The Internal Revenue Service (IRS) has released the maximum Health Savings Account (HSA) contribution amounts for 2012. Under IRS Revenue Procedure 2011-32, the maximum contribution will increase as follows:
- Single Coverage $3,050 $3,100
- Family Coverage $6,150 $6,250
Maximum out-of-pocket expense, including deductibles will also increase for 2012 as indicated blow:
- Single Coverage $5,950 $6,050
- Family Coverage $11,900 $12,100
HSA’s must be linked with a high-deductible health insurance plan. According to America’s Health Insurance Plans, about 10 million people were enrolled in this type of insurance plan, which was a 25% increase of 2009. Enrollment figures for 2011 are expected to be released soon.
For those of you who work with benefits, you may be familiar with “Healthcare Savings Accounts” commonly referred to as HSA’s. But you may find them somewhat confusing and difficult to explain to employees…or even your President & CEO as you consider options for medical insurance plan renewals.
What is an HSA? In simplest terms, is a tax-free account that can be used by employees to pay for qualified medical expenses. In order to have an HSA, the individual must meet the following eligibility requirements:
- Must be covered by a High Deductible Health Plan (HDHP)
- Must not be covered by other health insurance
- Is not eligible for Medicare
- Cannot be claimed as a dependent on someone else’s tax return
So why would it be of benefit for employees to have an HSA?
- Money in the account earns interest and accumulates tax free so the funds can be used now and in the future
- Contributions to do not have to be spent the year they are deposited (unlike a Flexible Spending Account)
- If an employee changes jobs, they can take the account with them and continue to use it to pay for qualified healthcare expenses
Employers are somewhat split on their opinion of HSA’s. Proponents believe they are a way to help reduce the growth of health care costs, as insurance premiums for HDHP plans are typically significantly lower. Additionally, since the employee is paying for more medical expenses out of the HSA, they are being forced to consider treatment costs and alternatives more closely than with a traditional medical insurance plan. However, other employers say they worsen, rather than improve, the U.S. health system’s problems as they may encourage healthy employees to leave insurance plans.
In any case, it is an option worth considering and discussing with your insurance vendor / broker when it’s time for your annual medical insurance renewal. And the best advice is always to stay healthy
The Senate on Nov. 30 turned back the first legislative efforts to repeal a portion of the health care reform law.
Two amendments—one proposed by Finance Committee Chairman Max Baucus, D-Montana, and the other by Sen. Mike Johanns, R-Nebraska—to repeal a requirement that employers furnish 1099 statements if they do more than $600 in business with a corporate vendor—failed to win enough votes to be attached to a food safety bill. The Senate approved the food safety measure on Nov. 30.
Small employers have complained that the reporting burden of the health care reform law requirement, which is scheduled to go into effect in 2012, is too great. While there is broad congressional support for repealing the requirement, the amendments failed for reasons unrelated to the health care reform law, Washington observers say. Democrats, for example, were concerned about language in Johanns’ amendment giving new authority to federal regulators to cut government spending.
Despite the setback, new proposals to repeal the 1099 reporting requirements are expected soon.
The reporting requirement would raise about $2 billion a year, according to estimates by the congressional Joint Committee on Taxation.
Source: Jerry Geisel of Business Insurance
The recently enacted Patient Protection and Affordable Care Act, otherwise known as healthcare reform is a complicated piece of legislation with many parts.
One part, that hasn’t gotten a lot of press, is the Community Living Assistance Services and Support (CLASS) Act.
CLASS creates a national voluntary long term care insurance program. The program is set to begin in 2011. The Department of Health and Human Services still needs to develop guidelines, so we don’t know much about it. However, employers should begin to think about whether they’ll participate in the program and stay tuned as facts become available. The program is to be fully funded by employees and benefits will be available to employees after they have paid premiums for at least 60 months.
CLASS provides small supplementary benefits for in home care, and is not enough to pay for assisted living facilities or nursing homes.
Recent healthcare reform will bring a lot of changes. One of those is the new requirement that employers report the cost of employer provided health coverage on W-2s. This new rule applies beginning in 2011 so employers will need to be prepared for its implementation in late December. Costs for various plans must be reported, including: medical and drug plans, executive checkups, Medicare supplemental policies, on-site clinics, and EAPs. Dental and vision plans are also included unless they are “stand alone” plans. Flexible spending plans are excluded. More information regarding how to value these plans, whether such valuations must occur monthly (it seems they must), and other important details is forthcoming from the government. So, stay tuned for more developments. And, in the next few months when you have nothing to do (like that ever happens) start figuring out how you’ll handle this requirement.
Many companies do not intend to comply early with a provision in the new health care reform law that will require group health care plans to extend coverage to employees’ young adult children up to age 26, according to a survey released Tuesday, June 8.
Among the 501 large employers responding to a Hewitt Associates Inc. survey, 77 percent said they will wait until the effective date before offering the coverage. Ten percent of respondents said they will extend coverage early to all eligible adult children, 9 percent said they will continue coverage for graduating students already covered in their plans, and 4 percent were undecided.
The law requires the extension to be made on the first day of the plan year starting after September 23, 2010. For calendar-year plans, which are the most common, the effective date of the provision would be January 1.
Source: Jerry Geisel, Business Insurance, a sister publication of Workforce Management.
The U.S. government gave thousands of unemployed workers an early Christmas gift when the Senate, in a rare session Saturday, December 19, approved a military spending bill that would extend federal COBRA health insurance premium subsidies for the unemployed.
H.R. 3326, which the House approved this week, cleared the Senate on an 88-10 vote.
President Barack Obama signed the bill Monday, December 21.
The bill would extend the nine-month, 65 percent premium federal subsidy by six months. The change would apply to those who are involuntarily terminated through February 28, 2010.
Under current law, employees who lose their jobs after December 31 are ineligible for the subsidy.
The legislation also would provide another six months of subsidized coverage for beneficiaries whose nine-month COBRA premium subsidy has run out.
In addition, the legislation would give beneficiaries whose subsidy expired and who didn’t pay the full premium the opportunity to receive retroactive coverage. For example, a b
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eneficiary whose nine months of subsidized coverage ran out November 30 and who didn’t pay the unsubsidized premium for December could pay his or her 35 percent share in January and receive COBRA coverage for December.
The legislation would require employers to notify current and future COBRA beneficiaries of the new 15-month premium subsidy.
The fate of the legislation has been followed closely by terminated workers—eager to know whether the subsidy will be extended—as well as employers who need to tell beneficiaries the COBRA premium they should pay.
The legislation makes clear that employers can offset future COBRA premiums or issue refund checks for beneficiaries who overpaid their COBRA premium. That could happen if a beneficiary whose subsidy ran out in November paid the full premium rather than the 35 percent share in December.
Source: workforce.com, Jerry Geisel
p.s. Yes I know today is not Friday . . . because Christmas Day is on Friday I am posting this a bit early. Merry Christmas! PH