EBRI Study – HSA and HRA Accounts Continue Growth Trend

February 15th, 2012 | No Comments |
Category: CDHC, Compliance and Regulatory, Flexible Spending, HRA, HSA, Health Care Reform, Health Reimbursement, Health Savings Accounts, IRS, PPACA, Taxes, Uncategorized

www.myhealthguide.com

MyHealthGuide Source: Employee Benefit Research Institute (EBRI), 1/2012, EBRI New Release and EBRI Full Text Brief with ChartsExecutive Summary

ASSET LEVELS GROWING

  • In 2011, there was $12.4 billion in health savings accounts (HSAs) and health reimbursement arrangements (HRAs), spread across 8.4 million accounts, according to data from the 2011 EBRI/MGA Consumer Engagement in Health Care Survey, sponsored by EBRI and Matthew Greenwald & Associates.
  • This is up from 2006, when there were 1.3 million accounts with $873.4 million in assets, and 2010, when 5.4 million accounts held $7.3 billion in assets.

AFTER LEVELING OFF, AVERAGE ACCOUNT BALANCES INCREASED

  • After average account balances leveled off in 2008 and 2009, and fell slightly in 2010, they increased in 2011. In 2006, account balances averaged $696.
  • They increased to $1,320 in 2007, a 90 percent increase.
  • Account balances averaged $1,356 in 2008 and $1,419 in 2009, 3 percent and 5 percent increases, respectively.
  • In 2010, average account balances fell to $1,355, down 4.5 percent from the previous year. In 2011, average account balances increased to $1,470, a 9 percent increase from 2010.

TOTAL AND AVERAGE ROLLOVERS INCREASE

  •  After declining to $1,029 in 2010, average rollover amounts increased to $1,208 in 2011.
  •  Total assets being rolled over increased as well: $6.7 billion was rolled over in 2011, up from $3.7 billion in 2010.
  • The percentage of individuals without a rollover remained at 13 percent in 2011.

HEALTHY BEHAVIOR DOES NOT MEAN HIGHER ACCOUNT BALANCES AND HIGHER ROLLOVERS

  • Individuals who smoke have more money in their accounts than those who do not smoke. In contrast, obese individuals have less money in their account than the non-obese.
  • There is very little difference in account balances by level of exercise. Very small differences were found in account balances and rollover amounts between individuals who used cost or quality information, compared with those who did not use such information.
  • However, next to no relationship was found between either account balance or rollover amounts and various cost-conscious behaviors. When a difference was found, those exhibiting the cost-conscious behavior were found to have lower account balances and rollover amounts.

DIFFERENCES IN ACCOUNT BALANCES

  • Men have higher account balances than women, older individuals have higher account balances than younger ones, account balances increase with household income, and education has a significant impact on account balances independent of income and other variables.

DIFFERENCES IN ROLLOVER AMOUNTS

  • Men rolled over more money than women, and older individuals had higher rollover amounts than younger individuals. Rollover amounts increase with household income and education, and individuals with single coverage rolled over a slightly higher amount than those with family coverage.

About EBRI

The Employee Benefit Research Institute is a private, nonprofit research institute based in Washington, DC, that focuses on health, savings, retirement, and economic security issues. EBRI does not lobby and does not take policy positions. Visit www.EBRI.org.

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Summary of Benefit Coverage Final Rule Released

February 13th, 2012 | 1 Comment |
Category: CDHC, Compliance and Regulatory, Health Care Reform, IRS, Taxes, Uncategorized

 
 
The Obama administration released the final rules for the Patient Protection and Affordable Care Act’s (PPACA) Summary of Benefits and Coverage (SBC) on February 9. The requirements have been the subject of much contention between insurers, employers and consumer groups over the past two years, and the final rules have been much anticipated by the benefits community.One of the most contentious parts of the debate about the new requirements was their effective date. PPACA specified that the SBC provisions begin on March 23, 2012, but the law also specified that this final rule be issued by March 23, 2011, so it is almost a year late. To give insurers and employers time to implement the provisions, the new requirements kick in on the first day of the first open enrollment period that begins on or after September 23, 2012. “For administrative simplicity, with respect to disclosures to participants and beneficiaries who enroll in group health plan coverage other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees), PHS Act section 2715 and these final regulations apply on the first day of the first plan year that begins on or after September 23, 2012. For disclosures to plans, and to individuals and dependents in the individual market, these requirements are applicable to health insurance issuers beginning September 23, 2012.”The final coverage summary rule also specifies that the SBC requirements apply to all health plans and insurers, not just fully insured plans. NAHU and other groups asked that large group plans be exempted, as they already provide extensive customized information to enrollees and this requirement would just create another expensive compliance requirement, but the Department of Health and Human Services (HHS) ruled that it did not have the authority under PPACA to exempt certain size groups or types of plans from the requirements. 

