Limits

 

The limit on contributions to a traditional. or Roth IRA will remain unchanged in 2021 at $6,000. The limit that applies to IRA catch-up contributions (contributions for individuals age 50 and older) remains at $1,000.

 

Social Security

 

The Social. Security Administration (SSA) announced an increase in the taxable wage base (TWB) for 2021 to $142,800 (was $137,700 in 2020). Workers pay Social. Security tax on wages up to the TWB and some retirement plans use the TWB when allocating contributions or calculating benefits.

 

HSA Contribution Limits

 

Although not a formal. retirement plan, health savings accounts (HSA) often factor into retirement savings. The IRS announced the following 2021 limits. These apply to individuals under a high-deductible-health-plan (HDHP). The minimum deductibles and maximum out-of-pocket expenses the IRS uses to define HDHPs are outlined below, as well.

 

HSA Contribution Limits

 

LimitIndividualFamily

 

 

2020

2021

2020

2021

HSA Contribution Limits

$19,500$19,500$7,100$7,200

Minimum Deductible for HDHPs

$6,500

$6,500

$2,800

$2,800

Maximum Out-of-Pocket Expense

$6,500$6,500$2,800$2,800

 

Resource:

 

 

 

 

Is your HSA compliant?  Which pre-tax qualified HSAFSAHRA spending card is right for you? Please contact our team at 360PEO (855)667-4621 for immediate answers.  Stay tuned for updates as more information gets released.  Sign up for the latest news updates.

 

The subject matter in this communication is educational only and not rendering legal, accounting, investment advice, or tax advice. You should consult with appropriate counsel or other professionals on all matters pertaining to legal, tax, investment, or accounting obligations and requirements.

 

 

 

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HSA 2022 Limits Released

HSA 2021 Limits

The IRS has released the 2021  Health Savings Account (HSA) inflation adjustments. To be eligible to make HSA contributions, an individual must be covered under a high deductible health plan (HDHP) and meet certain other eligibility requirements.

New HSA 2021 limits are as follows:

 

2021

2020

HSA Annual Contribution Limit
$3,600;  $7,200
$3,550 – Single; $7,100 – Family
HDHP Minimum Annual Deductible
$1,400;  $2,800
$1,400 – Single; $2,800 – Family
HDHP Out-of-Pocket Maximum
$7,000;  $14,000
$6,900 – Single; $13,800 – Family
Age 55+ Catch-Up Provision
$1,000;  $2,000
$1,000- Single; $2,000 – Husband/Wife

Age 55 Catch Up Contribution

As in 401k and IRA contributions, you are allowed to contribute extra if you are above a certain age. If you are age 55 or older by the end of the year, you can contribute an additional $1,000 to your HSA. If you are married, and both of you are age 55, each of you can contribute an additional $1,000. A savvy strategy for high-income earners is to invest the money in your HSA for the long haul. Once you’re 65, you can take out tax-free distributions to cover Medicare premiums. If you withdraw money at that point for non-medical uses, you pay the same tax as you would on withdrawals from a pretax 401(k). But you can also take money out tax-free to reimburse yourself for prior years’ out-of-pocket medical expenses if you have the old receipts.


COVId-19 Update: 

You can even use an HSA to save on a typical trip to the CVS. Thanks to a tax relief provision tucked in the last Covid-19 stimulus package, you can use the money you stash in an HSA or FSA (more on those later) for over-the-counter medications like Tylenol or Flonase as well as menstrual products like tampons and pads. That reverses Obamacare restrictions on OTC meds requiring a doctor’s prescription for them to be eligible for reimbursement.

 

HSA/HDHP Market Growth

HSA holders own the assets in the accounts and can build up substantial sums over time.  Enrollment in HSA-compatible insurance plans has increased to 10 million earlier this year, from 1 million in March 2005, according to, America’s Health Insurance Plans (AHIP), a trade group.

FSA Store

HSAs were authorized starting in January 2004. Since then, AHIP has conducted a periodic census of health plans participating in the HSA/HDHP market.

  • The number of people with HSA/HDHP coverage rose to more than 11.4 in January 2011, up from 10.0 million in January 2010, 8.0 million in January 2009, and 6.1 million in January 2008.
  • 30 percent of individuals covered by an HSA plan were in the small group market, 50 percent were in the large-group market, and the remaining 20 percent were in the individual market.
  •  14% of all workers in the private sector have access to a Health Savings Account acc. to the Bureau of Labor Statistics.
  • States with the highest levels of HSA/HDHP enrollment were California, Ohio, Florida, Texas, Illinois, and Minnesota.

HSA Advantages:

  • Opportunity to build savings – Unused money stays in your account from year to year and earns tax-free interest. The HSA also gives you an investment opportunity.
  • Tax-free contributions and earnings – You don’t pay taxes on contributions or earnings.
  • Tax-Free Money allowed for non-traditional Medical coverage– As per IRS Publication 502, unused money can be used for dental, vision, Lasik eye surgery, acupuncture, yoga, infertility, etc.  Popular Examples
  • Portability – The funds belong to you, so you keep the funds if you change jobs or retire.

Our overall experience with HSAs has been positive when employer funding is at a minimum 50% using either the HSA or an HRA (Health Reimbursement Account-employer keeps unspent money).  Traditional plans trend of higher copays and new in-network deductibles has also led to the popularity of an HSA.

Next Steps

Plan sponsors should update payroll and plan administration systems for the 2021 cost-of-living adjustments and should incorporate the new limits in relevant participant communications, such as open enrollment and communication materials, plan documents, and summary plan descriptions.

RESOURCE:

Is your HSA compliant?  Which pre-tax qualified HSAFSAHRA spending card is right for you? Please contact our team at Millennium Medical Solutions Corp (855)667-4621 for immediate answers.  Stay tuned for updates as more information gets released.  Sign up for the latest news updates.

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