Uncategorized

Each spring, the Internal Revenue Service announces inflation adjusted limits applicable to Health Savings Accounts (HSAs) for the following calendar year. The limits applicable for 2023 were recently released in Revenue Procedure 2022-24.

Releasing next year’s limits during the first half of the preceding calendar year allows employers to begin designing their group benefit plan offerings during the summer in time to prepare for open enrollment season later this fall. This early release is actually required by federal statute for those reasons.

The limits are all indexed to inflation. Everyone who buys groceries or gasoline is well aware that the rate of inflation for the past year has been historically high. Therefore it will come as little surprise that the 2023 thresholds are all increased above the 2022 limits. In fact, the amount of 2023’s annual increases are the largest in the history of Health Savings Accounts.

For 2023, the maximum allowable annual HSA contribution for individuals with single High Deductible Health Plan (HDHP) coverage will increase to $3,850 (from $3,650 in 2022). The maximum contribution for individuals with family HDHP coverage will increase to $7,750 (from $7,300 in 2022).  HSA eligible individuals over the age of 55 by the end of 2023 can contribute an additional $1,000 per year to their accounts.

For qualifying HDHPs in 2023, the minimum required deductible will increase to $1,500 for single coverage (from $1,400 in 2022). The minimum required deductible for family coverage will increase to $3,000 (from $2,800 in 2022).   The out-of-pocket maximum for HDHPs providing single coverage will increase to $7,500 (from $7,050 in 2022). For family coverage the out-of-pocket maximum will increase to $15,000 (from $14,100 in 2022).

For any compliance or strategy questions about offering Health Savings Accounts as part of your employee benefits package, send us a question here.

This year, employers that cover their employees under a Health Reimbursement Arrangement (HRA) once again face an important deadline for payment of a tax along with filing a corresponding Federal Tax Form. Though you may no longer sponsor a current HRA, if you did sponsor an HRA plan year that ended in 2020, this tax is due this year.
 
You can access the updated letter for this year’s filings at: https://adminamerica.my.salesforce.com/sfc/p/3i000000DvXd/a/3i000000Y19H/4WGkqcUdL0xYf7rVRq7lg5foAh2g4rsIrAkn4HcBsPM.
 
If Admin America administered your 2020 HRA plan year, the PCORI Average Covered Lives Report is posted and available via your Employer Portal. You can access the employer portal directly via:
https://adminamericaemployer.lh1ondemand.com
 
If Admin America administered your 2020 HRA plan year, and the report is not available on your portal, please email enroll@adminamerica.com to request a copy of the report.
 
If your plan was self-administered, instruction on how to calculate your Average Number of Covered lives is contained in the letter.
 
Some things to Note:
 

• Most employers that sponsor a Health Reimbursement Arrangement for their employees will be required to pay the PCORI Fee directly to the IRS on or before August 2, 2021. See the How: section of the letter for complete instructions and a copy of the form.

• For covered group heath plans with Plan Years ending in 2020, the per life rate is either $2.54 or $2.66. See the How Much: section of the letter to determine which rate applies.

• This year’s deadline is Friday August 2, 2021. The mailing address is on page 4 of the letter.

• The named Plan Sponsor of the HRA must report and pay the PCORI Fee. For single employer HRA plans, the employer is the Plan Sponsor.

This month Congress passed and President Trump signed the latest COVID related relief bill, the Consolidated Appropriations Act of 2021.  The new law includes several provisions that provide potential relief for Health and Dependent Care Flexible Spending Arrangement Participants.  Employer Plan Sponsors are allowed, but not required, to amend their plans to permit the following:

• Carryover of unused funds from a Plan Year ending during 2020 or  2021 to the following Plan Year;
• Extend Grace Periods applicable for Plan Years ending during 2020 or 2021 to 12 months after the end of the Plan Year;
• Allow Plan Participants who cease participation in a Health FSA during calendar 2020 or 2021 the opportunity to receive reimbursements from unused benefits or contributions through the end of the plan year in which such participation ceased (including grace period if applicable);
• Increase the maximum age (by one year) for Dependent Care beneficiaries who aged out during the pandemic; and
• Prospective modifications of election amounts for Health and Dependent care FSAs for Plan Years ending in 2021.

We wanted you to be aware of the provisions outlined above in the new law as soon as possible to give you an opportunity to consider them and possibly communicate them to Plan Participants.  

Any of the permissive changes listed above will require Plan Amendments (which may be completed retroactively any time during 2021) if elected.  Admin America, Inc. will be following up again with customers in the coming days to provide a process for electing any of the available options.

We also would like to point out that the administration of the additional rollover amounts and grace periods will require programming changes to Admin America, Inc.’s administrative platform.  Therefore, we cannot advise at this time as to when rollover amounts in excess of the previously announced limits will be available to Plan Participants via their electronic payment cards.  We will provide an update on the timing of any system updates as soon as we have more information.

Thank you and Happy New Year!