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Brown & Brown — Conference Presentation (February 2024)
39 slides from Brown & Brown's conference presentation, February 2024
Slide 1: This Webinar Will Start Momentarily
This Webinar Will Start Momentarily. Thank you for joining us.
Slide 2: HSA Compliance: A Deep Dive into the Rules Surrounding HSAs
HSA Compliance: A Deep Dive into the Rules Surrounding HSAs Presented By: Regulatory & Legislative Strategy Group
Slide 3: Disclaimer
DISCLAIMER Brown & Brown, Inc. and all its affiliates, do not provide legal, regulatory or tax guidance, or advice. If legal advice counsel or representation is needed, the services of a legal professional should be sought. The information in this document is intended to provide a general overview o
Slide 4: Health Savings Account (HSA)
Health Savings Account (HSA) What is an HSA? What is it for? Are there any special Tax-exempt trust or May be used for eligible requirements? custodial account owned medical expenses of the Must be covered by a high by the individual individual, and the deductible health plan individual’s spouse and
Slide 5: HSA Eligibility
HSA Eligibility W H O I S E L I G I B L E T O E S TA B L I S H A N D C O N T R I B U T E T O A N H S A ? Anyone who is: • Covered by an HDHP • Not enrolled in Medicare » Watch out for retroactive enrollment (which can be up to 6 months) due to events like the start of Social Security distributions D
Slide 6: Other Coverage Issues
Other Coverage Issues On-site Medical Clinics EAPs If an individual receives medical benefits (or If an individual can receive significant has the ability to receive medical benefits) medical benefits at no cost (or below fair- at no-cost (or below fair-market value cost) market value cost), the ava
Slide 7: Telemedicine and HSA Eligibility
Telemedicine and HSA Eligibility FIRST DOLLAR COVERAGE FOR TELEMEDICINE Background • Availability of telehealth benefits typically makes an employee ineligible to make or receive HSA contributions • Employers with HSA programs that also offer telehealth benefits previously (whether through the HDHP
Slide 8: Telemedicine and HSA Eligibility
Telemedicine and HSA Eligibility FIRST DOLLAR COVERAGE FOR TELEMEDICINE CARES Act Amendment • CARES Act amendment to Section 223 (March 2020) » Applicable for plan years beginning before 1/1/22 » Coverage for “telehealth and other remote care” is disregarded when determining whether someone is eligi
Slide 9: First Dollar Coverage for Telemedicine
First Dollar Coverage for Telemedicine CAA of 2022 Telehealth Expansion Act of 2023 • Extended CARES Act relief • Proposal to permanently extend relief • Applies during the period of April 1 through December 31, 2022 • Introduced in the House and Senate 3/28/23 » Note: Potential gap between 12/31/21
Slide 10: High Deductible Health Plan (HDHP)
High Deductible Health Plan (HDHP) Self-Only Coverage Family Coverage For 2024, self-only HDHP coverage must have an For 2024, family HDHP coverage must have an annual deductible of $1,600 and an out-of-pocket annual deductible of $3,200 and an out-of-pocket maximum of no more than $8,050 maximum of
Slide 11: ACA Impact on HSAs
ACA Impact on HSAs H S A Q U A L I F I E D H D H P O U T- O F - P O C K E T M A X I M U M I N T E R A C T I O N W I T H T H E A C A’ S O U T- O F - P O C K E T M A X I M U M HSA qualified HDHP out-of- HHS final rule states that the annual limitation on cost-sharing for essential health pocket maximu
Slide 12: HSA Contributions
HSA Contributions
Slide 13: High Deductible Health Plan
High Deductible Health Plan MAXIMUM ANNUAL HSA CONTRIBUTION Self-Only Coverage “Catch-Up” Contributions 2024 Maximum contribution = $4,150 Age 55 and older by the end of the tax year = $1,000 Source of Contributions Family Coverage Employer, or employee, or both 2024 Maximum contribution = $8,300 (o
Slide 14: Determining Maximum HSA Contribution Limit
