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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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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IRS Will Not Enforce Non-Discrimination Clause….For Now.

IRS Will Not Enforce Non-Discrimination Clause….For Now.

The IRS issued On December 22, 2010 a Notice http://www.irs.gov/pub/irs-drop/n-11-01.pdf which states compliance with the non-discrimination provisions of the Protection and Affordable Care Act (PPACA) are suspended for insured group health benefit plans….for now.

Under the original health care reform law, non-grandfathered, fully insured health plans would have required companies to meet the non-discrimination rules of IRC 105(h). This provision of the law is effective for plan years beginning on or after September 23, 2010. Therefore, if your company’s health plan renews on January 1, 2011 and it is non-grandfathered, your plan is subject to these rules on January 1, 2011.

The anti-discriminatory provisions were enacted primarily to prohibit highly-compensated employees (such as company owners and senior management) from receiving health benefits that are materially better than the “rank and file” employees. As contemplated in the health care reform measure, failure to comply with the anti-discriminatory rules could result in the payment of penalties to the IRS.

Affected plans must satisfy two tests; eligibility test, and benefits test. The tests determine whether or not the plan disproportionately benefits highly compensated individuals (HCI).  Please contact us for further information on these tests.

According to the notice, the decision to delay the effective date was because:

Regulatory guidance is essential to the operation of the statutory provisions, the Treasury Department and the IRS, as well as the Departments of Labor and Health and Human Services (collectively, the Departments), have determined that compliance with § 2716 should not be required (and thus, any sanctions for failure to comply do not apply) until after regulations or other administrative guidance of general applicability has been issued under § 2716.

There has been no indication of the length of the delayed implementation, other than the provision would become effective after further rules were promulgated.

The employer is responsible for monitoring non-discrimination compliance. If the plan is deemed discriminatory, fines could be assessed at $100 per day per individual discriminated against. If reasonable cause exists (the employer can show good faith belief that the plan was not discriminatory), the penalty can be capped at the lesser of 10% of group health plan costs or $500,000.

Importantly, this doesn’t apply to “grandfathered plans“. Employers of non-grandfathered, fully insured plans should review their contribution structures and benefit designs to ensure that plans are not favoring highly compensated employees.

Further information can be found at http://www.irs.gov/irb/2010-41_IRB/ar07.html .  Please contact our office for further guidance on your group’s plan.