IRS Announces 2018 HSA Adjustments

Recently the IRS issued it's anticipated Health Savings Account (HSA) guidance for calendar year 2018.  Listed below are the changes to current IRS rules affecting HSAs, and qualified high deductible health insurance plans, effective in 2018:

• HSA Contribution Maximum (Individual/Self Only Coverage): $3,450 ($3,400 in '17).
• HSA Contribution Maximum (Family Coverage): $6,900 ($6,750 in '17).
• HSA Annual "catch up" contribution amount for eligible individuals 55 years of age and older remains $1,000.

HSA Qualified High Deductible Insurance coverage changes:

- Minimum deductible/Self Only Coverage/Non-Embedded Deductible*: $1,350 ($1,300 in '17)
- Minimum deductible/Self Only Coverage/Embedded Deductible*: $2,700 ($2,600 in '17)
- Minimum deductible/Family Coverage/Embedded and Non-Embedded Deductible*: $2,700 ($2,600 in '17)

- Out of Pocket Maximum/Self Only Coverage: $6,650 ($6,550 in '17).
- Out of Pocket Maximum/Family Coverage: $13,300 ($13,100 in '17).

Note: The Affordable Care Act's (ACA) out of pocket limits placed on non-grandfathered health insurance plans impacts an HSA qualified plans family out of pocket maximum as follows:

• For self-only and families with an embedded out-of-pocket maximum, the maximum amounts are: $6,650 individual and $13,300 family.
• For self-only and family with a non-embedded deductible, the maximum amounts are: $6,650 individual and $7,350 family.
• Note: the ACA's 2018 maximum out of pocket limits applicable to non-grandfathered plans increases to $7,350 for self only coverage (from $7,150 in '17); and $14,700 for family coverage (from $14,300 in '17).

* Plans with Embedded family deductibles only require a single covered family member to meet the individual deductible amount before coverage begins.  Non-embedded (sometimes called aggregate deductible) plans require one or more family members to meet the entire family deductible amount before coverage applies.

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PCORI Fee/CERF - payment schedule

Patient Centered Outcomes Research Institute (PCORI) Fee, also known as 
the Comparative Effectiveness Research Fee (CERF)
Fee periods and payment schedule

For CERF payments, ERISA plan year is important, and determines both the timing and amount of payment to the IRS. If your ERISA plan year and renewal date differ, the ERISA plan year should be used to calculate an employer's fee per covered life, and payment due date.  Absent an ERISA plan year, an employer should use the affected plan's renewal date.

·         Fee due July 31, 2017

PLAN YEAR START DATE FEE PER AVERAGE COVERED LIFE

Feb. 1, 2015–Oct. 1, 2015 $2.17

Nov. 1, 2015–Jan. 1, 2016 $2.26  

·         Fee due July 31, 2018

PLAN YEAR START DATE FEE PER AVERAGE COVERED LIFE

Feb. 1, 2016–Oct. 1, 2016 $2.26

Nov. 1, 2016–Jan. 1, 2017 To Be Determined (TBD) (Note: Amount increases by rate of medical inflation.)

·         Fee due July 31, 2019

PLAN YEAR START DATE FEE PER AVERAGE COVERED LIFE

Feb. 1, 2017–Oct. 1, 2017 TBD

Nov. 1, 2017–Jan. 1, 2018 TBD

·         Fee due July 31, 2020

PLAN YEAR START DATE FEE PER AVERAGE COVERED LIFE

Feb. 1, 2018–Oct. 1, 2018 TBD

Nov. 1, 2018–Future renewals Fee expires. No further payments required.

The CERF is self-reported on Excise Tax Form 720; and applies to:

Fully insured medical plans, including minimum premium plans; Self-insured group medical plans; Individual/family plans; Stand-alone behavioral health plans; Limited medical plans (also known as Voluntary or mini-med plans); Individuals on a temporary U.S. Visa who live in the U.S.; Medicare Surround and Medicare Expand policies; Retiree-only plans; Health Reimbursement Accounts (HRAs); and Flexible Spending Accounts (FSAs) if the employer contribution is greater than $500 and it is more than the employee contribution.

IMPORTANT:  Insurance companies remit CERF on behalf of fully insured group and individual plans.  Employers must calculate and remit CERF for self-funded plans and Health Reimbursement Arrangements (HRAs).

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ACA Update - Phase 1 of 3 Toward Change

Today (May 4, 2017), the U.S. House of Representatives passed an amended version of the "American Health Care Act" or AHCA, on a 217-213 vote tally.  In and of itself, this vote DOES NOT ALTER THE HEALTHCARE/HEALTH INSURANCE LANDSCAPE!  There are a number of phases (at least 3, but likely several more procedural steps) that must be completed in order for the Affordable Care Act (ACA) to be partially repealed.  And to be clear, the AHCA would represent a partial, piecemeal repeal of the ACA, and would in fact, retain much of the ACA.  So here's where we are and what we know, as of today...

First and foremost, the AHCA is most definitely NOT a full repeal and replacement of the ACA.  If it (or a replacement/amended version) passes in the Senate, and is signed by the President, it would make fundamental changes to the ACA, but also retain a fair amount of the insurance and healthcare delivery reforms that have been implemented over the last seven years.  Here are the highlights of what the House passed today, and what the AHCA seeks to accomplish.  Note: items in red are amendments to the original version of the AHCA that never made it to a floor vote:

•   Eliminates the EMPLOYER and INDIVIDUAL coverage mandates.
•   Ends Medicaid expansion funding. 
•   Changes Medicaid from an open-ended program to one that gives states fixed amounts of money per person.
•   Replaces the ACA's cost sharing and premium cost subsidies based mostly on consumers' incomes, with tax credits that are age based.
•   Repeals many of the ACA taxes including the medical device tax, the health insurance sector tax, and the increased Medicare payroll withholding amount affecting high wage earners. (Note: the controversial "Cadillac tax" remains in the AHCA, but is deferred to 2026.)
•   Consumers who let their coverage lapse for more than 63 days in a year would be charged 30% surcharges to regain insurance. This would include people with pre-existing medical conditions.
•   State waivers would allow insurers to alter ACA provisions such as essential health benefits, community rating, and benefit limitations, if approved.
•    $8 billion allocated to States, over five years, to finance high-risk pools that cover those with pre-existing conditions.
•   $130 billion allocated to States, over a decade, to help those that can't afford coverage.

The House of Representatives has chosen the strategy of what is known as "budget reconciliation" to accomplish the objective of a partial repeal of the ACA.  In short, this means the provisions (see above) included in the AHCA are limited only to items that are deemed to have a "direct impact on spending".  As such, the ACA's "market reforms" are not affected by the AHCA.  Using this tactic, the AHCA only requires a simple majority vote from the Senate to make it to the President's desk for signature.

Stay tuned as there is much more to come in the days, weeks, months that follow.  In the meantime, the ACA is the law of the land, and must be complied with in every respect!

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