The final rule does remove a requirement that the benefit summaries include premium information, which was a change made in response to concerns articulated by NAHU and other groups that it would be difficult for insurers to put a single figure on a coverage package that might be offered in the small-group and individual market, for example, or not reflect employer premium contributions in the group market.

It also reduces the number of “coverage examples” that must be provided in each SBC from three to two. Under the final rule, insurers will have to illustrate what the plan would cover, and what the patient would pay, under two scenarios—having a baby and managing diabetes.

The rule specifies that it is only providing guidance on what the SBC must contain for the first year of applicability; additional guidance will be provided before January 1, 2014 about how to communicate whether the plan provides minimum essential coverage.

On a technical level, the SBC no longer has to be a standalone document, and it may be provided in color or grayscale. The new materials also create a special rule for cases in which a plan’s terms “cannot reasonably be described in a manner consistent with the template and instructions.” In those cases, plans must make an effort to describe coverage in a consistent manner.

Additional Information:
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Health savings accounts surpass $12.4 billion

February 8th, 2012 | No Comments |
Category: CDHC, COBRA, Compliance and Regulatory, Flexible Spending, HRA, HSA, Health Care Reform, Health Reimbursement, Health Savings Accounts, IRS, Taxes, Uncategorized

By

February 1, 2012

By year-end 2011, health savings accounts surpassed $12.4 billion in nearly 6.8 million accounts, according to market research from broker/dealer firm Devenir.

The company surveyed the top 50 HSA providers in the health savings account market, and predicts the HSA market will reach $27.6 billion in assets by the end of 2015.

“We continue to see strong growth in the HSA marketplace as well as steady increases in average balances”, said Eric Remjeske, president and co-founder, in a a statement.

Key findings from the Devenir December 2011 survey and research report:

  • Steady growth. HSAs continue to see consistent growth as the total number of HSA accounts rose to almost 6.8 million with assets totaling $12.4 billion, a year over year increase of almost 20 percent for accounts and a nearly 26 percent increase in assets for the period from December 31st, 2010 to December 31st, 2011.
  • Average account balances at the end of 2011 grew to $1,841 from $1,751 at the end 2010, a 5.1 percent increase. When you eliminate identified zero balance accounts that average rises to $2,179.
  • Existing accounts average balances have grown at an average of 31 percent each year from the year they were opened since 2005.
  • Contributions and withdrawals. HSA accountholders carried forward 24 percent of their contributions over the past year into 2012.
  • HSA investment dollars continue to grow.  HSA investment assets reached an estimated $960 million in December, a 34 percent year over year increase and are projected to reach $4.7 billion by end of 2015.

 

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Are employers able to waive or opt out of all health care reform?

January 31st, 2012 | No Comments |
Category: CDHC, Compliance and Regulatory, Health Care Reform, IRS, Taxes, Uncategorized

We keep hearing about the government issuing waivers, is it possible for employers to opt out of health care reform?  No, there is no waiver from all of health care reform. Employers may be thinking of the term “grandfathered plans,” which refers to plans in existence on March 23, 2010, which have made minimal changes, defined under regulations, and are therefore exempt from some, but not all, of health care reform’s mandates.

More abundant in the news, however, have been references to the “annual limit waivers,” which have been granted to many prominent restaurant chains and labor unions. The annual limit waiver was brought about due to the fact that health care reform first restricts, and then later prohibits (in 2014), annual dollar limits on the value of “essential health benefits.” Until 2014, restricted annual limits on essential health benefits are permissible under a three-year phased approach.

  • $750,000 for plan years beginning on or after Sept. 23, 2010, but before Sept. 23, 2011
  • $1.25 million for plan years beginning on or after Sept. 23, 2011, but before Sept. 23, 2012
  • $2 million for plan years beginning on or after Sept. 23, 2012, and Jan. 1, 2014

For plans issued or renewed beginning Jan. 1, 2014, all annual dollar limits on coverage of essential health benefits will be prohibited.

A class of group health plans and health insurance coverage generally known as “limited benefit” plans or “mini-med” plans often has annual limits well below the restricted annual limits set out in the interim final regulations. Because this is often the only type of private insurance available to some workers, temporary waivers from the restricted annual limit requirements were previously available. For plan years beginning before Jan. 1, 2014, the interim final regulations allowed HHS to establish a program under which the requirements relating to restricted annual limits may be waived for plans that were offered prior to Sept. 23, 2010 — if compliance would result in a significant decrease in access to benefits or a significant increase in premiums.

