IRS Expands Benefits That Can Be Provided Before HDHP Annual Minimum Deductible Is Met

Recently, the Internal Revenue Service (IRS) released a notice that expanded the list of preventative care benefits that a high deductible health plan (HDHP) can provide without a deductible or with a deductible below the annual minimum. Read this post from UBA to learn more.


The Internal Revenue Service (IRS) released a notice, effective on July 17, 2019, that expanded the list of preventive care benefits that a high deductible health plan (HDHP) can provide without a deductible or with a deductible below the annual minimum deductible.

UBA-1000-HDHP_Chart2

The services and items listed above are treated as preventive care:

  • only when prescribed to treat a person diagnosed with the associated chronic condition listed in the table’s second column, and
  • only when prescribed for the purpose of preventing the chronic condition’s exacerbation or a secondary condition’s development.

SOURCE: Hsu, K. (20 August 2019) "IRS Expands Benefits That Can Be Provided Before HDHP Annual Minimum Deductible Is Met" (Web Blog Post). Retrieved from http://blog.ubabenefits.com/irs-expands-benefits-that-can-be-provided-before-hdhp-annual-minimum-deductible-is-met


IRS increases 2020 HSA limits

The Internal Revenue Service (IRS) announced an increase in the annual limit on deductible contributions to HSAs. The annual limit will increase by $50 for individuals and $100 for families in 2020. Continue reading this blog post for more on this increase to HSA limits.


Employees will be able to sock away some extra money into their health savings accounts next year.

The annual limit on deductible contributions to an HSA will jump by $50 for individuals and $100 for families next year, the IRS announced Tuesday.

For 2019, the annual limit on deductible contributions will be $3,550 for individuals with self-only coverage, a $50 increase from 2019, and $7,100 for family coverage, a $100 increase from 2019.

The minimum deductible for a qualifying high-deductible health plan also will increase to $1,400 for self-only coverage and $2,800 for family coverage.

Annual out-of-pocket expenses will see an even bigger jump next year. Deductibles, copayments and other amounts that do not include premiums will have a maximum limit of $6,900 for individual coverage next year, up from $6,750 in 2019, and $13,800 for family coverage, up from $13,500 in 2019.

HSA enrollment continues to grow, especially as employees look at the accounts as a way to save for medical expenses in retirement. The number of HSAs grew 13% over the past year to top 25 million, according to research firm Devenir, while assets grew 19% to $53.8 billion. Devenir projects the number of HSAs to hit 30 million by 2020, with $75 billion in total assets and $16.7 billion in investment assets.

More employers are also offering employees contributions to their accounts. Indeed, the average HSA employer contribution rose to $839 last year, up 39% from $604 in 2017, according to Devenir. All told, employer contributions totaled almost $9 billion last year.

HSAs also saw a boon this year with Amazon’s decision to allow consumers to use the accounts to buy thousands of items on its site, a move that was ballyhooed as a positive for HSA customers, as well as Amazon. Items will be listed on Amazon as “FSA or HSA eligible” on the individual product pages; a full list of items can also be browsed on Amazon’s website.

“By accepting HSA dollars, Amazon is finally giving this untapped savings tool its moment to shine,” David Vivero, co-founder and CEO at Amino, an employee financial wellness platform, wrote recently in an Employee Benefit News blog. “Every payment method or currency — whether it’s dollars, airline miles, bitcoins or credit cards — depends on reliable large-scale merchant acceptance to become truly mainstream.”

Amazon’s chief competitor, Walmart, allows consumers to use HSA and FSA cards to purchase medical items, as well.

HSA contribution limits are updated annually to reflect cost-of-living adjustments. The increases are detailed in Revenue Procedure 2019-25 and take effect in January.

SOURCE: Mayer, K. (28 May 2019) "IRS increases 2020 HSA limits" (Web Blog Post). Retrieved from https://www.benefitnews.com/news/irs-announces-2020-hsa-limits


4 ways to help employees master their HDHPs in 2019

How can employers help their employees better understand their High Deductible Health Plans? Whether your employees are HDHP veterans or newbies, there are things companies can do to help improve employee understanding. Read on to learn more.


