November 5, 2015

PAIU HRBA ConferenceHRA, HSA, FSA Overview

Agenda

Introduction

Health Reimbursement Accounts

Health Savings Accounts

Flexible Spending Accounts

Issues to Consider

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Organization Structure

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U.S. Retirement Partners-USRP

Largest National Independent K-12 Employee Retirement & Benefit specialist Work with 4,000 school districts Over 1,000,000 clients

Pennsylvania Retirement Planning- Kades~Margolis Corp. Employee Benefits Consulting- USEBSG

Leading Employee Benefits Technology Platform ACA Compliance Administration Innovative Value Based Benefit Solutions

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HRAs, HSAs, FSAs

HRA- Health Reimbursement Accounts HSA- Health Savings Accounts FSA- Flexible Spending Accounts

All share the common characteristic that they enable the use of pre-tax dollars to be used to pay for certain health related expenses

The main differences are in how the accounts can be funded and in restrictions on using the accounts

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HRAs Used to reimburse employees eligible health care

expenses not covered by another health plan Pre-Tax contributions can be made by employer only Administered by employer or a 3rd party Significant flexibility on eligible expenses but must be

defined in Plan Document Unused funds may “rollover” year over year to incent

participants to conserve spending including post-employment

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HRAs (continued)

There is no limit for contributions to an HRA Funding is on a “pay as you go” basis Often used in conjunction with an increase in

employee out of pocket costs for certain services (Hospitalizations, Complex Diagnostics, ER, Specialty RX etc.)

Employee or dependent does not need to be covered by employer medical plan

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HSAs Pre-Tax contributions can be made by employer or employee

through payroll deduction or in a lump sum Must only be covered by a qualified High Deductible Health

Plan (HDHP) to be eligible to contribute- Minimum Plan Deductible $1,300 Single/ $2,600 Family

Can not be enrolled in Medicare and contribute Administered by a bank, credit union or insurance company

but account is owned by participant even if they are no longer employed

Funds typically accessed through a debit card

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HSAs (continued)

Funds can be used for qualified medical, dental or vision expenses such as copays, deductibles or other out of pocket expenses

Unused funds “rollover” year over year and can have a wide variety of investment options

Limit for contributions in 2015 $3,350 for Single coverage (No change 2016) and $6,650 with dependents ($6,750 in 2016)

Additional “catch up” contribution of $1,000 if 55+ until enrolled in Medicare

Penalty for early withdrawal prior to 65 or disabilty is 20% plus taxes

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FSAs

Also called Cafeteria Plans or 125 Plans Contributions typically made by employee only through payroll

deduction and are not subject to employer or employee payroll taxes

Administered by employer or 3rd party Funds can be used for qualified medical, dental or vision

expenses such as copays, deductibles or other out of pocket expenses (IRS Publication 502)

Funds must be used during plan year or they are forfeited- “Use it or Lose it” (some grace period or carry over rules may apply)

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FSAs (continued)

Limit for contributions in 2015 and 2016 is $2,550 but employers can set a lower limit

Participants are responsible for expense eligibility if audited A Dependent Care FSA can allow funds to be used for Day

Care or Senior Care expenses- Federal cap is $5,000 annually per household

Other FSAs can be set up for parking/transit reimbursement ($255 per month for parking and $130 for transit in 2016)

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Issues to Consider Employer and Employee contributions to HRAs, HSAs and FSAs

may all be subject to Cadillac Tax HRA- Certain fees attributable to the ACA are required to be

reported and paid by an employer or an administrator on their behalf

FSA- An employee has access to their entire annual contribution at the start of the plan year and does not have to repay the amount if they are terminated/quit

FSA- Any unspent employee contributions beyond the plan year or any grace period are forfeited to the employer plan- “Use it or lose it”

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Issues to Consider (continued)

HSA/FSA- An individual can not establish an HSA if they or their spouse is already covered under a general purpose (medical) FSA

Employers that establish a qualified High Deductible Plan during the plan year of the FSA must recognize that employees participating in the medical FSA would not be eligible to contribute to an HSA

If there is a grace period in the FSA, a participant would have to wait until all funds were used or the end of the grace period to begin HSA contributions

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Questions & Answers

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Thank You!

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Paul J. Miller, CEBSManaging DirectorU.S. Employee Benefits Services Group940 West Valley Rd., Suite 1200Wayne, PA 19087

Direct Dial: 610-971-1080 ext. 160Mobile:        610-246-2729Email:         pmiller@usebsg.com