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Health savings accounts (HSAs)

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HSA Eligibility for Retirement-Age Individuals

June 19, 2018

Authors

Meredith Jacobowitz and Sarah Bhagwandin

HSA Eligibility for Retirement-Age Individuals

June 19, 2018

by: Meredith Jacobowitz and Sarah Bhagwandin

Employers who offer high deductible health insurance plans to their employees typically also offer Health Savings Accounts (“HSAs”). HSAs allow employees to pay for uninsured medical expenses with pre-tax dollars and are set-up under Internal Revenue Code Section 223. HSAs are subject to annual contribution limits—single individuals may contribute up to $3,450 for 2018, families may contribute up to $6,900 for 2018, and individuals over the age of 55 may contribute an extra “catch-up contribution.” In most years, determining an employee’s maximum allowable contribution to an HSA is straightforward—an employee is either covered by a high deductible health plan or not, their spouse or dependent(s) are either covered by a high deductible health plan or not, and the employee is either at least age 55 or younger. However, in the year that an individual turns 65, determining the maximum allowable HSA contribution can become tricky. Read on to learn more

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IRS Reduces 2018 Annual HSA Contribution Limit for Family Coverage

March 6, 2018

Authors

Serena Yee

IRS Reduces 2018 Annual HSA Contribution Limit for Family Coverage

March 6, 2018

by: Serena Yee

In May 2017, the IRS issued Rev. Proc. 2017-37 announcing the inflation-adjusted health savings account contribution limits for 2018 as $3,450 for self-only coverage and $6,900 for family coverage.   However, this week the IRS issued Rev. Proc. 2018-18, which supersedes Rev. Proc. 2017-37 and reflects a decrease in the 2018 annual contribution limit for family coverage to $6,850.  Employers that provide a high deductible health plan option to their employees with a health savings account feature should ensure that their communications and systems are updated accordingly.

 

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Department of Labor Fiduciary Rule: Employers Should Not Overlook Impact on HSAs

May 18, 2016

Authors

Richard Arenburg and Denise Erwin

Department of Labor Fiduciary Rule: Employers Should Not Overlook Impact on HSAs

May 18, 2016

by: Richard Arenburg and Denise Erwin

HSAThe new Department of Labor rule defining the scope of who is an ERISA fiduciary (see our prior post here) has caused much consternation among investment professionals.  Much of the new rule is focused on reworking the outer fringes of the ERISA landscape capturing those in the investment industry offering IRA and annuity products.

Given that investment professionals appear to be the primary target of the new fiduciary rule, employers may believe that this is one room in the ERISA house of horrors that they do not have to enter.  To a large extent that is true because the concept of fiduciary status and the fee disclosure rules, as applied to traditional retirement plans, are already well entrenched.  Still, employers need to consider whether certain providers to their retirement

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New Law Uses Benefits to Pay for Buses and Veterans Health Care

August 14, 2015

Authors

Chris Rylands

New Law Uses Benefits to Pay for Buses and Veterans Health Care

August 14, 2015

by: Chris Rylands

When you were last pondering what creative name Congress will use on its next benefits-related bill (and, really, who does not do that in moments of abject despair, after a few glasses of wine, while bowling from time to time), surely the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015” was near the top of your mind, wasn’t it?  No?  Really?

Well, SURPRISE! Because that’s the name of your latest benefits bill.  In truth, it does have some provisions about transportation and the VA, but there are also benefits changes buried in various corners of the new law:

  • Beginning next year, the automatic extension for the Form 5500 has been, well, extended from 2 ½ months to 3 ½ months from the initial deadline.   This will allow plan administrators of calendar year plans more time to prepare for Halloween, but may cut in on their
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  • You Can Do With a Carryover What You Can’t Do with the Grace Period: Have an HSA

    April 8, 2014

    Authors

    Chris Rylands

    You Can Do With a Carryover What You Can’t Do with the Grace Period: Have an HSA

    April 8, 2014

    by: Chris Rylands

    Recently, the IRS released a Chief Counsel Advice Memo describing the interaction of the health FSA carryover feature we previously discussed and HSAs.  This memo addresses some of the important questions left open by prior guidance.  However, readers should know that CCA Memos are not binding guidance, so while this memo is helpful, employers should recognize that subsequent IRS guidance may take a different approach.

