In regards to Open Enrollment (OE), voluntary benefits and healthcare plans in general, Health Savings Accounts (HSAs) can be used by employers to help themselves and their employees battle the rising healthcare costs that are affecting millions of Americans more-and-more each year. So, if you’re someone looking for the most pertinent information on HSA contribution limits and other need-to-know items to prepare for OE, then you’ve come upon the right guide.
Now, let’s see if rebuffing these skyrocketing healthcare costs with HSAs may be in your best interest.
HSA contribution limits for 2019
Here are your no-hassle, HSA contribution limits for 2019:
Individuals – $3,500*
Families – $7,000*
HSA catch-up contributions (Age 55 or older) – $1000
*Employers are allowed to contribute to employee HSAs—individual and family— if they so choose, however, it cannot exceed the IRS’ HSA contribution limits for 2019 of $3,500 and $7,000.
What if you are signed up for more than one HSA account?
What if you are enrolled in an HSA at work and have another set up with a broker or bank? As long as the combined contributions to the plans (including the contributions by an employer) don’t exceed the 2019 HSA contribution limits set up the IRS, it’s perfectly fine.
Other important items
Let’s dive into the nitty-gritty with HSAs, High-Deductible Healthcare Plans (HDHPs), employer rules, advantage/disadvantages of HSA/HDHP-combos, reporting requirements, the Employee Retirement Income Security Act (ERISA) of 1979 and more.
HDHPs contribution limits for 2019
Here are your no-hassle, HDHP contribution limits for 2019:
HDHP minimum deductibles:
Individual – $1,350
Family – $2,700
HDHP minimum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums):
Individual – $6,750
Family – $13,500
According to HealthCare.gov, “An HSA can be used only if you have a High Deductible Health Plan (HDHP) — generally any health plan (including a Marketplace plan) with a deductible of at least $1,350 for an individual or $2,700 for a family. When you view plans in the Marketplace, you can see if they’re “HSA-eligible.”
What this means is that your traditional healthcare plans such as a Preferred Provider Organization (PPO) and Health Maintenance Organization (HMO) will not be eligible with an HSA.
The advantages of offering HDHPs and HSAs together
The following advantages of combining HDHPs and HSAs can be very fruitful for those signed up for them – here’s how:
1. Depending on the number of times a person will need to visit a healthcare facility, an HDHP will usually result in less expensive costs compared to a traditional healthcare plan.
2. An HDHP combined with an HSA is consumer-driven. What this means is that employees who are enrolled in these programs are more cost-conscious when they are shopping for healthcare-related services. Especially since enrolled in an HDHP, you will have higher out-of-pocket costs than someone enrolled in a traditional plan.
3. Compared to a Flex Spending Account (FSA) or Health Reimbursement Arrangement (HRA), those signed up for an HSA have more control over how and when their money is spent. It also offers an increase in privacy and a better ability for enrollees to add funds to it outside of their employer.
4. Employees enrolled in an HSA get tax-deduction advantages with their contributions.
5. HSAs can be used to save for retirement too.
Important HSA contribution rules for employers
Other than HSA contribution limits, the following are additional regulations that employers must be aware of.
Cafeteria (Section 125) Plan
An HSA falls under a “Cafeteria Plan,” because like walking through a cafeteria or buffet to choose “what to eat,” employees have the same advantages in the type of healthcare options they choose. Employers that contribute to their employees do so inside or outside of the cafeteria (section 125) plan. According to United Benefits Advisors, there are different contribution rules for both of them.
Contributions made OUTSIDE of a cafeteria plan
If making contributions to an employee’s HSA outside of a cafeteria plan, employers must contribute a comparable amount to the HSA’s of all comparable, participating employees.
Contributions made INSIDE of a cafeteria plan
HSA contributions made through a cafeteria plan do not have to satisfy the comparability rules but are subject to the Section 125 non-discrimination rules for cafeteria plans. HSA employer contributions will be treated as being made through a cafeteria plan if the cafeteria plan permits employees to make pre-tax salary reduction contributions.
There are a few HSA reporting requirements that employers must adhere to if they want to avoid incurring fines and/or penalties from the IRS.
- Employers must report their contributions to employee’s HSAs using the Form W-2
- Employers are required to deduct their HSA contributions on their business tax returns
- Employers have no reporting responsibilities to HSA distributions
HSA not ERISA
According to the U.S. Department of Labor, Under the Employee Retirement Income Security (ERISA) Act of 1974, this law protects the assets of millions of Americans so that funds placed in retirement plans during their working lives will be there when they retire. ERISA is a federal law that sets the minimum standard of retirement plans in the private sector. With that said, ERISA does not require any employer to establish a retirement plan. It only requires that those who establish plans must meet certain minimum standards.
As HSAs can be used to save for retirement in some aspects, employers should make sure that their involvement in the plans do not create an ERISA plan, or put them in a position to be involved in a prohibited transaction.
To ensure that contributions to employee HSAs aren’t riddled with risks for them to be subject to ERISA, employers can follow these rules provided by United Benefit Advisors:
- The establishment of the HSA is completely voluntary on the part of the employees; and
- The employer does not:
- Limit the ability of eligible individuals to move their funds to another HSA or impose conditions on the use of HSA funds beyond those permitted under the code
- Decide or influence the investment decisions with respect to funds contributed to an HSA
- Represent that the HSA is an employee welfare benefit plan established or maintained by the employer;
- Receive any payment or compensation in connection with an HSA
A smarter approach to benefits management
Many organizations struggle when it comes to managing employee benefits, navigating ACA compliance, working through Age-Banded benefits and sending crucial data files to appropriate carriers. That’s why many employers today are looking for cloud-based, automated solutions to streamline these efforts for employees and administrators. Doing this helps to create workforce harmony, and to promote higher levels of communication and engagement throughout it.
Benefits brokers can help stymie these problem-areas by partnering their offerings with a scalable, cloud-based human capital management (HCM) platform via a full suite, or a la carte solutions for those who only need a few components of HR Management technology. An HCM platform corrals all data into a single, secure location that promotes efficiencies to both end users and administrators by automating manual tasks and workflows, reducing the need for paper, customizing impactful reports, therefore saving hours of time, money, and more.
Benefits Brokers win by improving their overall sales and by providing their clients with new technology that can scale to meet the needs of their clients’ ever-changing requirements over the long-term. By providing your clients with HCM technology that works, over time, they will continue to want to use it, as well as potentially add more modules to improve other areas of their HR operations.
Find out more about how the Unum Voluntary Benefits Widget increased sales for Arcoro’s partner, Alexander & Company, by clicking here!
The Arcoro Solution
The Arcoro cloud-based, automated HCM platform is the perfect option for benefits brokers who need a strong HCM, benefits management and ACA compliance partner to combine within their current benefits offerings. With seamless integrations to top carriers such as Unum, Aflac, BlueCross BlueShield and more, consultants partnering with Arcoro have seen their opportunity-share rise in the market they are chasing.
The full HCM platform also offers modules in the following areas:
- Benefits Management
- ACA Compliance
- Employee self-service (Employee Portal)
- Payroll Processing
- Recruiting Applicant Tracking
- Time and Attendance
- Performance Management and Feedback Delivery
- Online Learning Management
- Succession Planning
- Employee Onboarding
- Job Posting and more