With 2018 in the books, now is a great time to give HDHP veterans and newbies at your company some help understanding — and squeezing more value out of — their plans in 2019.

Here are four simple steps your HR team can take over the next few months to put employees on the right track.

1. Post a jargon-free FAQ page on your intranet

When: Two weeks before your new plan year begins

Keep your FAQ at ten questions (and answers!), maximum. Otherwise, your employees can get overwhelmed by their health plans and by the FAQ.

When writing up the answers, pretend you’re talking directly to an employee who doesn’t know any of the insurance jargon you do. Keep it simple and straightforward.

Make sure your questions reflect the concerns of different employee types: Millennials who haven’t had insurance before, older employees behind on retirement, employees about to have a new kid, etc. To get a clear sense of these concerns, invite a diverse group of 5-7 employees out for coffee and ask them.

Some sample questions for your FAQ might be:
• Is an HSA different from an FSA?
• Do I have to open an HSA?
• How much money should I put in my HSA?
• This plan looks way more expensive than my PPO. What gives?

2. Send a reminder email about setting up an HSA and/or choosing a monthly contribution amount

When: The first week of the new plan year

When your employees don’t take advantage of their HSA not only do they miss out on low-hanging tax savings, your company misses out on payroll tax savings, too.

So right at the start of the new year, send an email that explains why it’s important to set up a contribution amount right away.

A few reasons why it’s really important to do this:

  • You can’t use any HSA funds until your account is fully set up and you’ve chosen how much you’re going to contribute.
  • If you pay for any healthcare at all next year, and don’t contribute to your HSA, you’re doing it wrong. Why? You don’t pay taxes on any of the money you put into your HSA and then spend on eligible health care…which puts real money back in your pocket. (Last year, the average HSA user contributed about $70 every two weeks and saved $267 in taxes as a result!)
  • There’s no “use it or lose it” rule! Any money you put into your HSA this year is yours to use for medical expenses the rest of your life. And once you turn 65, you can use it for anything at all. A Mediterranean cruise. A life-size Build-a-Bear. You name it.

3. Give your HDHP newbies tips on navigating their first visit to the doctor and pharmacy

When: The week insurance cards are mailed out

When employees who are used to PPO-style co-pays realize they have to pay more upfront with their HDHP, they can get…cranky. And start to doubt their plan choice — or worse, you as their employer choice.

So set expectations ahead of time to avoid employee sticker shock and to prevent you from getting an earful. Specifically, remind employees which types of visits are considered preventative care (and likely free) and which aren’t. Then explain their options when it comes to paying for — and getting reimbursed for — the visit.

4. Share tips on saving money on care with all your HDHP users

When: Any time before the end of the first quarter of the year

Specifically, you might recommend that your employees:

  • Check prescription prices on a site like Goodrx.com before they buy their meds
  • Visit an urgent care center instead of the ER, if they’re sick or hurt but it’s not life-threatening
  • Use a telemedicine tool (if your company offers one) to get free online medical advice without having to leave their Kleenex-riddled beds

Sure, following this communication schedule requires extra elbow grease. But if you defuse your employees’ stress and confusion early, they’ll feel more prepared to take control of their healthcare and get the most out of their plans. And as a bonus, you and your team get to spend less time answering panicked questions the rest of the year.

SOURCE: Calvin, H. (2 January 2019) "4 ways to help employees master their HDHPs in 2019" (Web Blog Post). Retrieved from https://www.benefitnews.com/opinion/4-ways-to-help-employees-master-their-hdhps-in-2019


3 things you should be telling employees about HSAs

HSAs can seem to be complicated but can save your employees an additional 20 percent on average compared to paying out of their pockets. Here are 3 tips for an employer to keep in mind about HSAs.


Everyone wants to spend less on health care, but many employees don’t realize that an HDHP plan with an HSA might be the best deal they can get. Some people get scared off by an HDHP’s big deductible, some are accustomed to FSAs, and some just think an HSA seems too complicated.

