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IRS Releases 2023 Inflation-Adjusted Amounts for HSAs and HDHPs

The IRS recently issued Rev. Proc. 2022-24, which sets the 2023 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 2023 limits are as follows: Annual HSA contribution limits: $3,850 for self-only coverage ($200 increase from 2022) and $7,750 for family coverage ($450 increase from 2022); Minimum HDHP deductibles: $1,500 for self-only coverage ($100 increase from 2022) and $3,000 for family coverage ($200 increase from 2022); and HDHP out-of-pocket maximum limits: $7,500 for self-only coverage ($450 increase from 2022) and $15,000 for family coverage ($900 increase from 2022). Rev. Proc. 2022-24 is available here.

FAQs Provide Additional Guidance Regarding At-Home COVID-19 Testing Coverage Requirements

As discussed in our prior blog post here, employer-provided group health plans, and insurers and other issuers, are required to cover the cost of over-the-counter, at-home COVID-19 tests (“OTC Tests”) authorized by the Food and Drug Administration (“FDA”). The DOL, HHS, and the Treasury Department (collectively, the “Departments”) previously issued guidance establishing a safe harbor that, if satisfied, allows plans and issuers to limit the reimbursement of OTC Tests to $12 per test (or the actual cost of the OTC Test, if lower). The Departments recently issued additional guidance in the form of FAQs clarifying how plans and issuers may comply with the safe harbor OTC Test coverage requirements. The FAQs clarify that whether a plan or issuer satisfies the safe harbor by providing adequate access to OTC Tests through its direct coverage program will depend on the particular facts and circumstances, but will generally require that OTC Tests are… Continue Reading

Action Item for Employers with HSA-Eligible Health Plans in Oklahoma

Beginning November 1, 2021, a new Oklahoma state insurance law requires health insurers providing pharmacy benefits and pharmacy benefit managers (“PBMs”) to count any amount paid on behalf of a participant towards that participant’s out-of-pocket maximum, deductible, copayment, coinsurance, or other cost-sharing arrangement. The law appears to be intended to apply only to pharmacy benefits. Counting such third-party payments, such as a prescription drug manufacturer’s coupon, towards a participant’s deductible could cause the participant to be ineligible for a health savings account (“HSA”). The Oklahoma Insurance Department has stated it is seeking clarification from the Oklahoma legislature regarding the conflict between the state statute and the federal rules governing HSA eligibility. Employers may want to contact their health insurers and PBMs (i) to determine whether any third-party payments are being applied toward the deductible under an HSA-eligible health plan and (ii) to communicate any relevant information to participants who may be affected. This new law… Continue Reading

IRS Releases 2022 Inflation-Adjusted Amounts for HSAs and HDHPs

The IRS recently issued Rev. Proc. 2021-25, which sets the 2022 calendar year limits on (i) annual contributions that can be made to a health savings account (?Ç£HSA?Ç¥) and (ii) annual deductibles and out-of-pocket maximums under a high deductible health plan (?Ç£HDHP?Ç¥). The 2022 limits are as follows: Annual HSA contribution limits: $3,650 for self-only coverage ($50 increase from 2021) and $7,300 for family coverage ($100 increase from 2021); Minimum HDHP deductibles: $1,400 for self-only coverage (no change from 2021) and $2,800 for family coverage (no change from 2021); and HDHP out-of-pocket maximum limits: $7,050 for self-only coverage ($50 increase from 2021) and $14,100 for family coverage ($100 increase from 2021). Rev. Proc. 2021-25 is available here.

IRS Announces that Purchases of Personal Protective Equipment are Tax Deductible

In Announcement 2021-7 (the ?Ç£Announcement?Ç¥), the IRS clarified that the costs to purchase personal protective equipment (?Ç£PPE?Ç¥), such as masks, hand sanitizers, and sanitizing wipes, for the primary purpose of preventing the spread of COVID-19, are tax deductible as a medical expense. Specifically, the amounts paid for PPE will be treated as amounts paid for medical care under Section 213(d) of the Internal Revenue Code. The costs of PPE are also eligible to be paid or reimbursed by health flexible spending arrangements, Archer medical savings accounts, health reimbursement arrangements, and health savings accounts. However, if the PPE expense is paid or reimbursed by such an arrangement or account, then the expense will not be tax deductible as a medical expense. The IRS also stated that group health plans may be amended to provide for the reimbursement of PPE expenses incurred for any period beginning on or after January 1, 2020… Continue Reading

