1. The health account alphabet soup
Serving up the right benefits to your clients
Kristin DuVal
DDI Benefits

2. HRA Basics

3. HRA Basics Account is owned and “funded” by the employer
Must be “integrated” with a qualified ACA health plan (except retiree-only HRA)
Funds are not expensed until they are reimbursed
A plan document is required

4. HRA funding
Employer funding only (not considered income for employees)
Amount determined by the employer (no maximum)
Funds may roll over at the discretion of the employer (remaining funds belong to the employer)
No money is set aside in a trust - pay as you go system.

5. HRA distributions Employer determines coverage amounts
Medical, vision and dental expenses may be covered
Non-prescription medications are not covered unless prescribed by doctor
Cards are optional

6. Post-deductible HRA (PDHRA)
PDHRA with HSA
Similar to a PDFSA, but employer funded
HRA funds become available after the HSA statutory deductible of 1350/2700 or greater
PDHRA with traditional PPO
The employer can set the deductible at any amount they choose. Members will pay all costs until they’ve reached the deductible

8. Question 1 How much do Megan and Mike receive in their HRA?
Answer: That is decided by the employer
Who can add money to the HRA?
Answer: Only the employer

9. Question 2
Can ABC Company offer Desiree only the medical plan through COBRA?
Answer: No, offering the insured coverage alone is not an option.
How will ABC Company determine the monthly premium of the HRA
Answer: Calculation of the value of the HRA is very complex

10. Question 3 Can Megan still use her HRA funds on July 1?
Answer: This depends on plan design and if she elected COBRA.
If she elected COBRA can she still pay for items using her HRA?
Answer: Yes, the HRA remains available while on COBRA.

11. Fsa basics

12. Why FSAs? A simple way to save: Significant tax savings
Convenient payroll contributions
Easy to use payment options
Pay for qualified medical expenses or for qualified dependent care

13. Health care FSAs Pre-tax payroll contributions
Can be used to pay for qualified medical expenses
Entire fund amount available at the beginning of the plan year
IRS allows contributions up to $2,650 per working spouse
Employers can choose to offer up to a $500 rollover or a grace period of 2 ½ months, but not both

14. FSA and HSA overlap Grace period
$0 balance by the last day of the plan year (typically 12/31)
Automatically extends their plan year by 2 ½ months even if they exhaust their funds.
Will not be able to fund HSA until 4/1 pro-rated for that year
Rollover
Can roll up to $500 into a LPFSA
Plan docs cannot be amended for a sub-group, but must be amended for everyone on the plan

15. Limited-purpose FSAs Tax-free payroll contributions
Funds available up front at the beginning of the plan year
Used in conjunction with a health savings account (HSA)
Can be used for dental and/or vision expenses only
Allows you to maximize you pre-tax HSA contributions and contribute additional pre-tax dollars to your LPFSA

16. Post-deductible FSAs
The employer can set the deductible or use the IRS statutory deductible of $1,350/$2,700
Funds available once the member meets the deductible
Used in conjunction with a health savings account (HSA)

18. Question 1 Is the Desiree eligible to open the HSA?
Answer: Yes, if she has a $0 balance as of December 31, 2016.
Is the Desiree eligible to open the HSA if her plan has a rollover instead of a grace period?
Answer: Yes, she can either rollover into a LPFSA or forfeit the money.

19. Question 2 Is it possible for an employer to contribute to the FSA?
Answer: Yes, but there are some guidelines and limitations.

20. Question 3 Does her COBRA extend to her FSA?
Answer: This is dependent on the balance of her FSA and how much she has had withheld from her pay check.
If she did not elect COBRA, can she still pay for items using her FSA?
Answer: It is possible, it depends on the plan design for the employer.

