Speak with an adviser 678.821.3508

START HERE
START HERE
"A
Uncategorized

How Your Staff Can Save on Childcare, Health Services

by Inoventive Solutions
September 23, 2024

One of the most underused employee benefits available is the “cafeteria” plan ― which can benefit both the employer and the employee.

These plans allow workers to withhold a portion of their pre-tax salary to cover certain medical or childcare expenses. The benefits are free from federal and state income taxes, employees’ taxable income is reduced and that means that employers don’t have to pay FICA on those dollars.

Cafeteria plans enhance your employee benefits package while boosting your margins. They have three specific flexible benefits for your employees to choose from:

1. Pre-tax health insurance premium deductions

Premium-only plans allow your employees to elect to withhold a portion of their pre-tax salary to pay for their portion of the premium contribution to their employer-sponsored plan. The plan offers a simple way to reduce the cost of their benefits.

2. Flexible spending accounts

An FSA allows you to fund certain medical expenses on a pre-taxed basis through salary reductions to pay for out-of-pocket expenses that aren’t covered by insurance (think: deductibles, copayments, prescriptions, over-the-counter drugs and orthodontia).

Each paycheck, a certain amount is withheld pre-tax and put into an account. Employees pay for medical expenses up front out of pocket and then seek reimbursement from their FSA.

The average U.S. worker spends more than $1,000 every year on these types of benefits.

And there’s one more benefit: By participating in an FSA, your employees’ taxable income is reduced, which increases the percentage of pay they take home.

3. Dependent care FSAs

The dependent care FSA is an attractive benefit for employees who have to pay for childcare or long-term care for their parents.

Many employees don’t take advantage of this benefit and may be unaware of the significant tax savings. Employees may hold back as much as $5,000 annually of their pre-tax salary for dependent care expenses.

Qualified dependent care expenses include, but are not limited to:

  • The care of a child under the age of 13,
  • Long-term care for parents,
  • Care for a disabled spouse or a dependent incapable of caring for her- or himself, and
  • Summer day camps.

What you get out of it

Every dollar that goes through a cafeteria plan reduces your payroll by the same amount. That means you don’t have to pay FICA or workers’ comp premiums on that part of your workers’ salaries.

The savings can add up to as much as 20% of every dollar being passed through the plan.

It’s also a great recruitment tool and an essential part of a larger employee benefits package.

"piggy
Uncategorized

New Approaches to Managing Health Care Costs, Improving Outcomes

by Inoventive Solutions
February 6, 2024

As health insurance and health care costs continue climbing, some employers are taking new and innovative steps to tamp down costs for themselves and their covered employees while not sacrificing the quality of care they receive.

Some of the strategies require a proactive approach by engaging with their broker and insurer, and even local health care providers, efforts that may be hampered by location and how flexible insurers may be. The goal for these employers is to reduce their and their employees’ costs and improve health outcomes.

The following are some strategies that employers are pursuing.

Steering workers to certain providers

One way to reduce spending is to contract with insurers that guide patients to facilities and providers that are more affordable and who have good patient outcomes. This process, called steerage, if executed correctly can save the employee money on their deductibles, copays and coinsurance and help them get better overall care.

For standard services, this steerage can help your employees see immediate savings on small payments. But for services that require pre-authorization, such as an MRI or X-ray, the insurer can help steer them to the least expensive provider. The differences in cost for these pre-planned services can often be hundreds of dollars, if not more.

Even guiding workers to outpatient facilities over inpatient facilities for these services can yield even greater savings and a better patient experience.

To get the most benefit out of steerage some employers have been switching from traditional group health insurance to self-insured direct-to-employer health plans. These plans will centralize employees’ health care with an integrated provider network or hospital group that focuses on coordinated care, which can reduce overall costs and improve the quality of care.

Since the employer is self-insured, they can work with a health system to establish an integrated care strategy that puts a premium on steerage.

Getting a handle on drug spending

Pharmacy benefit costs are the fastest-growing part of health care costs, up an estimated 8.4% in 2023, according to the Mercer “National Survey of Employer-Sponsored Health Plans.” And as new and more expensive pharmaceuticals hit the market, the portion of overall health care costs that goes towards medications will continue to rise.

One contributor to the increasing prices that your staff pay for their medication may be the pharmacy benefit manager that your insurer uses. Many PBMs earn commissions on drugs dispensed to patients and they benefit from steering them to higher-cost drugs. As well, many PBMs steer patients to pharmacies that they own, further muddying the waters.

