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COVID-19 Relief – Added Flexibility to Code Section 125 Cafeteria Plans

Prospective Mid-Year Election Changes IRS Notice 2020-29 allows employers to amend cafeteria plans to permit employees to make the following prospective mid-year election changes (including an initial election) for employer-sponsored health coverage, health flexible spending accounts (“FSAs”), and dependent care FSAs during calendar year 2020, regardless of whether the basis for the election change satisfies the “change in status” rules under Treas. Reg. § 1.125-4: Make a new election for employer-sponsored health coverage, if the employee initially declined to elect employer-sponsored health coverage; Revoke an existing election for employer-sponsored health coverage and make a new election to enroll in different health coverage sponsored by the same employer (including changing enrollment from self-only to family coverage); Revoke an existing election for employer-sponsored health coverage, provided the employee attests in writing that the employee is enrolled, or immediately will enroll, in other health coverage not sponsored by the employer; and Revoke an… Continue Reading

IRS Guidance Regarding High Deductible Health Plans and Expenses Related to COVID-19

In Notice 2020-15 (the “Notice”), the IRS provides relief for certain expenses related to the 2019 novel coronavirus (“COVID-19”). Generally, a high deductible health plan (“HDHP”) must satisfy the minimum deductible and maximum out-of-pocket expense requirements under Section 223(c)(2) of the Internal Revenue Code. However, “[t]o facilitate the nation’s response to [COVID-19],” the Notice provides that a health plan that otherwise satisfies the requirements to be an HDHP will not fail to be an HDHP merely because the plan provides health benefits for testing and treatment of COVID-19 before satisfying the applicable minimum deductible requirements. Notice 2020-15 is available here.

IRS Releases 2020 Inflation-Adjusted Amounts for HSAs and HDHPs

The IRS recently issued Revenue Procedure 2019-25, which sets the 2020 calendar year limits on (i) annual contributions that can be made to a health savings account (“HSA”) and (ii) annual deductibles and out-of-pocket maximums under a high deductible health plan (“HDHP”). The 2020 limits are as follows: Annual HSA contribution limits: $3,550 for self-only coverage ($50 increase from 2019); $7,100 for family coverage ($100 increase from 2019) Minimum HDHP deductibles: $1,400 for self-only coverage ($50 increase from 2019); $2,800 for family coverage ($100 increase from 2019) HDHP out-of-pocket maximum limits: $6,900 for self-only coverage ($150 increase from 2019); $13,800 for family coverage ($300 increase from 2019) View Rev. Proc. 2019-25.

IRS Releases 2019 Inflation-Adjusted Amounts for HSAs and HDHPs

The IRS recently issued Revenue Procedure 2018-30, which sets the 2019 calendar year limits on (i) annual contributions that can be made to a health savings account (“HSA”) and (ii) annual deductibles and out-of-pocket maximums under a high deductible health plan (“HDHP”). The 2019 limits are as follows: Annual HSA contribution limits: $3,500 for self-only coverage ($50 increase from 2018); $7,000 for family coverage ($100 increase from 2018) Minimum HDHP deductibles: $1,350 for self-only coverage (no change from 2018); $2,700 for family coverage (no change from 2018) HDHP out-of-pocket maximum limits: $6,750 for self-only coverage ($100 increase from 2018); $13,500 for family coverage ($200 increase from 2018) View Rev. Proc. 2018-30.

IRS Transition Relief for State Contraception Laws Creating HSA Eligibility Issues

Recently, several states expanded their contraceptive coverage mandates under the applicable state’s insurance laws to require medical insurance policies to cover certain male contraceptive services (e.g., vasectomies) on a first dollar basis before an insured has met the policy’s annual deductible. This is problematic for an insured medical plan that is intended to qualify as a high deductible health plan (“HDHP”). An HDHP enables participants to make or receive contributions to a health savings account (“HSA”). Unless an exception applies (such as coverage for preventive services, disease management, or wellness services), a medical plan that provides benefits before an individual has met the annual deductible cannot qualify as an HDHP. The IRS recently released Notice 2018-12, which provides that male contraceptive coverage will not qualify for an exception from this rule as a preventive service or under another exception. The IRS has granted temporary transition relief for the HSA eligibility… Continue Reading

IRS Releases 2018 Inflation-Adjusted Amounts for HSAs and HDHPs

The IRS recently issued Revenue Procedure 2017-37, which sets the 2018 calendar year limits on (i) annual contributions that can be made to a health savings account (“HSA”) and (ii) annual deductibles and out-of-pocket maximums under a high deductible health plan (“HDHP”). The 2018 limits, which were increased across the board from the 2017 limits, are as follows: Minimum HDHP deductibles – $1,350 self-only coverage ($50 increase from 2017); $2,700 family coverage ($100 increase from 2017). HDHP out-of-pocket maximum limits – $6,650 self-only coverage ($100 increase from 2017); $13,300 family coverage ($200 increase from 2017). Annual HSA contribution limits – $3,450 self-only coverage ($50 increase from 2017); $6,900 family coverage ($150 increase from 2017). View Revenue Procedure 2017-37.

IRS Releases 2016 Inflation Adjusted Amounts for HSAs and HDHPs

The IRS issued Revenue Procedure 2015-30, which sets the 2016 calendar year limits on (1) annual contributions that can be made to a health savings account (“HSA”) and (2) annual deductibles and out-of-pocket maximums under a high deductible health plan (“HDHP”). The 2016 limit on contributions to an HSA for an individual with self-only coverage under an HDHP remains unchanged at $3,350, whereas the limit for an individual with family coverage under an HDHP is increased from $6,650 to $6,750. The minimum annual deductibles for a plan to qualify as an HDHP in 2016 remain unchanged at $1,300 for self-only coverage and $2,600 for family coverage, whereas the annual out-of-pocket maximums under an HDHP are increased from $6,450 to $6,550 for self-only coverage and from $12,900 to $13,100 for family coverage. Revenue Procedure 2015-30 is available here.

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