IRS Clarifies Optional Flexible Spending Account and Cafeteria Plan Enhancements

In 2020, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (the ?Ç£Act?Ç¥) was enacted. The Act is part of the Consolidated Appropriations Act of 2021. The Act provides employer sponsors of cafeteria plans, including health flexible spending accounts (?Ç£HFSAs?Ç¥) and dependent care flexible spending accounts (?Ç£DCFSAs?Ç¥) (collectively, ?Ç£FSAs?Ç¥), with helpful new options for easing the normal FSA use-it-or-lose-it and mid-year election change rules. Generally, the Act provides for (i) flexibility with respect to carryovers of unused FSA amounts from the 2020 and 2021 plan years (?Ç£Enhanced Carryover?Ç¥); (ii) extension of the permissible period for incurring FSA claims for plan years ending in 2020 and 2021 (?Ç£Enhanced Grace Period?Ç¥); (iii) a special rule regarding post-termination reimbursements from HFSAs during plan years 2020 and 2021 (?Ç£HFSA Post-Termination Option?Ç¥); (iv) a special claims period and carryover rule for DCFSAs when a dependent ?Ç£ages out?Ç¥ during the COVID-19 public health emergency; and… Continue Reading

Before Cleaning Out Files, Brush Up on Record Retention Requirements

Our world is filled with paper and electronic records, and the HR departments at most companies are no exception. Enrollment forms, notices, plan documents, summary plan descriptions, benefit statements, and service records are just a few of the records that fill the HR department?ÇÖs file cabinets and computer storage. While it might be tempting to clean out files, plan sponsors should exercise care before disposing of any files relating to benefits under a plan. A clean desk today could create headaches tomorrow. Generally, ERISA requires an employer to retain plan records to support plan filings, including the annual Form 5500, for at least six years from the filing date (ERISA ?º107) and to maintain records for each employee sufficient to determine the benefits due or that may become due to such employee (ERISA ?º209), with no time limit on such requirement. In addition, HIPAA requires retention of the policies and… Continue Reading

Future Updates on the Consolidated Appropriations Act of 2021

We previously provided an overview of the Consolidated Appropriations Act of 2021 (the ?Ç£CAA?Ç¥) and the specific benefits changes employers need to focus on right now, which can be found here. There were numerous other provisions of the CAA that will impact retirement and group health plans. As the effective dates for those other provisions approach, we will provide you with a summary of the new provisions and how they may impact your plans.

IRS Issues Additional Guidance on Certain Coronavirus-Related Tax Credits

In a new series of FAQs, the IRS issued additional guidance on tax credits for qualified family leave wages and qualified sick leave wages provided under the Families First Coronavirus Response Act (the ?Ç£FFCRA?Ç¥). The first set of FAQs explains what amounts can be counted as qualified family leave wages for purposes of the tax credit granted for such amounts. The second set of FAQs explains how to determine the amount of qualified health plan expenses for purposes of the tax credits for qualified family leave wages and qualified sick leave wages, including how health plan expenses may be calculated for self-funded and fully insured plans, as well as how to calculate health plan expenses when an employer offers more than one health plan or other health-related benefits, such as health flexible spending accounts and health savings accounts. Links to the guidance are below, and more detailed information on the… Continue Reading

Payments for Certain Healthcare Arrangements are Tax Deductible

The IRS recently issued proposed regulations that?áaddress the treatment of amounts paid by an individual for a ?Ç£direct primary care arrangement?Ç¥ or a ?Ç£health care sharing ministry?Ç¥ (collectively, the ?Ç£Arrangements?Ç¥) as being tax-deductible ?Ç£medical care expenses?Ç¥ under Section 213 of the Internal Revenue Code (the ?Ç£Code?Ç¥). Under the proposed regulations, a direct primary care arrangement (?Ç£DPC Arrangement?Ç¥) is defined as a contract between the individual and one or more primary care physicians pursuant to which the physician(s) agree to provide medical care for a fixed annual or periodic fee without billing a third party. A health care sharing ministry (?Ç£Sharing Ministry?Ç¥) is defined as a tax-exempt organization under Section 501(c)(3) of the Code that meets specified requirements, including that its members share a common set of ethical or religious beliefs and share medical expenses in accordance with those beliefs. HSAs and the Arrangements. The preamble to the proposed regulations confirms… Continue Reading

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