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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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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 Jenny Ivy

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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IRS Issues 2011 Version of Publication 969 on HSAs, HRAs, Health FSAs and MSAs

January 31st, 2012 | No Comments |
Category: CDHC, Cafeteria Plans, Compliance and Regulatory, FSA, Flexible Spending, HRA, HSA, Health Care Reform, Health Reimbursement, Health Savings Account, Health Savings Accounts, IIAS, IRS, Section 125 Plans, Taxes, Uncategorized

Publication 969 has been updated for use in preparing 2011 tax returns. This publication provides basic information about HSAs, HRAs, health FSAs, Archer MSAs and Medicare Advantage MSAs, including brief descriptions of benefits, eligibility requirements, contribution limits and distribution issues. There are very few changes to the 2011 version. The publication has been updated to reflect two changes that apply beginning in 2011: the prescription requirement for OTC drugs (other than insulin) purchased after 2010, and the increase (to 20 percent) in the additional tax on HSA and MSA distributions not used for qualified medical expenses.

Click here to view IRS Publication 969.

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Health Care Benefits Options for Small Business Owners in the New World

January 24th, 2012 | No Comments |
Category: CDHC, Compliance and Regulatory, HRA, HSA, Health Care Reform, Health Reimbursement, Health Savings Account, Health Savings Accounts, IRS, PPACA, State Legislation, Taxes, Uncategorized

What Small-Business Owners Need to Know about Health Care Benefits

Offering comprehensive benefits to employees can help you attract, hire, and retain the best workers. Yet many small-business owners believe that health care insurance is a luxury they can’t afford. The good news: Thanks to new incentives, tax credits, industry reform, and nontraditional plans, health care insurance may be within reach.

Here are a few things small-business owners should know about providing health care insurance:

Reform is in the offing. Small businesses pay some 18 percent more than their larger counterparts for the same health insurance policy, but the federal government is working to change this. On March 23, 2010, The Patient Protection and Affordable Care Act, nicknamed Obamacare, was signed into law by the president. Most of its changes are scheduled to take effect by 2014. The upshot: Through incentives, tax credits, and affordable insurance exchanges , the cost of providing health care coverage to workers will become more affordable for small-business owners.

Tax credits can offset your costs. One of the most notable changes — and benefits — of health care reform for small businesses is the Small Business Health Care Tax Credit. According to the U.S. Department of Health and Human Services, nearly 4 million small businesses can take advantage of this tax credit when providing health insurance benefits to their workers. The first phase of the tax credit entitles businesses with fewer than 25 employees (that meet certain requirements) to a credit of up to 35 percent to offset the cost of providing insurance. In 2014, this tax credit will increase to 50 percent. To determine whether you’re eligible, speak with a tax adviser, refer to the IRS’s coverage, or read this post.

Alternatives to traditional coverage exist. Once upon a time, small businesses could only offer health insurance plans to employees through either a preferred provider organization (PPO) or health maintenance organization (HMO). Although these types of insurance plans still exist, today you have other options, too. These include allowing employees to set aside pre-tax dollars to pay for their medical expenses through a health reimbursement arrangement (HRA) or a health savings account (HSA). An HSA is tied to an insurance plan (typically one with a high deductible); an HRA isn’t. Both HSAs and HRAs offer tax advantages to small-business owners and their employees, which can lower the cost of health insurance.

Consumer-directed health plans are increasing in popularity. CDHPs were the only type of health insurance plan to experience enrollment growth in 2010, according to a survey conducted by Mercer, a global human resources consultant. These self-funded plans, in which employers and employees pay into an account instead of sending premiums to an insurance company, are based on the premise that not everyone will use all of the traditional health insurance plan dollars that have been allocated. In 2011, 18 percent of small businesses are expected to offer CDHPs. Another benefit of CDHPs: Enrollees are more likely to participate in wellness programs and demonstrate both cost-cutting and health-conscious behaviors when they play a more direct role in budgeting.

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New Guidance on Group Health Insurance Coverage Informational Reporting

January 4th, 2012 | 1 Comment |
Category: CDHC, COBRA, Cafeteria Plans, Compliance and Regulatory, FSA, Flexible Spending, HRA, HSA, Health Care Reform, Health Reimbursement, Health Savings Account, Health Savings Accounts, IIAS, IRS, PPACA, Section 125 Plans, State Legislation, Taxes

The IRS has issued new guidance to clarify how employers and benefit plan administrators will need to meet Form W2 health benefit cost reporting requirements, including the treatment of FSAs, HRAs, EAPs and wellness programs, and supplemental coverage.

The W2 reporting requirements were created under PPACA and for informational purposes only so that employees are provided with comparable consumer information on the cost of their health care coverage. Notice 2012-9 restates and amends the interim guidance initially provided in Notice 2011-28 and includes the following changes:

States that the reporting requirement does not apply to coverage under a health FSA if contributions occur only through employee salary reduction elections (Q&A-19).
Clarifies that employers may include the cost of coverage under programs not required to be included under applicable interim relief, such as the cost of coverage under an HRA (Q&A-33).
Employers are not required to include the cost of coverage under an employee assistance program, wellness program, or on-site medical clinic in the reportable amount if the employer does not charge a premium with respect to that type of coverage provided under COBRA to a qualifying beneficiary (Q&A-32).
Employers do have to include the cost of any supplemental health benefits, such as cancer insurance that they pay for, but they do not have to include the cost of supplemental health benefits that the employees pay for with after-tax dollars (Q&A-38).