22. HRA advantages vs disadvantages
Employer advantages
Employer determines the amount of coverage
Unused benefits can be forfeited
HRA costs are deductible as business expenses
Employee advantages
Funds are available immediately for qualified medical expenses
Unused funds can roll over
Can be used alongside a FSA
Employer disadvantages
Plan document is required
COBRA requirements
Rules/regulations are complex
Self-employed are not eligible
Employee disadvantages
Funds belong to the employer
Claims must be submitted for reimbursement
No ability to save for health care expenses in retirement

23. FSA advantages vs disadvantages
Employer advantages
Unused benefits can be forfeited
Employee advantages
Funds are available immediately for qualified medical expenses
Unused funds can roll over (if permitted by the employer)
Can be used alongside a health reimbursement arrangement or HSA (as limited or post deductible)
Pre-tax savings applied to funds elected
Employer disadvantages
Plan document is required
COBRA requirements (if balance in FSA is equal or less than the amount withheld from payroll)
Rules/regulations are complex (COBRA, ERISA and HIPAA apply)
Self-employed are not eligible
Employee disadvantages
Funds belong to the employer (Not portable from employer to employer)
Claims must be submitted for reimbursement
No ability to save for health care expenses in retirement

24. Qualified Small Employer Health Reimbursement Accounts
qsehra
Qualified Small Employer Health Reimbursement Accounts

25. Eligibility & requirements
Must be a small group, not an ALE (Applicable Large Employer) in prior CY
Controlled Group Rules apply under Section 416
Must not offer a group health plan
REQUIREMENTS:
Offered on same terms to all eligible employees
Benefit may vary based on the cost of health insurance tied to the employee’s age and/or number of family members covered. Thus, an employer could provide a greater benefit to an employee who is older or covers multiple family members.
Reimburse medical expenses under 213(d) list.
May reimburse premiums for individual health insurance policy.

26. Requirements, cont.,
Reimbursements under the Qualified HRA cannot exceed $4,950 for the employee only or $10,000 for family coverage.
These amounts are pro-rated for an employee who is covered for a partial year or where there is a short plan year.
Employees must provide “proof of coverage”. Reimbursements are not subject to income or employment taxes to the employer or employee if the employee has “minimum essential coverage.”
Employees not covered under MEC will be taxed on reimbursements on W-2.
QSEHRA must be funded solely by the employer. No employee salary reduction contributions are allowed.
Premium Tax Credit through Marketplace – no double dipping.

27. Requirements, Cont.,
QSEHRA coverage will adversely affect employees’ eligibility for premium subsidies for individual insurance policies bought through a state health insurance exchange.  The extent of the adverse effect depends upon whether the individual health insurance is “affordable” after factoring in the QSEHRA benefit.  If health insurance is affordable after factoring in the QSEHRA benefit, the employee loses entitlement to the premium subsidy altogether.  If health insurance is not affordable after factoring in the QSEHRA benefit, the employee’s monthly premium subsidy is reduced by one-twelfth of the employee’s annual QSEHRA benefit.
Employers must notify eligible employees about the QSEHRA at least 90 days before the beginning of each plan year and upon initial eligibility.
*This is not an exhaustive list of requirements…. Please see QSEHRA’s law for full details.

28. H.S.A. Basics

29. Two parts: Health plan + savings account
The health plan is called a high deductible health plan and the savings account is called a health savings account.

30. Two parts: Health plan + savings account
The health plan is called a high deductible health plan and the savings account is called a health savings account.

31. HSA-powered health plan
Minimum deductible
$1,350 single (2018)
$2,700 family (2018)
Maximum OOP
$6,650 single (2018)
$13,300 family (2018)
Here’s what they look like. The high deductible plan has a minimum deductible and out of pocket maximum of $1,300 for an individual or twice that for a family, and the maximum in-network deductible and out of pocket exposure is $6,550 for single coverage and twice that for family coverage.
So as you can see, the term high deductible health plan is a bit misleading, because the minimum deductible isn’t really that high. [Enter]
In fact, many people on a traditional PPO copay plan have deductibles and out of pocket exposure that’s higher than the HDHP limits.
[Enter] That’s why we prefer the term HSA-qualified health plan.

32. No copays before the deductible
The big difference between an HSA-qualified plan and a traditional PPO plan is that you don’t have copayments before the deductible for things like doctor visits or prescriptions.