But using an HSA to pay for health expenses can save your employees an additional 20 percent on average compared to paying out of their pocket. HSAs give them a way to pay for current and future medical expenses, and every dollar they save in their HSA saves you money on payroll taxes.

Here are three things you should be communicating about your HSAs:

1. FSAs are rubber, HSAs are glue

Many employees familiar with FSAs will expect that all health care accounts follow the “use it or lose it” rule. To them, saving a lot of money on health care will seem like a gamble since with an FSA, it can be better to save too little rather than way too much.

Make sure your employees understand that there’s no “use by” date on their HSA. The money they save will stick with them until they need it — this year, next year, or twenty years from now. Emphasize that the HSA is their account, and they’ll carry it with them even if they change jobs or retire. And speaking of retirement…

2. HSAs are a great way to save for retirement

Employees who understand their HSA may still only think of them as a way to cover their current medical expenses. The sobering reality is that the average couple will have over $240,000 in medical expenses during retirement. An HSA offers a great way to save for those expenses and other retirement costs.

Explain to your employees that HSA savings can be invested like a 401(k) and can grow year-after-year. An HSA actually offers better tax savings than an 401(k) when it’s used to cover medical expenses. Reassure your employees that there’s no downside to saving too much, because once they turn 65, their HSA savings can be spent on non-medical expenses, so they can use that HSA money to buy themselves those senior-discount skydiving lessons. And speaking of treating themselves…

3. You can pay yourself back with an HSA (thanks, self!)

Many employees worry that they’ll get no benefit from an HSA if they run into medical expenses before they’ve saved enough, so they choose an FSA, since their FSA annual contribution would be available immediately.

Let them know that they can use their HSA to “reimburse themselves” for any out-of-pocket money they spend on medical expenses. So if they spend $100 out-of-pocket on an X-ray in January, they can save some pre-tax money in their HSA during February, and write themselves a check for $100. Just remind them the medical expense has to be from afterthey opened the HSA—so setting it up right away is critical.

HSAs can save everybody money; employees just need to know how to make it work. Having a solid understanding of the benefits and flexibility of HSAs can help employees realize how easy it is to lower their taxes, cover their medical expenses, and save for the future.

SOURCE:
Schneider, C (2 July 2018) "3 things your clients should be telling employees about HSAs" [Web Blog Post]. Retrieved from https://www.benefitspro.com/2018/07/02/3-things-your-clients-should-be-telling-employees/


3 ideas to ease the transition to a high-deductible world

With high-deductible health plans rising to substantial heights, employers may not be thinking about the extreme changes happening ahead. Here are some tips on how to make a painless transition into a high deductible world.


We’re all familiar with the necessary evils of today’s society: paying taxes, going to the dentist and sitting in rush-hour traffic. Now, there’s another one to add to the list — high deductible health plans (HDHPs). They’re on the rise due to increasingly unmanageable health care costs caused by factors such as increased carrier and hospital consolidation, unregulated pharmaceutical prices, and a lack of financial awareness among medical providers.

In response, prudent employers who want to continue providing health benefits but can’t keep up with the costs are turning to HDHPs to share the financial burden with employees and encouraging those employees to become more disciplined shoppers. This is predictably being met with resistance.

But there’s a more urgent matter at hand: until we find a way to flip the health-care system on its head, we’re anticipating a future where networks get narrower and significantly limit options and deductibles rise to catastrophic heights.

Employers may not be thinking ahead for these drastic changes, which is why brokers can be instrumental in helping clients guide their employees toward the necessary mental and financial preparations. Here are a few ideas to get them started.

1. Shift gears to plan beyond the calendar year.

For most, health care is an infrequent experience that’s handled reactively: you get sick, you go to the doctor, your insurance foots the bill. However, now that employees are on the hook for potentially thousands of dollars, it’s crucial that they plan ahead.