There is a way to cut through this mess, but it requires asking tough questions of your insurer and/or the PBM. Ask them how they earn their money, and what kind of commissions and margins they are earning on drugs dispensed to your employees. It’s best to take this approach with the assistance of us, your broker.

Having an honest discussion with your insurer and PBM can open opportunities to save on pharmaceutical outlays through various strategies, like using generic drugs instead of brand-name ones and ensuring that your workers get the full manufacturer rebates — and that they are not kept by the PBM.

Depending on the PBM, this may or may not work.

Helping your employees get healthier

The healthier your workers are the less they will need to access health care, meaning they will spend less for medical services.

Employers can help their employees by weaving in health and wellness education in their staff communications. As well, many wellness programs focus on improving health, including smoking cessation programs, weight loss programs and free or subsidized gym memberships.

Also, many Americans are not keeping up on preventive care visits, many of which are free under the Affordable Care Act. Keeping up on these visits can help stave off larger health problems in the future.

Sometimes what’s needed for your employees to take preventive care seriously is education. You can work with us to come up with communications strategies aimed at trumpeting the importance of these visits by focusing on improving overall health and cost savings in the long run.

The takeaway

The above strategies follow a trend in health care focusing on improved health outcomes for patients by better coordinating care, particularly for those with chronic conditions. For employers, the name of the game is keeping costs down for themselves and their staff while not sacrificing quality of care and while improving their workers’ health.

""/
Uncategorized

New Anti-Obesity Drugs Put Employers in a Quandary

by Inoventive Solutions
June 14, 2023

A surge in demand for pricey, new and highly effective anti-obesity medications could put a financial strain on employers who sponsor their employees’ health plans.

Employers have long offered coverage for certain weight loss tools, such as bariatric surgery if employees qualify for the drastic procedure that requires an operation. Other medications that have been on the market for some time have limited effect, don’t work for everyone and can have serious complications.

But a new class of drugs that has hit the market in the last few years has proven extremely effective in helping people lose weight. As a result, pharmaceuticals like Novo Nordisk’s weight-loss-specific Wegovy and Saxenda, and Ozempic — a diabetes medication from the same company — are now in high demand.

There’s one big catch: These drugs are very costly, putting employers in a quandary. They want to attract and retain high-quality talent, but they don’t want to break the bank on their employee benefits offerings.

A recent survey by the Obesity Action Coalition found that 44% of people with obesity would switch jobs if it meant gaining access to obesity treatment coverage. Likewise, 51% would stay in a job they didn’t like to have access to the coverage.

These findings are significant considering how much these drugs cost and the fact that once someone starts taking them, if they stop, they will usually start gaining weight immediately.

What are these drugs?

This class of pharmaceuticals, known as glucagon-like peptide agonists (GLP-1s), have shown to be highly effective in helping people lose excess weight.

Since news spread of how effective they are, demand for these medications has skyrocketed.

Just three years ago, few people had heard of these drugs and they were not often prescribed, but that’s all changed.

For example semaglutide, which is known under the brand names of Ozempic, Wegovy and Rybelsus, was the fourth-most prescribed drug in terms of total costs in 2021 at $10.7 billion, an increase of 90% from the year prior, according to a report in the American Journal of Health-System Pharmacy.

While many of these drugs are injectable, some like Rybelsus come in pill form.

Shocking costs

Experts warn that if more workers seek out these drugs, payer outlays will spike, resulting in higher group health plan premiums for employers.

The list price of Wegovy is $1,350 per package, which breaks down to about $270 per week — or $16,190 per year.

That said, obesity has its own significant costs and proponents of these medications point at the potential for reduced costs on the back end if people lose weight and keep it off.

Medical costs of obesity in the U.S. were $173 billion in 2019, according to the Centers for Disease Control.

An unsustainable trend

It’s estimated that about 60% of large employers’ health plans cover one of these drugs, although with restrictions, including minimum body mass index (BMI) requirements and prior authorization.

Health plans may require enrollees who qualify for obesity care to first use other lower-priced anti-obesity drugs before they move to a GLP.

The American Gastroenterology Association recommends weight loss drugs for anyone who has a BMI over 30, or 27 if they have other medical complications, such as heart disease or diabetes. According to the CDC, 42% of Americans have a BMI over 30, which is considered clinically obese.

As the uptake of these drugs increases, employers and their health plans will need to make painful choices of to what extent the medications should be covered. Insurers are already considering ways to ensure that people who will most benefit from these drugs have access to them.