33. Preventive care covered up-front
One nice thing about HSA-qualified plans is that preventive care can be covered up front, prior to the deductible. And, thanks to PPACA, preventive care is now covered up-front with no cost-sharing on all non-grandfathered plans.

34. Health savings accounts
2018 contribution limits
Single: $3,450
Family: $6,900
Ages 55+: $1,000 catch-up
So if you have an HSA-qualified plan and don’t have any other coverage that would pay prior to the minimum deductible, you can set up a health savings account and contribute up to $3,100 as an individual or $6,250 as a family per year plus an additional $1,000 in catch-up contributions if you’re over the age of 55.

35. Any frequency until filing deadline
Contributions may be made with any frequency the account holder desires in equal installments or in one lump sum as late as the tax filing deadline of the following year.
That’s because account holders can make contributions in any frequency they desire, in equal installments or in one lump sum, as late as April 15th of the next year.

36. Eligible expenses
These funds, of course, can be used to pay for services that used to be covered by a copayment,
[Enter] but there are all sorts of other expenses that HSA money can be used for.

37. Other eligible expenses
Things like dental, vision, hearing, and chiropractic care.

38. Certain insurance premiums
HSAs can be used to pay for certain insurance premiums:
COBRA
Insurance premiums while receiving unemployment
Long-term care insurance
Medicare, parts B & D
You can also pay for certain insurance premiums with HSA funds – like COBRA premiums, individual health insurance premiums while you’re receiving state or federal unemployment benefits, certain long-term care insurance premiums, and even Medicare Part B and Part D premiums, which are now over $100 per month for most newly eligible individuals.

39. NOT use it or lose it
And, unlike an FSA, this is NOT a use it or lose it plan.
[Enter] It’s a use it or KEEP it plan.

40. Funds roll over… $
HSA funds “roll over” from year to year. There is no expiration date of the HSA funds.
And they actually have a snowball effect because you contribute money during the good years so that it’s there when you need it. For most people, they have more good years than bad years so their account continues to grow, and funds in the account can earn tax-free interest and/or investment income.

41. …and over
Accounts grow over time as unused funds roll over from year to year and earn tax-free interest and/or investment income. $
And they actually have a snowball effect because you contribute money during the good years so that it’s there when you need it. For most people, they have more good years than bad years so their account continues to grow, and funds in the account can earn tax-free interest and/or investment income.
HSA investments are subject to risk and are not FDIC insured. Investment options and thresholds may vary and are subject to change.

42. Take it with you
It’s portable, so they take it with them when they leave.

43. Save on taxes, budget for future
And it allows people to save on taxes and budget for the future.

44. Triple tax benefit Contributions are tax- deductible
Earnings are tax-free
Withdrawals for qualified medical expenses are tax-free
In fact, it’s the only account out there with a triple tax benefit. The member gets a tax break when she puts the money in the account, not when she takes it out, earnings in the account are tax free, and as long as withdrawals are made for qualified medical expenses, they’re always tax free. State taxes may differ.
The first two points are like an IRA or 401(k), but eventually you have to pay taxes when you withdraw money from those accounts. An HSA is different. It’s not a tax-deferred account, it’s a tax-free account.

45. Health care costs in retirement
The average couple retiring this year will incur $245,000* to cover medical expenses during retirement.
This is $350,000 gross withdrawal from traditional 401(k) plan to achieve net $245,000 medical expense in retirement**
-or-
Only $245,000 tax free withdrawal from HSA

46. ! HSA disadvantages HSA-qualified health plan is required
Funds are only available after deposit
IRS reporting requirements
Maximum funding limits
Can’t be used with full medical FSA
Limited purpose FSA or post deductible FSA are permitted !
Must be coupled with a HSA qualified health plan
Funds available only after deposited in account
Must file IRS reporting- 1099, 5498
Maximum limits for HSA Funding
Can’t be used with a Medical FSA
Must be Limited Purpose or Post Deductible