The guidance is applicable beginning with 2012 Forms W2 (forms required for the 2012 calendar year that employers are required to give employees by the end of January 2013). In addition, employers may rely on the guidance provided in this notice if they voluntarily choose to report the cost of coverage on 2011 Forms W2, even though this reporting is not required for 2011.

Click here to read Notice 2012-9.

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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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Jobs Bill Would Cap Employer Exclusion and HSA/HRA Deductions

September 21st, 2011 | No Comments |
Category: CDHC, Compliance and Regulatory, HRA, HSA, Health Reimbursement, Health Savings Account, Health Savings Accounts, Section 125 Plans, Uncategorized

The release of President a Obama’s deficit reduction plan comes just a week after the President submitted to Congress the actual text of his proposed jobs legislation.

NAHU’s greatest concern with S. 1549 , which seems quite unlikely to move forward in its current form, is that, as a pay for, the bill would change the tax treatment of employer-sponsored health insurance. Section 401 of the bill limits the value of all itemized deductions for married couples filing jointly with adjusted gross income of at least $250,000 and single taxpayers with adjusted gross income of at least $200,000 to 28 percent. This would include the cost of employer-sponsored health coverage and deductions for health-spending accounts (HSAs and HRAs). The amount that is reported by the employer for the employee is not excludable by the taxpayer. Republicans have expressed openness to some elements of the jobs proposal but have generally opposed the proposed tax changes and other revenue raisers that President Obama outlined. A number of Democrats also have spoken out against elements of the President’s proposal.

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CCIIO Issues Guidance on HRAs and Restricted Annual Limit Waiver Process

August 30th, 2011 | No Comments |
Category: CDHC, Compliance and Regulatory, HRA, Health Care Reform, Health Reimbursement, IRS, PPACA, Uncategorized

On Aug. 19, 2011, the Center for Consumer Information and Insurance Oversight (CCIIO) introduced supplemental regulatory guidance regarding the annual limit waiver application process. Specifically, the guidance clarifies that sponsors of stand-alone HRAs will not be required to seek waivers from PPACA rules that restrict annual dollar limits on the coverage of essential benefits.

As background, PPACA Section 2711 generally prohibits group health plans and issuers from offering coverage that imposes lifetime or annual limits on the dollar value of “essential health benefits,” but PPACA allows restricted annual limits with respect to essential health benefits for plan years beginning before Jan. 1, 2014. The waiver program is an application process permitted under PPACA whereby the secretary of HHS is permitted to temporarily waive the restricted annual limits for limited benefit or mini-med plans if compliance would result in a significant decrease in access to benefits or a significant increase in premiums. For plan years beginning on or after Jan. 1, 2014, all group health plans may not impose annual dollar limits on essential health benefits.

Prior regulations provided that HRAs that were integrated with group health coverage were exempt as long as the other group health coverage complied with the restricted annual limit requirements, meaning a waiver would not be needed. In those prior regulations, the CCIIO also requested comments on the process that should be imposed with respect to stand-alone HRAs.

The new guidance recognizes that “all HRAs set limits on the amount that can be spent” and that the limits would always be less than the applicable restricted annual limit amounts, which would ultimately result in a “significant decrease in access to HRA benefits.” Therefore, the guidance “exempts as a class all HRAs that are subject to the requirements of Section 2711 and that were in effect prior to Sept. 23, 2010, from having to apply individually for an annual limit waiver for plan years beginning on or after Sept. 23, 2010, but before Jan. 1, 2014.” This means that HRAs established prior to Sept. 23, 2010, which were otherwise subject to the restricted annual limit requirements, such as stand-alone HRAs, have been granted a waiver from the requirements without the need to actually request a waiver.

Significantly, while stand-alone HRAs are now exempt from the restricted annual limit waiver process, they still must comply with the record retention and annual notice requirements contained in the “Technical Instructions for the Waiver Extension and Waiver Application Process,” available below.

Finally, if an employer that maintains an HRA also maintains other coverage, whether or not that coverage is integrated with the HRA, that other coverage must meet the annual limit requirements or obtain a waiver. All waiver and waiver extension applications must be received by Sept. 22, 2011, as set forth in the previous guidance issued on June 17, 2011.

Technical Instructions for the Waiver Extension and Waiver Application Process
CCIIO Supplemental Guidance
Additional Information

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More than 11.4 million Americans now covered by HSA Eligible PLans

June 21st, 2011 | No Comments |
Category: CDHC, COBRA, Compliance and Regulatory, HRA, HSA, Health Care Reform, Health Reimbursement, Health Savings Account, Health Savings Accounts, IRS, PPACA, Taxes, Uncategorized

A release from America’s Health Insurance Plans:

AHIP Urges Policymakers to Prevent Disruption for HSA Policyholders

Washington, DC – More than 11.4 million Americans are covered by Health Savings Account (HSA)-eligible insurance plans, a more than 14 percent increase since last year, according to a new census released today by America’s Health Insurance Plans (AHIP) finds.