Determining Maximum HSA Contribution Limit TWO METHODS Prorated (Monthly) Maximum Contribution Method • Will depend on number of months individual is HSA-eligible • Individual eligible to contribute up to 1/12th of applicable annual maximum for each month they are HSA-eligible • Example: Employee A
Slide 15: Special Contribution Rule
Special Contribution Rule LAST “MONTH” RULE “ • This also applies when an employee switches from individual to family coverage An individual may contribute the entire annual limit when first • If the employee is enrolled in the family tier as of December 1 of the eligible for an HSA as long as they
Slide 16: Mid-Year Change from Family to Single HDHP
Mid-Year Change from Family to Single HDHP W H AT I S T H E M A X I M U M A N N U A L C O N T R I B U T I O N ? Employee that enrolls in family coverage as of January, but later changes to single coverage in September (2024 amounts):* 9/12 x $8,300 = $6,225 3/12 x $4,150 = $1,038 Maximum Contributio
Slide 17: Multiple HSAs in the Family: Spouses
Multiple HSAs in the Family: Spouses • If both spouses of a married couple are HSA eligible, and either spouse is covered by family HDHP coverage (other than self-only coverage), then both are treated as having family HDHP coverage and must divide the total family maximum annual contribution amount
Slide 18: HSAs: Adult Dependents and Domestic Partners
HSAs: Adult Dependents and Domestic Partners • The division of the annual maximum contribution amount between married spouses does not apply to adult dependents (that are not claimed as a tax dependent on the employee’s tax returns) or domestic partners of an employee » An adult dependent or domesti
Slide 19: HSA Corrections
HSA Corrections M I S TA K E S H A P P E N What happens when ineligible For those that lose eligibility: contributions are made to an HSA? • Curative distributions can be used if excess contribution • The IRS appears to differentiate between and net income attributable to an excess contribution are
Slide 20: HSA Corrections
HSA Corrections M I S TA K E S H A P P E N What about contributions in excess of the statutory maximum or contributions made due to an administrative error? • Curative distribution can be used if excess contribution and net income attributable to an excess contribution are distributed before the acc
Slide 21: Qualified Medical Expenses
Qualified Medical Expenses
Slide 22: HSA Funds
HSA Funds HSA funds may be invested and can grow HSA funds may be used for “qualified” out-of-pocket on a “tax-qualified” basis medical expenses (generally not medical premiums) • Funds can roll over from year-to-year and an individual • Code 213(d) – medical expenses incurred by the can keep the mo
Slide 23: Qualified Medical Expenses
Qualified Medical Expenses EXAMPLES • Most medical care that is subject to a • Dental and vision care deductible » Copays • Select insurance premiums: » Coinsurance » COBRA » Doctor visits » Qualified long-term care insurance » Inpatient or outpatient treatment » Health insurance premiums paid while
Slide 24: Non-Qualified Medical Expenses
Non-Qualified Medical Expenses EXAMPLES • Insurance premiums (other than the exceptions listed on the previous slide) • Surgery purely for cosmetic reasons • Expenses covered by another insurance plan • General health items such as tissues, toiletries and hand sanitizer BROWN & BROWN | 24
Slide 25: HSA Distribution Rules
HSA Distribution Rules TA X Q U A L I F I E D • HSA distributions may only be taken for qualified medical expenses » Non-qualified expenses will be subject to ordinary income taxes and be subject to an additional 20% penalty Distributions for non-qualified • HSA distributions can only be applied to
Slide 26: Interaction with Health FSAs and HRAs
Interaction with Health FSAs and HRAs
Slide 27: Interaction of Health FSAs with HSAs
Interaction of Health FSAs with HSAs H E A LT H F L E X I B L E S P E N D I N G A R R A N G E M E N T ( H E A LT H F S A ) • A general-purpose health FSA will reimburse all otherwise unreimbursed, out-of- pocket 213(d) (medical) expenses (except for individual premiums) • Generally, a health FSA pro