""/
Uncategorized

Group Health Premiums Set to Rise 6.5%: Poll

by Inoventive Solutions
August 31, 2022

U.S. employers can expect to see their group health insurance premiums climb an average of 6.5% in 2023 from this year, according to a new study.

Economic inflationary pressures will push the average premium cost per employee to about $13,800, compared to about $13,020 for 2022, according to the study by professional services firm Aon.

While the expected increase is higher than the average 3.7% rises in 2021 and 2022, it’s still lower than the current 9.1% increase in the Consumer Price Index, a key measure of inflation.

One of the reasons costs are not increasing as much as inflation is that health insurers lock in pricing with health care providers for multi-year contracts. As a result, Aon predicts that inflationary pressures will take a few years to be reflected in health care costs after current contracts lapse and new ones are negotiated.

It’s unclear how long it will take for inflation to fully be reflected in health care costs, though it will likely take a few years until most insurance contracts have been renegotiated, according to a Kaiser Family Foundation and Peterson report.

What’s happening

In 2020, the first year of the COVID-19 pandemic, health care usage dropped dramatically as many people put off routine health care to avoid going to a provider and risk infection. Also, many providers stopped doing non-emergency care like knee replacements.

In all, health insurers paid out far less in claims in 2020 than they did the year prior, even though many people were being hospitalized after contracting the coronavirus.

Since then, medical care has returned to the same pre-pandemic level, but with a twist: All those skipped procedures in 2020 and 2021 are now being performed and most hospitals have backlogs for many procedures like colonoscopies and cancer screenings.

Other contributing factors adding pressure on health care trends include:

New technologies — This includes new technologies providers are using, as well as investments in telemedicine by both health insurers and providers.

Catastrophic claims — The severity and cost of catastrophic claims continues increasing substantially.

Chronic conditions — More Americans are battling chronic conditions, which can quickly drive up their cost of care.

Blockbuster drugs — Pharmaceutical companies are developing groundbreaking, yet costly drugs that can cost tens of thousands of dollars a year.

Specialty drugs — Doctors are prescribing more specialty drugs, which also have high price tags.

Employers curtail cost-shifting

As costs have increased, employers seem to be absorbing most of the premium increases and have grown reluctant to pass on more of the premium cost to their employees.

On average, employers subsidize about 81% of the plan cost, while employees pay the remainder. According to the Aon report, in 2022, when the average annual group health insurance premium increased 3.1% to $13,020 per employee, from $12,627 in 2021, employers took on more of the premium burden:

  • Employers on average are paying out $10,500 for their portion of the premium, up 3.7% from $10,123 in 2021.
  • Employees’ share of the premium increased only 0.6% during that same time to $2,520.

Meanwhile, overall employee costs (premiums and out-of-pocket expenses) increased 2.6% from 2021 to 2022:

  • As mentioned above, employees’ share of premium increased 0.6% to $2,520.
  • Average employee out-of-pocket costs (deductibles, copays and coinsurance) jumped to $1,892 in 2022, up 5.1%.

Looking ahead

When insurers quote your group coverage, they look at your claims experience and the costs your employees incur overall. Employees with chronic conditions can quickly increase those costs.

As a result, many employers are focused on helping their workers with chronic and complex conditions rein in those costs. One way is to offer wellness plans that help them improve their overall health, such as smoking cessation, exercise and weight loss programs.

""/
Uncategorized

Workers Cite Health Benefits as a Top Factor When Accepting a Job

by Inoventive Solutions
June 3, 2022

Despite the job market upheaval and intense competition for talent, there is a mismatch between the value that human resources executives and job prospects put on employee benefits, according to a new survey.

One in five workers surveyed said that health care and health insurance are a major factor when deciding to accept a job, compared with only 13% of human resources executives, according to the “2022 Health at Work” survey by Quest Diagnostics.

And when asked to cite the top two factors for attracting and retaining workers, 50% of employees cited comprehensive health insurance, making it the highest-rated factor. That’s compared with only 37% of HR executives.

While making more money was still the top reason for looking for new work, the results illustrate the importance of health benefits and that employers are not as tuned into their employees’ needs as they think they are.

But the one issue hanging over all employee benefits, particularly health insurance, is the costs. Employees are now expecting employers to do more to control these costs, particularly as premiums are expected to increase as more people are dealing with chronic conditions and delayed treatment due to the COVID-19 pandemic. That should be a wake-up call for employers.

