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Addictions Are Rising Among Workers; What Employers Can Do

by Inoventive Solutions
June 25, 2024

According to a study by the Substance Abuse and Mental Health Services Administration, 10% of America’s workers are dependent on one substance or another.

The nation is still battling the biggest drug scourge: opioid and fentanyl. Provisional data from CDC’s National Center for Health Statistics indicate that in 2023 there were an estimated 107,543 drug overdose deaths in the U.S., 81,083 of which were opioid-related. While those are shocking statistics, the majority of addicts are hooked on other drugs or alcohol, and that includes millions of American workers.

A study by the American Addiction Center found that 22.5% of respondents admitted to using drugs or alcohol during work hours. The most common substance used during working hours is cannabis.

Those who work from home at least part of the time are more likely overall to abuse drugs or alcohol than those who work in offices. Overall, people who work from home part-time or full-time are about 10% more likely than people who work full-time in offices to get drunk at work.

As an employer, the costs are great if you have someone on staff who has a substance-abuse problem. Workers with addictions to drugs are alcohol have:

  • Lower or lack of workplace productivity;
  • Higher health care costs;
  • Increased absenteeism and presenteeism;
  • Diminished quality control;
  • More disability claims;
  • Increased workplace injuries;
  • Lower morale;
  • Higher job turnover; and
  • Employee theft.

How your health plan can help

If you have an Affordable Care Act-compliant health plan, it will offer access to mental health and substance abuse treatment, which is considered one of 10 essential benefits plans must offer.

The ACA requires health plans to pay for prevention and early intervention as well for substance abuse issues. 

Health care plans also have to comply with a “parity” law, which requires them to treat mental health issues the same way they do physical diseases. Since the COVID-19 pandemic demand for mental health services has soared, straining both providers of those services and the health plans.

The Centers for Medicare and Medicaid Services in 2024 also started requiring all ACA-compliant health plans to contract with at least one substance use disorder treatment center and one mental health facility in every county where they are available in the plan’s service area.


What else can you do?

Some employers have tried to help employees tackle their addictions or abuse problems by implementing workplace prevention, wellness and disease-management strategies. These programs improve health, which lowers health care costs and insurance premiums and produces a healthier, more productive workforce.

Considering offering an employee assistance program. These programs offer temporary free access (typically a set amount of sessions) to a number of services like counseling as well as substance abuse assistance. These sessions are confidential and the employer will not know if an employee is accessing them.

Consider offering more accessible substance use management solutions, like digital and telehealth-based solutions. There are a growing number of these types of service providers, which make accessing counselors more convenient and cost-effective.

Offer confidential screenings and assessments. There are a number of screening, brief-intervention and referral-to-treatment modules available to help people confront their drinking or drug use and get the help they need. 

"HRA
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HRA Gym Cost Reimbursement? Not So Fast Says IRS

by Inoventive Solutions
June 18, 2024

The IRS has issued a new bulletin, reminding Americans that funds in tax-advantaged medical savings accounts cannot be used to pay for general health and wellness expenses.

The bulletin focuses on medical savings accounts that employers will often sponsor, including flexible spending accounts (FSAs), health reimbursement arrangements (HRAs) and health savings accounts (HSAs), which are funded by employees’ untaxed earnings.

These accounts are only to be used for qualified, legitimate medical expenses, like out-of-pocket costs for medical services, prescription medications and medical hardware.

The IRS said that it had issued the bulletin due to concerns about companies misrepresenting the circumstances under which food and wellness expenses can be paid or reimbursed through one of these accounts.

IRS Commissioner Danny Werfel said some companies behind these plans are employing aggressive marketing tactics that suggest that these accounts can pay or reimburse for things like food for weight loss, “when they don’t qualify as medical expenses.”

Mistaken claims

Some companies mistakenly claim that notes from doctors based merely on self-reported health information can convert non-medical food, wellness and exercise expenses into medical expenses, but this documentation actually doesn’t, according to the IRS.

Such a note would not establish that an otherwise personal expense satisfies the requirement that it be related to a targeted diagnosis-specific activity or treatment; these types of personal expenses do not qualify as medical expenses.

