HSA expansion: Not yet passed by House and Senate but in discussions
We continually monitor what happens in Washington regarding HSA regulations and legislation. There is discussion on expanding the benefits of HSAs in several key areas. Although not yet fully enacted, we wanted to share with you what is on the Legislative agenda and what is being discussed. The $92 billion package and new expansions to the HSA below still need to be passed by the full House and Senate and are not in effect today.
To summarize some of the key areas being discussed, here is what we know:
Gym membership as potential qualified medical expense: The House Ways and Means Committee has passed a bill (H.R. 6312) allowing taxpayers to treat the amounts paid for membership at a fitness facility and gym classes as medical expenses. The bill is known as the Personal Health Investment Today (PHIT) Act. It adds qualified sports and fitness expenses to the definition of qualified medical expenses. The committee approved the bill by a 28 to 7 margin, according to The Wall Street Journal.
HSA Expansion package: Other bills in the Ways and Means Committee package focuses on allowing more people to invest in HSAs or expanding the medical services and insurance coverage HSA owners can pay for with their funds. One bill (H.R. 6309) would let Medicare Part A beneficiaries currently prohibited from contributing to their existing HSAs once they turn 65 to maintain their accounts. Another bill (H.R. 6199) would allow over-the-counter medicines to count as qualified HSA expenses.
Increasing maximum HSA limits: One of the bills approved (H.R. 6306), sponsored by Rep. Erik Paulsen (R-MN), would increase the maximum HSA contribution limits so that the limits would be matched to the combined amount of the annual deductible and out-of-pocket limitation of high deductible health plans (HDHP). The current limits on annual contributions that can be made to an HSA for 2018 is $3,450 for self-only coverage and $6,900 family coverage, but under the legislation those limits would nearly double, rising to $6,650 for self-only coverage and $13,300 for family coverage. The legislation would also allow both spouses to make catch-up contributions to the same HSA. Under current law, married spouses who are at least 55 years old can only make a $1,000 catch-contribution to his or her own HSA, but the legislation removes that allocation rule. Thus, spouses would be permitted to contribute their basic and catch-up contribution amounts to one spouse’s HSA.
If you are interested in learning more, here are several articles you can read:
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Sarah Branigan said it was a lot easier to save for her retirement when she had a pure pension at the beginning of her career. “I was a teacher, so every check, they took money out and put it toward my pension. I knew what I would be earning after 20 or 30 years on the job and that was it,” said the 49-year-old resident of Orland Park, a suburb just south Chicago.But when Branigan left her teaching position after 25 years in 2015, she began working at a local hospital as a community relations specialist. When she saw her retirement options, she said her head almost exploded. “I’m used to this cut-and-dry plan,” she said. “Then, I get my employee handbook, and it’s IRAs and mutual funds and HSAs. I had no idea what to do.”Branigan said she enlisted her son to help her out and eventually chose a mix of plans. “He told me I have a pension coming for my regular expenses, so I should use any retirement money I earn here in a different way,” she said. “He felt pretty strongly about the HSA and some other things. I’ll listen to him. If I go broke, I told him he has to take me in.”A NEW WORLDBranigan’s story is familiar to many. What was once a fairly simple decision has become a bit of a quandary for many employees: Which retirement plan is best for me? For many companies, the HSA is a relatively new option. Originally offered to provide employed Americans a way to use pre-tax money for medical costs, Health Savings Accounts allow contributors a chance to not only cut their healthcare expenses, but to also save money for retirement, as any unused portions of the HSA can go toward long-term financial goals.This year, qualified participants can contribute up to $3,450 for individual coverage and $6,900 for family coverage. Since HSA funds roll over to the next year if not used, they’re not taxed if you don’t spend them. Earned interest isn’t taxed either. Fortune Magazine’s Kelley Long is big on the alternative savings plan. “Because HSA rules allow funds to carryover indefinitely with the triple tax-free benefit of funds going in tax-free, growing tax-free, and coming out tax-free for qualified medical expenses, I have yet to find a reason that someone wouldn’t choose to max out their HSA before funding their 401(k) or other retirement account beyond their employer’s match,” she wrote.NOT DEAD YETStill, that doesn’t mean 401(k) plans are without merit. Christine Benz, director of personal finance at Morningstar, said 401(k) contributions are especially beneficial to workers with higher earnings. “If you’re in a position to make the maximum allowable contribution to a 401(k) or other employer-sponsored plan next year, make sure that you’re taking full advantage of any matching contributions on offer from your employer,” she wrote. “Some employers match contributions on a per-pay-period basis, meaning that high-income earners who hit their own contribution limits early in the year can miss out on matches later on.”OPTIONS AVAILABLE Presenting employees with more financial options for retirement is a welcome trend. As pure pension plans dwindle, more of today’s workers will look to focus on a plan that serves their needs best. More importantly, more options enable them to make changes as those needs are redefined. “I’m starting to understand that how I’m going to pay for my retirement is a work in progress,” said Branigan. “When I’m healthy, I’m going to max out my HSA because I know I can continue to save those dollars. If something happens, they’ll be there for me to use. If not, I’ll use them for a down payment on a condo in Arizona when I retire.”
