American Benefits Group (ABG) Navigating the Road to Consumer Directed Healthcare 2.0
The rapid adoption of consumer-directed health plans and accounts is a megatrend. In 2021 over 80 percent of U.S. employers offer a High Deductible Health Plan (HDHP) with a pre-tax consumer spending account or an HSA. According to Employee Benefit Research Institute (EBRI), the average industry-wide Health Savings Account (HSA) balance is about $2,100, while an average couple will require more than $285,000 in savings at retirement age to cover their likely out-of-pocket healthcare costs. Moreover, only 30 percent of health savings account holders fall in the ‘saver’ category, carrying account balances from year to year. These statistics highlight the need for better education, tools, and resources to help consumers better manage the financial responsibility for their current and future healthcare costs.
American Benefits Group (ABG) Upping the Benefits Administration Game
In recent years, the US’ employee benefits landscape has rapidly evolved owing to factors such as escalating healthcare costs, changes in employment and benefits laws, and new initiatives and options in healthcare benefits. As employers continue to explore various ways to manage the costs and strategic design of their health benefits programs, integrated consumer-driven accounts such as Healthcare FSA, Health Savings Accounts (HSAs), and Health Reimbursement Arrangements (HRAs) play an instrumental role to empower participants with the tools they need to manage their health care spending and out of pocket costs. Delivering comprehensive tools and guidance to manage these accounts in one place with access real time healthcare cost and quality assessment tools and data is a responsibility that Massachusetts-based American Benefits Group (ABG) take very seriously.
On May 12th, the IRS released Notice 2020-29 and 2020-33. These notices provided new relaxed rules for 2020 for making elections under Cafeteria plans, using amounts during a grace period or carryover period changes to the method determining the carryover amounts under Health FSAs and clarifying which premiums can be reimbursed under ICHRAs. The following is an explanation of both notices.
This law has many important components, one of which permanently reinstates coverage of Over the Counter (OTC) drugs and medicines as items eligible for reimbursement under Code 213(d) expenses in FSA, HRA, and HSA plans. With this law, the drugs and medicines will no longer require participants to have a prescription to prove eligibility. In addition to the reinstatement of OTC eligibility, the bill expands the eligible OTC definition to include menstrual care products (i.e. tampons, pads, etc.).
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Manual Claim Reimbursement: these can be submitted electronically either by uploading information through the participant portal, using the camera feature with our mobile application or faxing to our secure fax viewer.
Monthly Administrative Service Fee Invoices Payments: communications have been sent to all AP contacts for each organization. Within the communication, we identify alternative methods of payment.
COBRA and Direct Billing: If you are currently receiving your remittances by check we ask that you sign up for ACH. Please reach out to firstname.lastname@example.org.
American Benefits Group CEO and Founder Bob Cummings Reelected as President of NAPBA May 28th 2019 - Bob Cummings has been reelected to serve as President of The National Association of Professional Benefits Administrators (NAPBA). A NAPBA Trustee since 2007, Cummings was first elected NAPBA president in 2015, and has been an instrumental force in the emergence of the Consumer Directed HealthCare industry over the last 20 years, orchestrating the growth of NAPBA as the primary compliance standards and best practice organization for third party employee benefits administrators serving the consumer directed healthcare industry.
On April 26, 2018, the IRS announced (through Rev. Proc. 2018-27) that the 2018 HSA maximum family contribution is reverting back to the original $6,900. As reported in March the IRS had previously announced a decreased limit of $6,850 (Rev. Proc. 2018-18).
In restating the original limit of $6,900, the IRS shared many reasons for the decision, including taxpayer complaints that the $50 limit reduction imposed “numerous unanticipated administrative and financial burdens” for those that had already maxed out their contributions before the reduction was announced, and administrators who had to modify their systems to reflect the reduction. Most interestingly, some stakeholders had pointed out the fact that Section 223 of the IRC requires the IRS to publish the annual inflation adjustments by June 1 of the preceding calendar year.
As a result of the new announcement, HSA eligible individuals with family coverage may now contribute up to $6,900 for 2018. Employers wanting to take advantage of the increased limit will need to make the appropriate adjustments in their payroll and benefits administration systems, if they had previously change the systems to reflect the $6,850 limit.
A further complication comes with the new announcement: Some employees had already maxed out the $6,900 before the March 5, 2018, reduction announcement. To help the employees avoid the 6 percent excise penalty tax for excess contributions, the employers already completed the corrective action of distributing the excess $50. Now, with the limit back at $6,900, that $50 is no longer considered an excess contribution. If the $50 was associated with employer contributions or employee pretax contributions, it would now be considered a nonqualified distribution, subject to a 20 percent excise penalty tax (plus income tax). To avoid the tax, the employees will need to work with the employer and HSA bank/trustee to repay the $50 to the HSA. The repayment will need to take place by April 15, 2019. Again, this last complication only applies to those employees who maxed out their contribution prior to March 5, 2018, due to employer or employee pretax contributions and whose employers had already refunded the excess $50 to them.
On March 5, 2018, the IRS released Rev. Proc. 2018-18 (as part of Bulletin 2018-10). Due to changes made in the Tax Cuts and Jobs Act (2017 tax reform), certain adjustments needed to be made to inflation amounts. One of those adjustments is to the annual family contribution for HSA's in 2018. The family max contribution is decreased from $6,900 to $6,850. The single contribution limit remains unchanged at $3,450.
When Bob Cummings started out in benefits administration, health-insurance co-pays were $3, premiums were well under $100 a month, his office ran on MS-DOS, and it issued paper statements. Much has changed since then, obviously, but not his company’s success formula, based on personalization, creativity, knowledge of a complex and ever-changing subject, and what American Benefits Group prefers to call ‘enabling technology.’
How employers can stay competitive… and retain talent
“Uncertainty” is not likely to warm the hearts of many CFOs and Finance VPs, and perhaps no aspect of corporate administration has a higher level of uncertainty than healthcare and benefits. As with pension plans, the administration of defined benefit health plans is best suited to those with a defiantly optimistic view of business trends or to companies certain that they will experience year-over-year gains to fund defined benefits indefinitely.
Health Savings Accounts are an integral component of the Consumer Directed HealthCare strategy. As HSAs gain mainstream acceptance in the marketplace it’s imperative that employers adopt an HSA solution that integrates with their core benefits offerings. Maintaining separation between the HSA and the underlying HDHP health plan will help avoid unnecessary disruption when the inevitable change of medical carrier occurs.
Every so often it seems another round of surveys is released demonstrating the strong, continual growth of the consumer-directed health care (CDHC) market and the accompanying behavioral shift in how Americans approach buying health care. This month has