However, in June 2011, HHS issued guidance to revise the waiver program to establish new procedures and impose an application cutoff of Sept. 22, 2011, for all waiver extensions and new waiver requests. This means that the waiver process has now concluded, and no waivers will be granted for new waiver applications received after Sept. 22, 2011. Applications received after Sept. 22, 2011, will not be accepted, which means that any plan or policy that did not receive a waiver must be in compliance with the annual dollar limits on essential health benefits described above.

If a plan was granted a waiver by Sept. 22, 2011, that plan will be required to submit an Annual Limit Update in order to retain eligibility for the annual limit waiver through 2014. The first Annual Limit Update must be submitted by Dec. 31, 2012, and the second by Dec. 31, 2013.

Click here for additional information about the waiver process.

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Massachusetts Individual Health Mandate Penalties for Tax Year 2012 Over $2500 per Family

January 9th, 2012 | No Comments |
Category: CDHC, Compliance and Regulatory, Health Care Reform, State Legislation, Taxes, Uncategorized
 Personal Income Tax

Technical Information Release 12- 2

  Massachusetts

Department of

Revenue

Individual Mandate Penalties for Tax Year 2012

Pursuant to G.L. c. 111M, § 2, the Department of Revenue is issuing this Technical Information Release to announce the penalty schedule for individuals who fail to comply in 2012 with the requirements under the Massachusetts Health Care Reform Act (the Act). See St. 2006, c. 58, as amended. The Act requires most adults 18 and over with access to affordable health insurance to obtain it. In 2012, individuals must be enrolled in health insurance policies that meet minimum creditable coverage standards defined in regulations adopted by the Commonwealth Health Insurance Connector Authority (the Connector). Individuals who are deemed able to afford health insurance but fail to comply are subject to penalties for each month of non-compliance in the tax year (provided that there is no penalty in the case of a lapse in coverage of 63 consecutive days or less). The penalties, which will be imposed through the individual’s personal income tax return, shall not exceed 50% of the minimum monthly insurance premium for which an individual would have qualified through the Connector.[1] 

These penalties apply only to adults who are deemed able to afford health insurance. On an annual basis, the Connector establishes separate standards that determine whether individuals, married couples and families can afford health insurance, based on their incomes and affordable health insurance premiums. Those who are not deemed able to afford health insurance pursuant to these standards will not be penalized. Individuals also have the opportunity to file appeals with the Connector asserting that hardship prevented them from purchasing health insurance (and, thus, that they should not be subject to tax penalties).[2]

 

For 2012:

  • Individuals with incomes up to 150% of the Federal Poverty Level are not subject to any penalty for non-compliance, as those at this income level are not required to pay an enrollee premium for Commonwealth Care health insurance. 

 

  • Penalties for individuals with incomes from 150.1 to 300% of the Federal Poverty Level will be half of the lowest priced Commonwealth Care enrollee premium that could be charged to an individual at the corresponding income level, based on the Connector’s Commonwealth Care enrollee premiums as of January 1, 2012.

 

  • Penalties for individuals with incomes greater than 300% of the Federal Poverty Level will be:

 

  • ages 18-26: half of the lowest priced individual Commonwealth Choice Young Adult Plan premium without drug coverage; and 
  • ages 27 and above: half of the lowest priced individual Commonwealth Choice Bronze premium with drug coverage, based on the Connector’s prices for these plans as of January 1, 2012.

 

  • The Department anticipates issuing an updated penalty schedule for tax year 2013.

 

  • Penalties for married couples who do not comply with the individual mandate rules (with or without children) will equal the sum of individual penalties for each spouse.

 

Penalties for 2012
IndividualIncome

Category*

 150.1-200% FPL 200.1-250% FPL 250.1-300% FPL Above 300% FPLAge 18-26 Above 300% FPL

Age 27+
Penalty $19/month$228/year $38/month$456/year $58/month$696/year $83/month$996/year $105/month$1,260/year

* Compare individual’s annual family household income to chart immediately below to determine applicable Federal Poverty Level (FPL).