Health Savings Accounts were authorized starting in January 2004. Since then, AHIP has conducted an annual census of health plans participating in the HSA health plan market. This year’s census shows that enrollment in HSA plans has nearly doubled over the last three years, from 6.1 million enrollees in January 2008 to 11.4 million in January 2011.

“HSA plans continue to be a vital source of affordable coverage for millions of families and employers across the country,” said Karen Ignagni, President and CEO of AHIP.

Key findings from the census include:

As of January 2011, approximately 11.4 million people were covered by HSA plans, an increase of more than 14 percent since last year.
Between January 2010 and January 2011, the fastest growing market for HSA plans was for large-group coverage, which rose by 26 percent, followed by individual market coverage, which grew by 15 percent.
In the individual market, 2.4 million covered lives are enrolled in HSA plans, while approximately 2.8 million lives were enrolled in HSA coverage in the small-group market and over 6.3 million lives were covered in the large-group market.
States with the highest levels of HSA enrollment were California (1,073,319 enrollees), Texas (844,832 enrollees), Ohio (728,868 enrollees), Illinois (690,509 enrollees), Florida (656,243 enrollees) and Minnesota (507,307 enrollees).

AHIP is reaching out to policymakers on both sides of the aisle about ways to mitigate the potential unintended consequences of provisions in the new health care reform law that could disrupt or limit the availability of coverage through HSA plans, including:

Restrictions on Over-the-Counter Medications: Starting this year, HSA funds can no longer be used to purchase over-the-counter (OTC) medications without a prescription. This requirement reduces consumers’ access to common OTC drugs, such as allergy medications, and instead provides an incentive to use higher-cost prescription drug alternatives.
Medical Loss Ratio: The medical loss ratio (MLR) regulation is particularly problematic for HSA-eligible plans. By Congressional design, these plans are intended to provide consumers with a high-deductible, low-premium coverage option along with the ability so save for health care expenses through an HSA. While these plans typically have lower benefit costs, they are not necessarily less costly to administer on a per-enrollee basis, and, as a result, naturally have lower loss ratios. Policymakers should recognize the unique nature of HSA plans to preserve consumers’ access to this important coverage option.
Minimum Actuarial Value Requirement: Effective in 2014, insurance coverage sold in the individual and small-group markets must meet certain minimum actuarial values for each level of coverage provided: bronze, silver, gold, and platinum. The lowest level, bronze, must have a minimum 60 percent actuarial value, which is the dollar value of the average expected benefits paid out by the plan. The ACA directs the HHS Secretary to establish the process for determining actuarial values and states that the Secretary “may” include the amount of the annual employer HSA contributions toward the actuarial value calculation. Including employer HSA contributions in the actuarial value calculation significantly increases the likelihood that HSA plans will meet the minimum requirement and will help ensure consumers continue to have access to the high-quality, affordable coverage they rely on today.

For the full report and slides, please visit the links below:
Full Report: http://www.ahipresearch.org/pdfs/HSA2011.pdf
Slides: http://www.ahipresearch.org/pdfs/HSA2011-slides.pdf

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HSA Contributions and Assets Continue Rapid Growth Curve

June 2nd, 2011 | No Comments |
Category: CDHC, Compliance and Regulatory, FSA, Flexible Spending, HRA, HSA, Health Care Reform, Health Reimbursement, Health Savings Account, Health Savings Accounts, IRS, Taxes, Uncategorized

More Americans are using HSAs to save and pay for medical expenses, according to a new report from the J.P. Morgan Treasury Services. The report shows the average HSA balance is up 7 percent from 2009, at $1,494, and the average account contribution rose slightly in 2010 to $1,884, compared to $1,816 in 2009. The report includes the J.P. Morgan HSA Program Snapshot which details the saving, spending and investing patterns and trends among 700,000 HSA account holders in 2010. The average age of account holders is 43, and 73 percent of account holders contributed more than they spent during each month in 2010 (up from 68 percent in 2009), the report showed.

“As health care costs continue to rise year over year, Americans are increasingly leveraging HSAs as a means for using pre-tax dollars on medical expenses, as well as a way to invest and earn money for future health costs,” says David Josephs, managing director at J.P. Morgan.

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EBRI Study – HSA and HRA Accounts Continue Growth Trend

Health savings accounts surpass $12.4 billion

IRS Issues 2011 Version of Publication 969 on HSAs, HRAs, Health FSAs and MSAs

Health Care Benefits Options for Small Business Owners in the New World

What Small-Business Owners Need to Know about Health Care Benefits

New Guidance on Group Health Insurance Coverage Informational Reporting

CMS Cuts Some Slack on HRA Reporting Rules

Jobs Bill Would Cap Employer Exclusion and HSA/HRA Deductions

CCIIO Issues Guidance on HRAs and Restricted Annual Limit Waiver Process

More than 11.4 million Americans now covered by HSA Eligible PLans

HSA Contributions and Assets Continue Rapid Growth Curve