Here are some of the approaches that employers are taking:

Pay a fixed amount to an employee’s total premium — In this scenario you agree to pay a set amount towards the premium regardless of which plan your worker chooses. If they choose one with more generous benefits and lower out-of-pocket costs, they’ll pay more out of pocket than if they choose a plan with a lower premium. You can choose either a flat rate or a specific percentage of total premium.

Offer narrow network health plans — Employees who sign up for these plans can only receive care and services from providers in the plan’s network. If they go out of network, it will likely not be covered and the employee has to pay for the costs out of pocket.

And because the network is narrow, meaning the insurer doesn’t contract with a number of different providers, premiums are usually lower, but still offer quality care.

Offer wellness programs — If implemented properly, these programs can help your workers improve their overall health through lifestyle change. There are a number of wellness programs with a focus on a variety of areas, such as smoking cessation, weight loss, exercise programs and activities, and health screenings.

These are all programs aimed at preventing disease and poor health, reducing the need for expensive medical care later.

Offer a telemedicine option — Virtual care services have exploded during the last two years and more plans are covering these services.

Offering telemedicine as part of your benefits package can lead to substantial cost savings as it allows your employees to access health care professionals when they need them, 24/7. This can reduce the chances of trips to urgent care facilities and emergency rooms, which are both costly.

Offer HDHPs — High-deductible health plans tend to be less expensive than other plans because they shift more of the cost to the employee, who pays out of pocket in exchange for lower premiums.

Typically, employers will arrange for workers to contribute a portion of their pay, pre-tax, into a health savings account, which they can later use to pay for health services and medicine. The idea is that your employees will use the money they save on premiums and deposit it into the HSAs, which have a number of benefits:

  • Funds going into the accounts are not taxed,
  • Withdrawals are not taxed,
  • HSAs have an investment feature that lets account holders invest their funds, much like a 401(k) plan, and
  • Employees can keep the accounts, and even move them between employers.
"deal"/
Uncategorized

Helping Your Employees Find the Right Plan for Them

by Inoventive Solutions
November 16, 2021

Studies have found that nine out of 10 employees opt for the same benefits every year and that around a third of workers don’t fully understand the group health plan benefits they are enrolled for.

Staying in the same plan after year can be a waste of money if someone is in the wrong plan for them. And not understanding benefits can lead to wasted money as well, as workers often skip necessary appointments, check-ups and treatment regimens for chronic conditions, which in turn puts their health at risk.

As coverage has grown in complexity over the past decade, it’s important that you provide the resources for your employees to choose the health plan that is best for them. Here are three tips that will help them get the most out of their benefits.

Don’t skimp on explaining

While some employees’ eyes are bound to gloss over while someone is explaining the various plan options, their networks, their copays, deductibles and more, it pays to take the time to explain them step by step.

That means breaking the benefits down to the basics in language anyone can understand. Avoid getting bogged down in health insurance jargon and keep it simple. The simpler the better.

Don’t think of it as talking down to your employees, because there’s a good chance some of them are not familiar with how health coverage works. Encourage questions, by telling them there are no stupid questions. Invite employees to speak one-on-one with your benefits point person if they have questions they’d rather ask privately.

Make benefits communications all year long

When the new year starts and open enrollment is in the mirror, most employers don’t reach out to staff until a few weeks before the next year’s enrollment period starts.

Plan now for regular benefits communications throughout next year. Send them e-mails and materials during the course of the year that remind them to consider how their current coverage is measuring up to their needs.

This is especially important if someone’s health situation changes. They may be looking to make a change during the next open enrollment, and feeding them periodic memos about their coverage can help them educate themselves and prepare.

Communications could include explainers about cafeteria plans, health savings accounts, how to use their health benefits wisely, and more.

Know your crew

After open enrollment, run a report looking at what plans your employees are signed up for and see if they are concentrated in certain plans. Many employees when choosing health plans ask their co-workers, which often leads to them choosing a plan that is not optimum for them since there are many factors that may vary, including:

  • Their age.
  • Whether or not they are married.
  • Whether or not they have children.
  • Their health situation.

That’s why it’s important to run some analytics on your employees’ health plan choices. We can work with you to make sure that they are in the right plans and identify what might be a better alternative for them.

For example, in many cases, the younger and healthier someone is, the best choice may be a high-deductible health plan with lower premiums, tied to an HSA. Older employees and those with health conditions — those who are more likely to use medical services and be on medication — may need a plan with a lower deductible.

The takeaway

It benefits both your employees and you if your employees are in the appropriate plan for their life and health situation.

Fortunately, you can ensure that they understand their benefits by understanding their needs and helping them learn about their benefits throughout the year.