Slide 28: Health FSA Grace Period Impact on HSAs
Health FSA Grace Period Impact on HSAs H E A LT H F L E X I B L E S P E N D I N G A R R A N G E M E N T ( H E A LT H F S A ) • The health FSA may a have grace period of up to 75 days (2.5 months) following the end of the plan year • Claims incurred during the grace period may be reimbursed from the
Slide 29: Health FSA Grace Period Impact on HSAs
Health FSA Grace Period Impact on HSAs DESIGNING AN HSA COMPLIANT GRACE PERIOD • The plan may be amended (before the end of the plan year) to provide that during the health FSA grace period, employees may only seek reimbursement of limited purpose healthcare expenses (e.g., dental and vision care ex
Slide 30: Interaction of Health FSAs with HSAs
Interaction of Health FSAs with HSAs DESIGNING AN HSA COMPATIBLE HEALTH FSA Limited Purpose Health FSA Post-Deductible Health FSA A health FSA that only provides reimbursement for A health FSA that only provides reimbursement of health dental and vision expenses care expenses after the employee sati
Slide 31: Health FSA Carryover Impact on HSAs
Health FSA Carryover Impact on HSAs H E A LT H F L E X I B L E S P E N D I N G A R R A N G E M E N T ( H E A LT H F S A ) The health FSA may include a carryover of up to $640 The health FSA may also be amended (before the end of (indexed for inflation) into the following plan year the plan year) to
Slide 32: Interaction of HRAs with HSAs
Interaction of HRAs with HSAs H E A LT H R E I M B U R S E M E N T A R R A N G E M E N T ( H R A ) A health reimbursement arrangement (HRA) provides for reimbursement of 213(d) medical expenses • 100% employer dollars • Claims are typically paid from the employer’s general assets If the HRA is “gene
Slide 33: Interaction between HRAs and HSAs
Interaction between HRAs and HSAs DESIGNING AN HSA COMPATIBLE HRA Limited Purpose HRA Post-Deductible Health HRA Retirement HRA Provides reimbursement Provides reimbursement after the Provides reimbursement after for dental and vision minimum annual deductible has the individual has retired and is e
Slide 34: HSAs and Cafeteria Plans
HSAs and Cafeteria Plans
Slide 35: HSAs and Cafeteria Plans
HSAs and Cafeteria Plans P R E - TA X H S A C O N T R I B U T I O N S • Employers may permit employees to make pre-tax Nondiscrimination Rules contributions to their HSA accounts through an • Employer HSA contributions through the cafeteria plan will employer’s Section 125 cafeteria plan be subject
Slide 36: HSAs and Ineligible Individuals
HSAs and Ineligible Individuals HSA-ELIGIBLE VS. CAFETERIA PLAN ELIGIBLE Are owners, partners, and other self-employed individuals eligible to contribute to an HSA? • HSA eligibility is distinct from cafeteria plan eligibility Cafeteria plan: ineligible individuals » An individual who is not eligibl
Slide 37: HSA Contributions Outside the Cafeteria Plan
HSA Contributions Outside the Cafeteria Plan C O M PA R A B L E C O N T R I B U T I O N R U L E • Applies when employer does not permit employees to » Current active employees vs. former employees make pre-tax contributions to their HSA account through » Non-union employees vs. employees in collecti
Slide 38: HRCI and SHRM Credits
HRCI and SHRM Credits This Program, ID No. 657995 , has been approved for 1.00 HR (General) recertification credit hours toward aPHR™, aPHRi™, PHR®, PHRca®, SPHR®, GPHR®, PHRi™ and SPHRi™recertification through HR Certification Institute® (HRCI®). Brown & Brown is recognized by SHRM to offer Profess
Slide 39: Find your solution at BBrown.com
Find your solution at BBrown.com DISCLAIMER: Brown & Brown, Inc. and all its affiliates, do not provide legal, regulatory or tax guidance, or advice. If legal advice counsel or representation is needed, the services of a legal professional should be sought. The information in this document is intend
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