• Legislative & Regulatory News: ECFC ALERT: Transit Benefits Retroactivity for 2014 12/18/2014
  • Legislative Resources: ECFC 2015 Legislative & Regulatory Survey 12/11/2014
  • Legislative & Regulatory News: U.S. House vote on expired tax breaks impacts commuter benefit 12/04/2014
  • Legislative Resources: Revenue Ruling 2014-32: updates previous guidance on the use of smartcards, debit or credit cards 11/25/2014
  • Legislative & Regulatory News: Revenue Ruling 2014-32: updates previous guidance on the use of smartcards, debit or credit cards 11/25/2014
  • Legislative & Regulatory News: Additional FAQs issued on individual policies paid with pre-tax dollars 11/06/2014
  • Legislative & Regulatory News: HHS and IRS announcement regarding Employer plans and hospital coverage 11/06/2014
  • Legislative & Regulatory News: CMS announces suspension of enforcement of HIPAA HPID requirements 10/31/2014
  • Legislative & Regulatory News: IRS releases 2015 annual inflation adjustments in Revenue Procedure 2014-61 10/30/2014
  • Legislative Resources: IRS Revenue Procedure 2014-16 – Provides annual inflation adjustments for 40+ tax provisions 10/30/2014
  • Press Releases: Employer-Provided Healthcare and Open Enrollment: What Employees Need to Know 10/30/2014

    Washington, D.C. (October 30, 2014) – There’s been a lot of talk about the individual health insurance market and health insurance exchanges over the past year but, according to the most recent Census Bureau data[1], close to 85 percent of Americans get health insurance from their employers or government plans like Medicare and Medicaid. Which means it’s also open enrollment season for the more than 170 million covered by employer-sponsored plans–as well as the 48.9 million Medicare recipients who have until December 7, 2014, to make plan changes.

    “While open enrollment periods vary from employer to employer, October and November are traditionally the key months when employees have an opportunity make changes to their plans,” explains Natasha Rankin, executive director of the Employers Council on Flexible Compensation. “And many of these workers may find themselves faced with significant changes in the type and level of coverage offered by their employers this year. Most notably, an increasing move among companies towards consumer-directed benefits packages that use higher deductible health insurance plans linked to tax-advantaged health savings accounts such as health savings accounts, health reimbursement arrangements, and flexible spending arrangements.”

    A recent study from the National Business Group on Health[2], found the number of employers offering workers a consumer-directed health plan as the only health benefit option is expected to grow by nearly 50 percent next year: almost one-third (32%) plan to do this in 2015, compared with 22 percent this year. In addition, more than half (57%) of employers surveyed are implementing or expanding consumer-directed health plans.

    “There’s no denying that consumer-directed health plans are here to stay,” explains Ms. Rankin. “They make sense for employers as they try to contain costs while, at the same time, provide an affordable health insurance solution for their employees.”

    The Affordable Care Act has set minimums and maximums on deductibles and out-of-pocket expenses for qualifying high deductible health plans. In 2015, the minimum deductible is $1,300 for an individual and $2,600 for a family. Maximum out-of-pockets costs are $6,450 for a single person and $12,900 for a family.

    “The good news is employers can help their employees manage the increased out-of-pocket costs associated with these high deductible plans,” continues Ms. Rankin. “Employers can easily pair the high-deductible insurance with tax-advantaged benefits packages such as health savings accounts (HSAs), health reimbursement arrangements (HRAs), and flexible spending arrangements (FSAs).”

    Here’s how they work:

    • Health Savings Accounts (HSAs) are tax-advantaged medical savings accounts available to taxpayers who are enrolled in a qualified high deductible health plan. The funds contributed to the account are not subject to federal income tax at the time of deposit. Unused funds can be carried over to following years and added to subsequent contributions, earning tax-deferred interest. Withdrawals for qualified medical expenses are tax-free. The employer, the employee, or a combination of both can make contributions to the HSA. The best part is the HSA is owned and operated by the employee, which makes it portable. So if an employee leaves a company or the workforce, the HSA goes with the individual. For 2015, the ACA set contribution limits to HSAs at $3,350 for individual coverage and $6,650 for families. Additionally, individuals 55 and older can contribute an additional $1,000 each year to help save money for future retiree medical expenses.
    • Health Reimbursement Arrangements (HRAs) are defined contribution benefits established by the employer for the employee. The employer defines what that they will contribute to the HRA each year to help their employees cover medical expenses. The HRA plan is solely funded by the employer–but those contributions do not count as employee salary. In addition, withdrawals from the HRA for qualified medical expenses are tax-free. The HRA offers a high degree of flexibility for the employer in terms of plan design and the schedule of reimbursements. Beginning in 2014, the ACA has changed the structure and use of HRA funds. A HRA must be integrated–which means it must be paired with a qualifying high deductible health insurance plan. In addition, funds in the HRA cannot be used to cover premiums for the high deductible plan. Unlike HSAs, the HRA belongs to the employer, and it is up to the employer to determine how, or if, unused funds will be handled at year’s end.
    • Flexible Spending Arrangements (FSAs) are tax-advantaged benefit programs that allow employees to use pre-tax money for pay for eligible healthcare expenses. Based on ACA rules, an employee can elect to fund, per participant, up to $2,550 of her/his annual salary in the FSA in 2015. In addition, a new ruling issued by the IRS amends the “use or lose it” ruling. As of October 31, 2013, up to $500 in unused funds can rollover and be used in the following plan year. This rollover is restricted to plans that do not have a grace period. In addition, the ruling does not affect the $2,550 annual contribution. In terms of combining an FSA with other tax-advantaged health savings plans, FSAs can be used with HSAs in a limited capacity. Because a FSA is considered a health plan, only limited purpose FSAs‒typically covering dental and vision‒may be used with a HSA. An employee can also have both a HRA and FSA simultaneously. However, the same expense cannot be reimbursed from both accounts. The employer can set the terms of ordering rules to determine whether the HRA or FSA should be used first to cover qualifying medical expenses.

    “Educating employees about how these tax-advantaged options work should be a top priority among employers,” comments Ms. Rankin. “There are definitely aspects of each plan that can appeal to different employers and employees. For example, individuals who are 55 or older can contribute an additional $1,000 a year to their HSA to use now–or, if they enjoy good health–save for medical expenses in retirement.”

    As we move towards 2016, when the employer mandate goes into effect for companies with 50 or more employees, the Employers Council on Flexible Compensation (ECFC) anticipates even greater adoption of high deductible health insurance plans paired with defined contribution HSAs, HRAs, and FSAs.

  • Legislative Resources: Consumer-Driven Options for Open Enrollment Success 10/27/2014

    Article in SHRM bylined by Executive Director Natasha Rankin regarding a variety of strategies and incentives that promote smarter healthcare decision-making

  • Legislative & Regulatory News: Final Rule on Amendments to Excepted Benefits Released 9/30/2014