New P New Perspecti pectives on HSAs es on HSAs April 25, 2019 #wpbc17
Panelists • Kara Backus, ERISA/Employee Benefits Attorney at Bullard Law • Vanessa Lyons, Manager of National Accounts, Labor & Trust at Regence • Greg Jones, Director of Business Development, Professional Benefit Services 2
What is an HSA? • Internal Revenue Code §223 • Tax advantaged account • Used to pay for qualifying medical expenses • For the taxpayer, spouse and dependents 3
Qualifying to Contribute to an HSA • A qualified individual: • Is covered under a HDHP on the first day of the month • Has no other health coverage (unless it is “HSA” compatible) • Is not enrolled in Medicare • Cannot be claimed as a dependent on some else’s federal tax return. 4
What is a HDHP? • High Deductible Health Plan • aka Consumer Driven Health Plan • IRS minimum/maximum deductibles & out-of-pocket expenses • Annual Limits for 2019: $6,750 for an individual and $13,500 for a family 5
HSA Contribution Limits • Limits are: • Adjusted annually • based on an individual’s health coverage tier • Self Only Coverage = maximum $3,500 • Individual + 1 = maximum $7,000 • Individuals age 55 or older = additional $1,000 6
Health Care Affordability How can HSAs help with health care affordability? 7
HSAs and Retirement Plan Strategies Should an employee consider an HSA as part of his/her retirement plan? What are some strategies for including an HSA as part of an employee’s retirement plan? How should an employee balance his/her priorities among all of the types of plans (e.g., 401(k), HSA, FSA, etc.)? 8
Spending vs. Savings Account Many employees use their HSAs as spending accounts instead of savings accounts. What are the policy implications and results of this behavior? What communication strategies may be effective at changing this behavior? 9
Other Federal Law Are HSAs a group health plan governed by ERISA? Is a plan document, SPD, and 5500 filing required for an HSA? Are employees entitled to continuation coverage for their HSAs under COBRA? 10
FSAs and HSAs May an employer offer a regular FSA and an HSA at the same time? What eligibility or practical considerations does the employer need weigh in deciding between FSAs, HSAs, or offering both? What about an employer that currently sponsors an FSA with a calendar year and a carryover provision—may the employer begin offering an HSA mid-way through the year? 11
HSA Distributions May an employee receive HSA distributions while he/she is covered under a non-HDHP? When can an employee receive distributions from his/her HSA? 12
Excess Contributions and Excise Taxes What happens when an employee contributes too much to his/her HAS? Are there any penalties? What factors may cause a participant to incur a penalty? How can a participant avoid these penalties? 13
Nondiscrimination Testing Are HSAs subject to nondiscrimination testing? What testing applies, if any, when an employer does not contribute to the HSAs for its employees? What if an HSA fails either IRC §125 nondiscrimination testing or the comparability testing? 14
Vesting/Forfeiture of Accounts What happens to an employee’s HSA contributions and investment earnings when the employee leaves the employer that sponsors the HSA? What about employer contributions to an HSA when the employee terminates employment? 15
HSA Tools and Support What are some effective tools and decision-making supports that you have seen in the HSA market? 16
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