** Yearly penalty amounts listed above based on non-compliance for entire year.

 Federal Poverty Level – Annual Income Standards

Family Size 150% FPL 200% FPL 250% FPL 300% FPL
1 $16,344 $21,780 $27,228 $32,676
2 $22,068 $29,424 $36,780 $44,136
3 $27,804 $37,068 $46,332 $55,596
4 $33,528 $44,700 $55,884 $67,056
5 $39,264 $52,344 $65,436 $78,516
6 $44,988 $59,988 $74,976 $89,976
7 $50,724 $67,620 $84,528 $101,436
8 $56,448 $75,264 $94,080 $112,896
For each additional person add +$5,736 +$7,644 +$9,552 +11,460

 

This Schedule reflects the Federal Poverty Level standards for 2011 and will be updated when the 2012 Federal Poverty Level standards are published in 2012.

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US Appeals Court Rules Health-Care Law Is Constitutional

November 8th, 2011 | No Comments |
Category: CDHC, Compliance and Regulatory, Health Care Reform, Uncategorized
By Brent Kendall

Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)–A federal appeals court in Washington ruled Tuesday that a key piece of last year’s federal health-care overhaul is constitutional, handing the Obama administration another legal victory ahead of the Supreme Court’s likely consideration of the law.

The U.S. Court of Appeals for the District of Columbia Circuit ruled that Congress, acting under its power to regulate interstate commerce, had the authority to require individuals to carry health insurance or pay a penalty.

“The right to be free from federal regulation is not absolute, and yields to the imperative that Congress be free to forge national solutions to national problems, no matter how local–or seemingly passive–their individual origins,” Judge Laurence Silberman, a Reagan appointee, wrote for the court.

The 2-to-1 ruling marked the second time a Republican appointee has voted to uphold the law.

Judge Harry Edwards, a Carter appointee, joined Silberman’s ruling.

Judge Brett Kavanaugh, an appointee of President George W. Bush, dissented from the court’s decision, but he offered no opinion on the merits of the law. Instead, he said that lawsuits challenging the insurance mandate are premature because the mandate penalties amounted to a type of tax that can be challenged only after it is collected, rather than before.

A U.S. appeals court in Virginia adopted similar reasoning in September when it ruled that such lawsuits can’t proceed until individuals start paying penalties in 2015.

The D.C. Circuit is the third U.S. appeals court to rule for the Obama administration. A fourth, the 11th Circuit Court in Atlanta, ruled the law’s insurance mandate is unconstitutional.

It is a near certainty that the Supreme Court will resolve the matter, and the justices may indicate within days whether they will consider the health-care law during their current term.

The court is scheduled to discuss several challenges to the health-care overhaul during its private conference on Thursday.

If the justices decide during their Thursday meeting to hear one or more health-care cases, they could make the announcement that day or, more likely, disclose the decision in a written list of orders that is scheduled for release on Nov. 14. However, there is no guaranteed date for the court to reveal its plans.

If the court agrees to consider the health-care law, oral arguments will likely be scheduled for the spring of 2012, with a decision expected by the end of June.

Tuesday’s appeals court ruling is notable because the D.C. Circuit’s decisions traditionally get particularly close attention from the Supreme Court, in part because four of the justices–including Chief Justice John Roberts–previously sat in that circuit.

Silberman, the author of Tuesday’s ruling, is a well-respected conservative judge who has served on the court since 1985. Another Republican judicial appointee, Judge Jeffrey Sutton of the Cincinnati-based Sixth Circuit, provided a pivotal vote when that court upheld the health-care law in June.

Sutton wrote a concurring opinion upholding the insurance mandate as a reasonable way for Congress to exercise its authority over the insurance and health-care markets.

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CMS Cuts Some Slack on HRA Reporting Rules

September 28th, 2011 | No Comments |
Category: CDHC, Compliance and Regulatory, HRA, Health Reimbursement, Uncategorized

The Centers for Medicare and Medicaid Services (CMS) provided badly needed relief to Health Reimbursement Arrangement (HRA) administrators in an Alert that was issued on Thursday.

HRAs have been subject to a quarterly reporting requirement under Medicare Secondary Payer (MSP) rules that have been in effect for years. What this means is that HRA administrators must provide participant data to CMS so it can determine when Medicare is primary or secondary coverage to an employer-provided HRA.

One key exception was for participants with an annual benefit level of less than $1,000. Effective October 3, 2011, the Alert increases that threshold to $5,000. The practical impact will be a significant reduction in the number of participants who must be reported.

Another important change relates to participants who have exhausted their account balances for the year, where the employer has already fully funded the account. These participants should now be reported to CMS as terminated.

For the past two weeks, there were several indicators that CMS might relax this reporting requirement. A September 7, 2011, teleconference indicated to us that CMS might make this change, and we anticipate that other positive changes may be in the works.

Stay tuned.

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