These accounts can only reimburse for services, prescription drugs and hardware that alleviate or prevent a physical or mental defect or illness.

The IRS maintains examples of what these plans can reimburse for, and it has a set of frequently asked questions on its website to address any confusion. The essence of what is reimbursable comes down to whether it’s a qualified medical expense.

Some examples of what HRAs, HSAs and FSAs may or may not cover include:

Gym memberships: You cannot be reimbursed for membership fees if you joined the gym for general health, as it’s not a medical expense.

However, you can seek reimbursement if the membership was purchased for the sole purpose of affecting a structure or function of the body (such as a prescribed plan for physical therapy to treat an injury) or the sole purpose of treating a specific disease diagnosed by a physician (such as obesity, hypertension or heart disease).

Food or beverages purchased for weight loss or other health reasons: The costs can be reimbursed only if:

  • The food or beverage doesn’t satisfy normal nutritional needs,
  • The food or beverage alleviates or treats an illness, and
  • The need for the food or beverage is substantiated by a physician.

If any of the three requirements is not met, the cost of food or beverages is not a medical expense.

Exercise for the improvement of general health: If you are paying for swimming, dance or kayaking lessons, the costs cannot be reimbursed by these accounts, even if a doctor recommends it, because these activities are only for the improvement of general health.

Nutritional counseling or a weight-loss program: This is a qualified medical expense only if it treats a specific disease diagnosed by a physician (such as obesity or diabetes).

Smoking cessation: The cost of a smoking cessation program is a qualified medical expense because the program treats a disease (tobacco-use disorder).

The takeaway

If you offer HSAs, HRAs and/or FSAs to your staff, you may want to consider sharing the IRS bulletin with them so they understand what they can seek reimbursement for. If they are being reimbursed for non-medical items and services, they may run afoul of federal tax law.

"2025
Uncategorized

2025 HSA Contribution, HDHP Cost-Sharing Limits

by Inoventive Solutions
June 11, 2024

The IRS has announced significantly higher health savings account contribution limits for 2025, with the amount increasing 3.6% for individual HSA plans.

The IRS updates this amount annually, along with minimum deductibles as well as the out-of-pocket maximums for high-deductible health plans. Under its rules, HSAs, which help employees save for medical expenses, are only available to those enrolled in qualified HDHPs.

Understanding these amounts now can help you get an early start on human resources planning for next year.

Here are the changes coming in 2025:

HSA annual contribution limit

  • Self-only plan: $4,300, up from $4,150 in 2024
  • Family plan: $8,550, up from £8,300 in 2024
  • Catch-up contribution (for those aged 55 and older): $1,000 (unchanged)

HDHP minimum annual deductible

  • Individual plan: $1,650, up from $1,600 in 2024
  • Family plan: $3,300, up from $3,200 in 2024

HDHP annual out-of-pocket maximum

  • Individual plan: $8,300, up from $8,050 in 2024
  • Family plan: $16,600, up from $16,100 in 2024

What to do

If you sponsor an HDHP for your staff, you should review the plan’s minimum deductible amount and maximum out-of-pocket expense limit when preparing for the 2025 plan year.

If you allow employees to make pre-tax contributions to an HSA, you should also update your plan communications to reflect the new amounts.

The many benefits of HSAs

An HSA is a special bank account for your employees’ eligible health care costs. They can put money into their HSA through pre-tax payroll deductions, deposits or transfers. As the amount grows over time, they can continue to save it or spend it on eligible medical and medical-related expenses.

Employers can also contribute to the accounts, but the annual contribution maximum applies to all contributions in total (from the employee and the employer).

The money in the HSA belongs to the employee and is theirs to keep, even if they switch jobs. If they go to a new employer that offers qualified HDHPs, they can continue to fund the account in their new job.

Funds roll over from year to year and can earn interest. Many plans also have investment options for the funds to help savers further grow the account.

There are a number of benefits for employees who have an HSA:

  • The money an employee contributes to an HSA is not subject to income taxes, which reduces their overall taxable income.
  • They are not taxed on withdrawals.
  • If employees contribute to their HSA with after-tax money, they can deduct their contributions during tax time on Form 1040.
  • Employees can tap the funds for any approved out-of-pocket medical expenses.
  • They can also grow the account tax-free by investing the funds in the account, sort of like a nest egg for medical expenses in retirement.