    The question raised was whether an employee in a general purpose FSA with a carryover feature can contribute to an HSA.  The answer (a good legal answer) is, “it depends.”

    The CCA starts out by noting, correctly, that an individual who is covered under a general purpose health FSA (i.e. one that reimburses for more than just dental, vision, preventive care, and post-HDHP deductible expenses) is not eligible to contribute to an HSA.  So a general purpose carryover makes the individual

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    More Post-DOMA Guidance from the IRS – Cafeteria Plans, FSAs and HSAs

    December 27, 2013

    Authors

    benefitsbclp

    More Post-DOMA Guidance from the IRS – Cafeteria Plans, FSAs and HSAs

    December 27, 2013

    by: benefitsbclp

    Since the Supreme Court ruled section 3 of DOMA unconstitutional in United States v. Windsor, benefits practitioners have been eagerly awaiting IRS guidance as to how the decision impacts employee benefits. On December 16, 2013, the IRS released Notice 2014-1, to provide some information as to how Federal tax recognition of same-sex spouses affects cafeteria plans, including health and dependent care flexible spending accounts (“FSAs”) and health savings accounts (“HSAs”). Though there were no surprises in the Notice, it may give comfort to employers who allowed employees with same-sex spouses to change elections mid-2013 as a result of Windsor. However, requirements as to the timing of some cafeteria plan amendments is still left unsettled.

    Election Changes

    Under the Code Section 125 rules, an employee may change cafeteria plan elections mid-year and make new elections only under certain circumstances and as permitted by

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    Top 5 Unanswered Questions with the $500 FSA Carryover

    November 13, 2013

    Authors

    Chris Rylands

    Top 5 Unanswered Questions with the $500 FSA Carryover

    November 13, 2013

    by: Chris Rylands

    After having some time to consider the recent IRS guidance on the $500 carryover (sometimes called the “rollover”) for FSAs that we previously wrote about, additional issues keep coming to light.  Here’s a quick list of just some of the issues that we have encountered that remain unanswered:

  • As noted in our previous post, additional guidance is needed on the effect of this carryover on the status of a health FSA as an excepted benefit.
  • How does the addition of the carryover impact the limited FSA COBRA obligation?  Ordinarily, if a health FSA meets the conditions of being an excepted benefit as described in our earlier post, it is also eligible for a limited COBRA obligation.  If a participant has an underspent account in such an FSA, then he or she only needs to be offered COBRA through the end of the year of
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  • IRS Adopts State of Celebration Rule – If Valid Where Performed, You are Married for Federal Tax Purposes

    September 10, 2013

    Authors

    benefitsbclp

    IRS Adopts State of Celebration Rule – If Valid Where Performed, You are Married for Federal Tax Purposes

    September 10, 2013

    by: benefitsbclp

    In Revenue Ruling 2013-17, the Internal Revenue Service provided clear guidance to define “spouse” for all purposes under the Internal Revenue Code. A “spouse” includes a same-sex spouse whose marriage is recognized by the state in which the marriage occurred. Use of this “state of celebration” rule will greatly simplify employee benefit plan administration for employers. However, the IRS indicated in this guidance that it will provide more direction on the impact of this definition on employee benefit plans.

    How Did the IRS Define the State of Celebration Rule?

    These are the bottom line holdings from the IRS guidance, which apply for all purposes under the Internal Revenue Code:

    • The terms “spouse,” “husband and wife,” “husband,” and “wife” include an individual married to a person of the same sex if the individuals are lawfully married under state law, and the term
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