"lounge"/
Uncategorized

COVID-19 Home Test Kits Reimbursable under FSAs, HSAs

by Inoventive Solutions
November 3, 2021

Under new guidance issued by the IRS, at-home COVID-19 testing kits will be considered a reimbursable medical expense under the three main health care savings vehicles offered to employees.

This new guidance adds to the list of personal COVID-19-related expenses for which employees can seek reimbursement under:

  • Health savings accounts
  • Health reimbursement arrangements, and
  • Flexible spending accounts.

This is good news as these home tests become more common during this stretch of the pandemic.

The IRS earlier announced that personal protective equipment for use in preventing infection and spread of COVID-19 is also reimbursable by HSAs, FSAs and HRAs. That includes:

  • Masks,
  • Sanitary wipes, and
  • Hand sanitizers.

What to do

If you offer one of the above savings vehicles, you may need to amend your group health plan’s language, unless the plan is drafted to reimburse all IRS-permitted expenses. In that case, you can leave it as is.

If, however, the plan lists all permitted expenses, you’ll need to amend it. If you plan to set the effective date for 2021, say Sept. 15, you should make the amendment no later than Dec. 31, 2021 for it to be effective.

Regardless of whether you have to change the plan or not, you should notify all participating staff of the change so they can take advantage of their plan if they need to.

"healthcare"/
Uncategorized

Group Plan Affordability Level Set for 2022

by Inoventive Solutions
October 5, 2021

The IRS has announced the new affordability requirement test percentage that group health plans must comply with to conform to the Affordable Care Act.

Starting in 2022, the cost of self-only group plans offered to workers by employers that are required to comply with the ACA, must not exceed 9.61% of each employee’s household income.

Under the ACA, “applicable large employers (ALEs)” — that is, those with 50 or more full-time employees (FTEs) — are required to provide health insurance that covers 10 essential benefits and that must be considered “affordable,” meaning that the employee’s share of premiums may not exceed a certain level (currently set at 9.83%). The affordability threshold must apply to the least expensive plan that an employer offers its workers.

The threshold has been reduced from the 2021 level because premiums for employer-sponsored health coverage increased at a lower rate than national income growth this year. That was largely the result of a large reduction in non-emergency health care services as many people stayed away from hospitals when COVID-19 cases were surging.

With this in mind, you will need to balance out any potential premium rate hikes with the affordability level for employees and make sure that you offer at least one plan with premium contribution levels that will satisfy the new threshold. Some employers may need to boost their contributions in order to avoid penalties.

Example: The lowest-paid worker at Company A earns $25,987 per year. To meet the affordability requirement, the worker would have to pay no more than $2,497 a year in premium (or $208 a month).

ALEs with a large low-wage workforce might decide to utilize the federal poverty line affordability safe harbor to automatically meet the ACA affordability standard, which requires offering a medical plan option in 2022 that costs FTEs no more than $103.14 per month.

Failing to offer a plan that meets the affordability requirement to 95% of your full-time employees can trigger penalties of $4,060 for 2022 per FTE receiving subsidized coverage through an exchange. That’s the full-year penalty and the actual penalty prorated depending on how many months an employee received subsidized coverage.

The penalty is triggered for each employee that declines non-compliant coverage and receives subsidized coverage on a public health insurance exchange.

Since most employers don’t know their employees’ household incomes, they can use three ways to satisfy the requirement by ensuring that the premium outlay for the cheapest plan won’t exceed 9.61% of:

  • The employee’s W-2 wages, as reported in Box 1 (at the start of 2022).
  • The employee’s rate of pay, which is the hourly wage rate multiplied by 130 hours per month (at the start of 2022).
  • The individual federal poverty level, which is published by the Department of Health and Human Services in January of every year. If using this method, an employee’s premium contribution cannot be more than $104.52 per month.


Out-of-pocket maximums

The IRS also sets out-of-pocket maximum cost-sharing levels for every year. This limit covers plan deductibles, copayments and percentage-of-cost co-sharing payments. It does not cover premiums.

The new out-of-pocket limits for 2022 are as follows:

  • Self-only plans — $8,700, up from $8,550 in 2021.
  • Family plans — $17,400, up from $17,100 in 2021.
  • Self-only health savings account-qualified high-deductible health plans — $7,050, up from $7,000 in 2021.
  • Family HSA-qualified HDHPs — $14,100, up from $14,000 in 2021.
"PBM"/
Uncategorized

PBM Trade Association Sues Over Transparency Rules

by Inoventive Solutions
September 14, 2021

As the federal government continues rolling out new laws and regulations aimed at increasing price transparency in the health care industry, one group is fighting back: pharmacy benefit managers.