To facilitate this shift in mindset, employers should encourage employees to:

  • Utilize a health savings account (HSA):When it comes to HSAs, people tend to fall into one of two schools of thought: “HSAs are a silver bullet” or “HSAs are a terrible excuse by politicians to allow the existence of HDHPs.” Rarely is a situation so black and white, and this one is no exception. HSAs aren’t the best choice for everyone. Certain demographics can’t afford to juggle the high costs of health care (and life) while also contributing funds to an account. However, it’s important to keep in mind that as costs continue to rise, more people will be pushed above the HSA qualification line and having an account may be the only life raft available when drowning in high deductibles — a trend we’re already starting to see.In an ideal world, the HSA wouldn’t exist. Out-of-control health care costs bear the blame for solutions like HDHPs — and the HSA is our consolation prize. The reason I advocate the utilization of these accounts for long-term planning is because they are the only health care benefit we have that encourages people to think beyond 12 months. Unlike the flexible spending account (FSA), the money in an HSA rolls over every year and grows over time, so it lets people save for years down the road (maybe when the pediatrician bills pile up, or you finally have that major surgery) vs. scrambling to spend their funds before the end of the year. Also, if an employer is contributing to an employee’s HSA, it’s leaving money on the table not to sign up for an account.
  • Shop for the best “deals”:Unless someone is a frequent flyer in the health care system, they might brush off shopping for healthcare since it seems like a lot of effort for a single doctor’s visit. However, considering the fact that the cost of an ACL surgery can vary as much as $17,000, those numbers certainly add up over time. (Even more so if a patient fails to find care that’s in network.) Helping employees understand this concept, and pairing it with an easy-to-use transparency solution, can save them tons of money in the long run — especially if the cost savings from each doctor’s visit are deposited into an HSA for future use.

2. Recognize that options are still available.

I’m not going to try to frame high deductibles in a positive light. It’s not the ideal situation for consumers or employers. But sometimes, just knowing there are options in a seemingly bleak situation can provide temporary relief. Here are some tips for employers to share with employees when they’re frustrated about their HDHPs:

  • Ask questions:Employees shouldn’t be afraid to ask questions. Healthcare is known for being convoluted, so it’s likely they’re not alone in any confusion they experience. They should start with health insurance and take time with the HR manager to understand the specifics of their coinsurance, copays, deductibles, and benefits so they’re aware of all their options, such as free preventive services. Another great place for questions is at the doctor’s office. Asking about and negotiating costs (yes, you can do that!) can have huge payoffs — Consumer Reports found that only 31 percent of Americans haggle with doctors over medical bills but that 93 percent of those who did were successful, with more than a third of those saving more than $100.
  • Stay educated:“Education” can be a tired term for brokers and employers. Employees never seem to read the emails and collateral materials that teams painstakingly curate each year. While disheartening, I think the focus on education is a long but ultimately rewarding process. Consider the 401(k). These plans struggled through the recessions in the early 2000s, but through constant behavioral reinforcement (helped largely by policies such as The Pension Protection Act, which made it easier for companies to automatically enroll their employees in 401(k) plans) and continued efforts by employers, 401(K)s bounced back and hold $4.8 trillion in assets today.The same lesson can be applied to your education efforts as well. That is, eventually the education will stick. So help create a new ecosystem for employees to navigate by getting timely information and resources out there about maximizing HDHPs and utilizing HSAs.

3. Stay optimistic because change is coming.

This point is a bit more abstract. Worrying about health care costs is exhausting, and things are likely to get worse before they get better. However, there’s been a lot of news in the health care space that should bring a glimmer of optimism.

For instance, we heard about the partnering of three industry powerhouses to create a new health care company for their employees. It’s been fascinating to see how much chatter this announcement has already generated and will likely keep traditional employer health care vendors on their toes.

While the trend of employers building coalitions to tackle health care costs is nothing new and it’s too early to tell how successful this initiative will be, the bigger point is that this is a strong signal that change is desperately needed. More and more companies — regardless of what industry they’re in — are starting to realize that they’re all in the business of health care. And as we gain power in numbers, I believe we will build the momentum to create some serious change.

It’s tough to win in today’s health care world, and it’s likely going to get even more challenging over the next few years.  But if brokers and employers can provide the right level of guidance, education, and resources, they can help employees better mentally and financially manage their high-deductible futures.