HSA-eligible expenses:

  • Payments for services or medicine that go towards health plan deductibles, copayments or coinsurance.
  • Dental or vision care (including orthodontics, eye exams, corrective lenses).
  • Medical devices.
  • Certain over-the-counter medicines, like pain relievers, allergy medication, cold and flu medicine, and menstrual products.
  • Vitamins and health supplements, if recommended by a medical or health professional for the treatment or prevention of a specific disease or condition.
"medical
Uncategorized

Interest in Health Premium Reimbursement Accounts Grows

by Inoventive Solutions
June 4, 2024

Employer adoption of specialized accounts that they fund to help reimburse employees when they buy health insurance on their own is surging in 2024.

The number of employers who offer individual coverage health reimbursement accounts (ICHRAs) grew 30% in 2024 from the year prior, expanding a benefit that provides employers another option than purchasing group health plans for their employees, according to a new report by the HRA Council.

Employers fund these accounts with money that employees can use to purchase health insurance, often on Affordable Care Act exchanges.  

Uptake has been even larger among employers with 50 or more full-time employees (up 85%).  These employers are required to purchase health coverage under the ACA, and offering ICHRAs allows them to satisfy the employer mandate under the law.

Thanks to generous subsidies on the exchanges, the funds that employers contribute are often enough for workers to purchase either Silver- or Gold-level plans, which have the lowest copayments, coinsurance and deductibles.

How ICHRAs work

As mentioned above, employers fund ICHRAs with money that workers can use to help reimburse for the purchase of health insurance, often on an ACA exchange. Excess funds can be used to reimburse them for qualified medical expenses, including copays, coinsurance and deductibles, in addition to medications and some medical equipment.

Funds are deposited into the ICHRA on a monthly basis. These funds are not taxed.

Employers that offered an ICHRA between July 1, 2022 and June 30, 2023 contributed an average $908.80 a month, which was more than enough to purchase the lowest-cost self-only Gold plan on an ACA exchange, according to a report by PeopleKeep, a benefits administration software company.

Some other features of these plans include:

  • No reimbursement limits.
  • Firms of any size can offer an ICHRA.
  • Employers may designate different reimbursement amounts to different types of employees.
  • Employers can offer both group health plans and an ICHRA concurrently.

Satisfying the employer mandate

ICHRAs can satisfy the ACA employer mandate if they meet the standards the law sets out for group health plans:

Affordability: To be considered affordable, employer-sponsored health insurance or benefits for employees should cost no more than 8.39% of the employee’s household income in 2024, using the lowest-cost Silver plan on the ACA exchange as a standard after accounting for the employer’s ICHRA contributions.

In other words, the lowest-cost Silver plan premium, minus the employer’s ICHRA monthly allowance, must be less than 8.39% of the worker’s household income.

Minimum value: Under the ACA, a health plan meets the minimum value standard if pays at least 60% of the total cost of medical services for a standard population, and its benefits include substantial coverage of physician and inpatient hospital services. Any plan a worker purchases on an ACA exchange will satisfy the employer mandate.

Small-employer option

There is actually a similar plan that is only available to employers with fewer than 50 full-time equivalent workers: the qualified small employer health reimbursement account. QSEHRAs differ from ICHRAs in a number of ways.

They have maximum contribution limits, determined by the IRS each year. For 2024, those limits are $6,150 for each self-only employee and up to $12,450 per employee with a family.

While an ICHRA allows for varying allowance amounts based on many employee classes, QSEHRAs only allow employers to vary reimbursement amounts based on age and family size.

All full-time W-2 employees and their families are automatically eligible for a QSEHRA. Employers may offer plans to part-time employees as well.

Employers can’t offer both group insurance and a QSEHRA to their staff.

The takeaway

While these accounts are growing in use, it’s a risky move to stop offering group health insurance and replace it with an ICHRA. These are new accounts and most workers will be unfamiliar with them.

And considering that health insurance is one of the main benefits that employees look for, offering a reimbursement arrangement may turn some workers off. Give us a call if you have questions.

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