The Pharmaceutical Care Management Association, a trade association for PBMs, has sued the Department of Health and Human Services, Internal Revenue Service and Department of Labor, all of which were instrumental in rolling out transparency regulations in 2020, which took effect Jan. 1, 2021.

The rules specifically require health plans (including PBMs) and health insurers to disclose on their websites their in-network negotiated rates, billed charges and allowed amounts paid for out-of-network providers, and the negotiated rate and historical net price for prescription drugs.

PBMs were included in the transparency rules because numerous reports have found that some of them rely on opaque contracts with pharmacies and drug companies, and that they allegedly fail to pass on rebates and lower drug prices they negotiate to their enrollees.

The lawsuit comes as PBMs are feeling the heat over their practices. At least seven states and the District of Columbia are investigating them, mainly focusing on whether they fully disclose the details of their business and whether they receive overpayments under state contracts.

Also, attorneys general in four states have sued PBMs, mostly alleging that they misled state-run Medicare programs about pharmacy-related costs.

What the PBMs are saying

The PBMs allege in their lawsuit that the rule will not benefit consumers because their knowing what the contracted drug prices are won’t have an effect on them as there are no actions they can take knowing this information.

The trade association said: “The rule offers consumers no actionable information because net prescription drug prices are not charged to consumers and never appear on a bill.” Instead, the information will likely confuse consumers, it alleges.

The trade body in its court filing said PBMs maintain that their business model hinges on their ability to negotiate confidentially and keep the details of their manufacturer contracts as trade secrets that are not available to other drug manufacturers or otherwise disclosed to the public.

“Confidentiality, in turn, allows PBMs to bargain from a position of strength to reduce drug prices,” it wrote. “Government-enforced information sharing will raise costs by reducing PBMs’ ability to negotiate deeper discounts on drug prices.

“The regulation threatens to drive up the total drug price ultimately borne by health plans, taxpayers and consumers by advantaging drug manufacturers in negotiations over price concessions,” it added.

"Health
Uncategorized

Rules Allowing Mid-Year Health Plan, FSA Changes Will Sunset

by Inoventive Solutions
August 4, 2021

A temporary rule that allowed covered employees to make mid-year election changes to their health plans and revisit how much they set aside into their flexible spending accounts (FSAs) will sunset at the end of the year.

The rules gave employers the option to allow their employees to make changes to their health plans, including choosing a new offering, but it did not require that they allow them to make these changes.

The more relaxed rules were the result of provisions in the Consolidated Appropriations Act, 2021, which was signed into law in December 2020 by President Trump, and subsequent regulatory guidance by the IRS.

In response to the COVID-19 pandemic, the IRS liberalized the rules for cafeteria plan mid-year election changes for health plans and FSAs in the 2021 plan year. During 2021, employers may permit employees to make election changes without affecting their status. The rules that were relaxed:

  • Allow employees who had declined group health insurance for the 2021 plan year to sign up for coverage.
  • Allow employees who have enrolled in one health plan option under their group health plan to change to another plan (such as switching insurance carriers or opting for a silver plan instead of a bronze plan).
  • For health FSAs, allow participants to enroll mid-year, increase or decrease their annual contribution amount, or pull out of the plan altogether and stop contributing.
  • For plan years ending in 2020 and 2021, employers are permitted to modify their health FSAs to include a grace period of up to 12 months to spend unused funds from the prior policy year.
  • Allow for a higher carryover amount than the typical $500.

But, all plans that take effect on or after Jan. 1, 2022 will revert to the old rules that bar mid-year election changes and limit the grace period for spending unused FSA funds to just two and half months after the end of the prior policy year.

The takeaway

The rules coming to an end will only affect those employers who opted to allow their employees to make changes to their health plan choices and/or their FSAs. If you didn’t make this move, there is nothing you need to do.

If you did permit your staff to make these mid-year changes, you will need to communicate to them as soon as possible and before and during open enrollment that mid-year changes will not be possible in 2022.

When telling them about the rules change, make sure to inform them of the permanent rules and when they take effect again.

Also, if you extended the grace period and/or the carryover amount for FSAs, inform them that the carryover grace period will revert to two and half months and that the maximum carryover amount will revert to $500.

1 2 3
Recent Posts
Recent Comments
    Archives
    Categories
    Meta