The 2018 HSA family contribution limit is back to $6900
On April 26th, the IRS updated its decision to decrease the 2018 maximum contribution limit for family coverage only. The maximum annual contribution limit for family coverage limit is now back to $6,900.
Earlier this year, the IRS had adjusted the maximum contribution limit for family coverage from $6,900 to $6,850. Yesterday the IRS updated its decision. To view the official IRS announcement, please visit the Internal Revenue Service press release.
In response to the IRS update, Outstaffing has updated its systems to ensure compliance with the IRS updated decision.
Here are up-to-date 2018 contribution limits:
• $6,900 for family coverage
• $3,450 for individual coverage
Note: There is no change for the individual coverage annual contribution limit
I sometimes feel sorry for the people in the telemarketing business – they must get tired of being hung up on (or worse) 9.9 times out of 10! But I think I can safely predict that we all hate those calls. And don’t even mention those annoying “Robo-Calls.” There’s probably no way to stop them all, but you may be able to decrease the number that you get. Have you registered your number with the FTC’s Do Not Call Registry? Register your number at www.donotcall.gov
Certain Events Trigger 30 or 60-Day Special Enrollment Periods
Under HIPAA, certain events that happen to employees or their dependents trigger a right to “special enroll” in a group health plan. Special enrollment allows individuals who previously declined health coverage to enroll in coverage outside of a plan’s open enrollment period.
An employee and his or her dependents must be provided at least 30 days to request special enrollment in a group health plan because of:
Loss of eligibility for other coverage, such as coverage from a spouse’s employer;
Termination of employer contributions toward other health coverage; or
Certain life events, including marriage, birth, adoption, or placement for adoption.
An employee and his or her dependents must be provided at least 60 days to request special enrollment in a group health plan because of:
Loss of coverage under a state Children’s Health Insurance Program (CHIP) or Medicaid; or
Determination of eligibility for premium assistance under CHIP or Medicaid.
Group health plans must make all employees eligible to enroll in the employer’s group health plan aware of their special enrollment rights at or before the time an employee is initially offered the opportunity to enroll in the plan by distributing a Notice of Special Enrollment Rights. A downloadable model notice from the U.S. Department of Labor (DOL) is available here (scroll to page 2 of the PDF—marked as page 138). Please note that the DOL’s model notice does not discuss the 60-day special enrollment period requirement mentioned above.
The IRS has released the 2018 W-4 Form and updated the withholding calculator to help you determine the appropriate allowances for the 2018 tax year. The IRS recommends checking your withholdings if one of the following pertains to you:
Families with more than one earner
Those with two or more jobs at the same time or who only work for part of the year
Those with children who claim credits such as the Child Tax Credit
Those with older dependents, including children age 17 or older
Those who itemized deductions in 2017
Those with high incomes and more complex tax returns
This new form will be available this Saturday, March 17 in Web Pay. It will be updated in Onboarding on Tuesday, March 27.
Paylocity cannot provide tax advice or advise on tax withholdings. Please speak to your tax advisor if you have questions about how the new form may affect you. However, if you have questions about updating your withholdings with Paylocity, contact your Account Manager.
The new tax reform plan has changed the 2018 contribution limit for family coverage only. The new contribution limit is now $6,850 (previously set at $6,900). To review the official IRS announcement, visit the Internal Revenue Bulletin (part III, section 4).
Outstaffing’s priority is to keep you informed of information that may impact your financial planning and benefits.
Anthem BC/BS: We believe a sound review process for keeping our drug lists up to date is key to improving members’ health and controlling drug costs. It also helps make sure our members have access to medications they need.
Through our quarterly formulary (drug list) review process, we regularly add or remove drugs or make tier changes to our drug lists. This maintains the highest level of clinical integrity, while delivering cost savings to you and your employees. Medications may move to a higher tier or be removed from our drug lists twice a year. Our next update is coming soon, and the updated drugs lists* will be available as of April 1.
Due to the recently passed Tax Cuts and Jobs Act, we have begun using the new tax rates issued by the IRS. This will change your withholding and net pay on your next paycheck.
Below is one example of the impact of these changes. This example is for an individual claiming Married Filing Jointly with one allowance and an annual salary of $52,000. For simplicity, only the Federal Income Tax Withholding Calculation is shown without benefits and other taxes.