SOURCE:
Vivero, D (2 July 2018) "3 ideas to ease the transition to a high-deductible world" [Web Blog Post]. Retrieved from https://www.benefitspro.com/2018/02/08/3-ideas-to-ease-the-transition-to-a-high-deductibl/


These 3 industries are leading the way in HDHP adoption

Interested in knowing which industries are leadig the way in HDHP adoption? Check out this blog article.

Employers in the education, health care, manufacturing and retail sectors are using a variety of tactics to drive selection of HDHPs, with varying levels of adoption from employees, so says the report, based on anonymous employee benefit election data on the Benefitfocus Platform from more than 540 large employers in those sectors.

In the education sector, HDHPs are becoming less the exception, more the rule.

“Back in 2016, traditional health plans like PPOs and HMOs represented an overwhelming majority of health plan offerings and elections among employers in the education industry,” the authors write. “But just two short years later, things look completely different. In an industry known historically for its generous health insurance benefits, the HDHP has made remarkable gains in popularity.”

The share of employers in the education sector offering at least one HDHP has more than doubled since 2016, from 23 to 50 percent, according to the report. Employers have done a lot to make HDHPs attractive — they now pay 87 percent of the total HDHP premium and have doubled their contribution to employees’ HSAs since 2016. Their efforts have worked — 34 percent of employees selected an HDHP when given the choice for 2018, up from 20 percent two years ago.

In the health care sector, employers are encouraging consumer-driven plans with moderate success, according to the report.

“Over the past two years, employers in the health care industry have taken steps to shift more health insurance costs onto employees, while providing ways to help them manage the additional burden,” the authors write. “But there remains a long runway of opportunity for these organizations to boost adoption of the consumer-driven health care model.”

The number of employers offering HDHPs has nearly doubled in two years, with 73 percent offering at least one in 2018, up from 41 percent in 2016. However, despite there efforts, only 27 percent of employees selected an HDHP for 2018. Health care employers are likely trying to raise the adoption rate by transferring more PPO plan costs onto workers — the average employee premium contribution for a single-coverage PPO is up 24 percent from 2016.

In the manufacturing sector, despite boom in HDHP offerings among those employers, more of their workers are still opting for PPOs. “Manufacturing employers have displayed a particularly strong and growing enthusiasm for HDHPs in recent years,” the authors write. “But cost-sharing dynamics appear to be driving employees away from these plans and back into traditional health plans. Meanwhile, voluntary benefits maintain above-average popularity among both employers and employees.” The majority (88 percent) of employers in manufacturing now offer an HDHP, up from 54 percent in 2016. However, the percentage of employees electing an HDHP continues to decrease, while PPO participation grew from 36 percent in 2016, to 57 percent for 2018.

The report also found that voluntary benefits have become increasingly prevalent among manufacturers, with nearly 60 percent of employers offering at least one for 2018, up from 34 percent in 2016.

In the retail sector, employees shoulder more health plan costs, while more employers offer voluntary benefits to supplement coverage, according to the report.

“As employers in the retail industry look to keep benefit costs under control, health care is getting more expensive for their employees,” the authors write. “And while voluntary benefits offer additional financial protection for the majority of these workers, there remains a long runway of opportunity for health spending accounts to help them manage their out-of-pocket liabilities.”

Retail employers offering at least one HDHP increased from 55 percent in 2016 to 76 percent. Nearly half (40 percent) of their employees elected HDHPs, but premiums for these plans are rising, with the average annual employee contribution for a single-coverage HDHP up nearly 20 percent since 2016.

Despite HDHP prevalence, retail employers contributed 40 percent less to HSAs than the average for all employers, and employees contributed 20 percent less than peers in other industries. To supplement coverage, 56 percent of employers offered at least one voluntary benefit, up from 43 percent in 2016.

“Everywhere you turn there’s a story about rising health care costs,” says Ray August. “What employers in every industry have in common is the struggle to economically provide the best plans and care for their employees.”

Source:
Kuehner-Hebert K. (7 May 2018). "These 3 industries are leading the way in HDHP adoption" [web blog post]. Retrieved from address http://bit.ly/2FUf4Ii