Section 223 of the Internal Revenue Code provides that an individual’s interest in the balance of her health savings account (“HSA”) is not subject to forfeiture. Consequently, contributions made by an employer to an employee’s HSA may be recouped only in very limited circumstances. In IRS Notice 2008-59 (the “Notice”), the IRS described several specific circumstances in which an employer may recoup contributed amounts from the HSA trustee. However, in its recently released Information Letter 2018-0033 (the “Letter”), the IRS confirmed that the circumstances discussed in the Notice were not intended to be exclusive and clarified that if there is clear documentary evidence demonstrating an administrative or process error on the part of the employer or the HSA trustee (an “HSA Process Error”), an employer may request that the HSA trustee return the amounts to the employer, with any correction needed to put the parties in the same position they… Continue Reading
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.
The IRS has issued guidance stating that taxpayers may use $6,900 as the maximum health savings account (“HSA”) contribution limit for family coverage for 2018. In 2017, the IRS stated that the maximum HSA contribution for family coverage for 2018 would be $6,900. However, recent tax reform legislation changed how the contribution limit is calculated, and in March of 2018, the IRS issued a reduced limit for 2018 of $6,850. The new IRS guidance now permits taxpayers to continue to treat the 2018 limit as $6,900 and also provides guidance for taxpayers who already received a distribution of an excess contribution in 2018 based on the $6,850 limit. View the guidance in Rev. Proc. 2018-27.
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
On March 5, 2018, the IRS issued Revenue Procedure 2018-18 (“Rev. Proc. 2018-18”), which, among other things, reduced by $50 the maximum annual contribution that an employee who has elected family coverage under the employer’s high deductible health plan (“HDHP”) could make to his or her health savings account (“HSA”) for 2018. Under the Internal Revenue Code, the applicable limits for HSAs are adjusted annually for any cost-of-living adjustments (“COLA”). Prior to the recent enactment of the Tax Cuts and Jobs Act (H.R. 1) (the “Tax Act”), COLAs were based on the Consumer Price Index (“CPI”). The Tax Act changed the basis of COLAs to instead use the Chained Consumer Price Index for All Urban Consumers (“C-CPI-U”). The HSA family coverage contribution limit that was previously announced by the IRS for 2018 was $6,900, which reflected a CPI-based COLA. The revised limit, pursuant to Rev. Proc. 2018-18 and reflecting the… Continue Reading
The DOL’s final fiduciary rule (the “Final Rule”) went into effect on June 9, 2017 after several delays. The Final Rule clarifies when a person who provides investment advice becomes a fiduciary to a plan for purposes of ERISA and the Internal Revenue Code. Under the Final Rule, the term “plan” explicitly includes health savings accounts (“HSAs”). While employers typically have little direct HSA involvement beyond engaging an HSA service provider (e.g., a trustee or custodian) and forwarding payroll contributions, the Final Rule does raise issues for employers to consider: Employers should review the products and services offered by their HSA service provider to HSA participants and determine if the service provider is a fiduciary as defined in the Final Rule. If applicable, the employer should consider including an affirmative acknowledgement in its HSA provider services agreement to the effect that such provider is a fiduciary under the Final Rule… Continue Reading
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.
The IRS announced the 2017 inflation adjusted amounts for a high deductible health plan (“HDHP”) and health savings account (“HSA”) contribution limits in Revenue Procedure 2016-28, as follows: Minimum HDHP deductibles – $1,300 self-only; $2,600 family (no changes from 2016) HDHP out-of-pocket maximum limits – $6,550 self-only; $13,100 family (no changes from 2016) Annual HSA contribution limits – $3,400 self-only; $6,750 family ($50 increase for self-only; no change to family contribution limit from 2016) Revenue Procedure 2016-28 is available here.
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.
The IRS recently issued Revenue Procedure 2014-30, which set the calendar year 2015 limits on annual contributions that can be made to a health savings account at $3,350 for an individual with self-only coverage under a high deductible health plan (“HDHP”) and $6,650 for an individual with family coverage under a HDHP. A HDHP for calendar year 2015 is a plan which has an annual deductible of at least $1,300 for self-only coverage or $2,600 for family coverage and which limits annual out-of-pocket expenses to $6,450 for self-only coverage or $12,900 for family coverage. A copy of Revenue Procedure 2014-30 is available here.