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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New FAQ’s from DOL for You

February 13th, 2012 | No Comments |
Category: Compliance and Regulatory, DOL, Health Care Reform, IRS, PPACA, State Legislation, Taxes, Uncategorized

It wasn’t all about the Summary of Coverage documents last Thursday. The Departments of Labor, HHS and Treasury also issued new guidance on frequently asked questions by employers and health plans concerning the auto-enrollment, employer requirements and waiting periods in PPACA. The agencies have asked for comments on the new guidance, which is due by April 9. NAHU plans to submit a letter on behalf of the whole association, and we also anticipate that our Employers for Flexibility In Health Care coalition will submit detailed comments as well. 

For those of you who like who prefer the Cliff Notes version rather than reading the seven detailed questions and their answers, here is a run down of some of the key points made in the document.

  • Don’t worry about auto-enrollment any time soon.

 ”The Department of Labor has concluded that its automatic enrollment guidance will not be ready to take effect by 2014.” 

  • What do employers have to do to determining if their coverage is “affordable” or not (a.k.a. whether or not the employee is allowed to drop employer coverage and go seek individual subsidized coverage through a state exchange)? 

The document states that “Treasury and the IRS intend to issue proposed regulations or other guidance permitting employers to use an employee’s Form W-2 wages (as reported in Box 1) as a safe harbor in determining the affordability of employer coverage.”

  •  What about a look-back/stability period safe harbor for employers? 

“It is anticipated that the guidance will allow look-back and stability periods not exceeding 12 months.”
 

  • If you were wondering how and when you are supposed to decide if an employee is full-time or not: 

“Treasury and the IRS intend to propose an approach under which the period of time that an employer will have to determine whether a newly-hired employee is a full-time employee (within the meaning of section 4980H) will depend upon whether, based on the facts and circumstances, (a) the employee is reasonably expected as of the time of hire to work an average of 30 or more hours per week on an annual basis and (b) the employee’s first three months of employment are reasonably viewed, as of the end of that period, as representative of the average hours the employee is expected to work on an annual basis.”
 

  • Employers are not required to offer coverage to part-time employees.
     
  • When does the benefit waiting period clock begin to tick? 

“The 90-day waiting period begins when an employee is otherwise eligible for coverage under the terms of the group health plan.”
  

  • What is the interaction between 90-day wait periods and employer penalties?

“The upcoming guidance is expected to provide that, at least for the first three months following an employee’s date of hire, an employer that sponsors a group health plan will not, by reason of failing to offer coverage to the employee under its plan during that three-month period, be subject to the employer responsibility payment under Code section 4980H

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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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House Votes to Repeal the CLASS Act

February 6th, 2012 | No Comments |
Category: Compliance and Regulatory, Health Care Reform, IRS, Taxes, Uncategorized
By ASSOCIATED PRESS | 2/1/12 11:46 PM EST

WASHINGTON – The Republican-led House on Wednesday voted to repeal a financially troubled part of the 2010 health care law that was designed to provide affordable long-term care insurance.

The House vote comes months after the Obama administration suspended the Community Living Assistance Services and Support program, known as the CLASS Act.

Health and Human Services Secretary Kathleen Sebelius in October said she was unable to find a way to make the program financially solvent.

Still, the White House has said it does not support repealing the program, under which workers would pay a monthly premium during their careers and collect a daily cash benefit if they become disabled later in life.

Republicans have targeted the program as part of their overall goal of dismantling the health care overhaul law. Action on the bill in the Democratic-controlled Senate is uncertain.

“Republicans are committed to repealing and defunding it, piece by piece if necessary,” House Speaker John Boehner (R-Ohio) said of the health care bill after the CLASS Act vote.

The House vote was 267-159, with 28 Democrats joining all 239 voting Republicans in support.

The Senate has ignored House votes in the past year to repeal the entire health care law or to block funding for parts of it. One of the few changes Congress has been able to bring about concerned a requirement for small businesses to file more health care paperwork.

The CLASS Act was supposed to address the crisis in long-term care coverage. Currently some 10 million Americans need long-term care, and that number is expected to hit 15 million by 2020. But only about 8 percent of people buy private long-term care insurance.

Under the voluntary program, a priority of the late Sen. Edward Kennedy, monthly premiums would be used to finance benefits of at least $50 a day for those needing long-term care. The money would go for services at home or to help with nursing home bills.

But government actuaries determined that unless a large number of healthy people signed up, premiums would have to soar to unaffordable levels to meet the growing needs of the disabled.

Experts have concluded, said Rep. Phil Gingrey (R-Ga.) that “the CLASS program can’t be operated without mandatory participation so as to ensure its solvency.” Unless it is terminated, he said, “it poses a clear danger to the fiscal health of our budget and to the American taxpayer.”

The administration finally has come to the conclusion “that we knew even before the bill passed, that this was unsustainable, it was unworkable, it was fatally flawed,” said the bill’s sponsor, Rep. Charles Boustany (R-La.).

But Rep. Henry Waxman (D-Calif.) said the Republican goal was to “tear down and dismantle programs that provide health care in the United States.” He said “the solution is to amend the program to make it work, not just repeal it and leave nothing in its place.”

Read more: http://www.politico.com/news/stories/0212/72353.html#ixzz1ldfVzFUJ

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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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IRS Releases 2011 Versions of Publications 502 and 503

January 31st, 2012 | No Comments |
Category: Compliance and Regulatory, IRS, Taxes

  The IRS recently issued the 2011 versions of Publication 502 (Medical and Dental Expenses) and Publication 503 (Child and Dependent Care Expenses). Publication 502 describes what medical expenses are deductible on taxpayers’ 2011 federal income tax returns. The 2011 version includes clarifications with respect to breast reconstruction surgery, guide dogs/service animals, hearing aids, nursing services and provisions regarding health insurance costs for self-employed persons, and the health coverage tax credit. Publication 502 is used by taxpayers to determine what qualifies as a medical expense under Code 213(d), and many use this publication to help identify expenses that may be reimbursed or paid by health FSAs, HSAs or HRAs. However, employers sponsoring these plans who refer to Publication 502 must do so with caution, as it addresses the expenses that are deductible, but does not describe the various rules that need to be considered when administering health FSAs, HSAs or HRAs.

Publication 503 describes the requirements that taxpayers must meet in order to claim the dependent care tax credit (DCTC) under IRC § 21 for child and dependent care expenses. The 2011 version includes an explanation of how to calculate the DCTC when the taxpayer has multiple qualifying individuals, but one of them has no dependent care expenses. Following a similar concept of Publication 502, employers relying on Publication 503 should do so with caution, as the expenses reimbursable under an employer-sponsored dependent care assistance program may have different rules than the DCTC.

Click here to view Publication 502.

Click here to view Publication 503.

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