by Lexi Garcia | Nov 10, 2023 | Blog
The IRS announced 2024 contribution limits for all Flexible Spending Account (FSA) plans. Below is an overview of the limit increases across all the types of FSAs except for Dependent Care FSAs, which remain the same at $5,000 per year.
Health Flexible Spending Account
The Health FSA, which provides employees the ability to set aside money on a pre-tax basis to pay for eligible medical, dental, and vision expenses will have an increase to its contribution maximum from $3,050 to $3,200 for 2024. The new contribution limit will also apply to the Limited Purpose FSA which reimburses eligible dental and vision expenses. Limited Purpose FSA
limits will also increase from $3,050 to $3,200 for 2024.
Carryover Limit
The FSA Carryover limit provides employers the option to transfer a maximum amount of remaining FSA balances at a plan year’s end to carryover for use during the next plan year. This is available with Healthcare and Limited Purpose FSAs only. The carryover limits for this account will increase from $610 to $640 for 2024.
Commuter Benefits
Commuter Benefits help employees pay for certain parking, mass transit and/or vanpooling expenses with pre-tax dollars. The contribution limits for this account will increase from $300 to $315 for 2024.
Adoption Assistance
The Adoption Assistance FSA helps employees pay eligible adoption expenses such as agency fees and court costs by contributing to the account with pre-tax money from their paycheck. The contribution limits for this account will increase from $15,950 to $16,810 for 2024.
For more information about this major change and how it may impact you, read our latest handout.
by Lexi Garcia | Oct 12, 2023 | Blog
QUESTION: We understand that our group health plan can terminate COBRA coverage early if a qualified beneficiary becomes entitled to Medicare after electing COBRA. What does it mean to be “entitled” to Medicare?
ANSWER: When qualified beneficiaries (including covered employees) first become entitled to Medicare after electing COBRA coverage, their COBRA coverage can be terminated early—before the end of the maximum coverage period. For this purpose, the Medicare terms “eligibility” and “entitlement” are not synonymous, and it is important to understand the difference. “Entitlement” means that an individual who is eligible for Medicare has actually enrolled in Medicare and may currently receive benefits. An individual who must take additional steps to enroll in Medicare before receiving benefits is not yet “entitled” to Medicare for purposes of the COBRA rules.
Individuals who become eligible for Medicare Part A (hospital insurance) based on age, disability, or end-stage renal disease (ESRD) must apply to become entitled to Part A coverage in many cases, but entitlement is automatic for individuals who have already applied for and are receiving Social Security or Railroad Retirement Act benefits. Individuals become entitled to Medicare Part B (physicians’ services and other health expenses) either automatically when they become entitled to Part A, or later during specified enrollment periods.
Although group health plans are allowed to terminate a qualified beneficiary’s COBRA coverage early upon Medicare entitlement, it is important to remember that the COBRA rights of other qualified beneficiaries in the family unit who are not entitled to Medicare are not affected. For example, the plan could not terminate the COBRA coverage of the spouse and dependent children of a Medicare-entitled former employee.
Source: Thomson Reuters
by Lexi Garcia | Oct 5, 2023 | Blog
QUESTION: Although Medicare entitlement is listed as a COBRA triggering event, our company’s COBRA TPA does not offer COBRA to covered employees when they become entitled to Medicare. Is Medicare entitlement a COBRA qualifying event for active employees who become entitled to Medicare but do not lose coverage under our group health plan?
ANSWER: Medicare entitlement is not a COBRA qualifying event for active employees who become entitled to Medicare but do not lose coverage under a group health plan. If a COBRA triggering event (such as Medicare entitlement) does not cause a loss of plan coverage, there is no qualifying event, and COBRA need not be offered. Medicare entitlement rarely causes a loss of plan coverage for active employees and, therefore, will rarely be a qualifying event. This is because the Medicare Secondary Payer (MSP) rules generally prohibit group health plans from making Medicare entitlement an event that causes a loss of coverage for active employees.
The MSP statute generally prohibits a group health plan from “taking into account” the age-based or disability-based Medicare entitlement of an individual who is covered under the plan by virtue of the individual’s current employment status. In addition, the plan generally must provide a current employee who is age 65 or older with the same benefits, under the same conditions, as those provided to employees who are under age 65. Among the employer or insurer actions that constitute an impermissible “taking into account” are (1) terminating coverage because the individual has become entitled to age-based Medicare; or (2) in the case of a large group health plan, denying or terminating coverage because the individual is entitled to disability-based Medicare without also denying or terminating coverage for similarly situated individuals who are not entitled to disability-based Medicare. (Special rules apply for ESRD-based Medicare.) Consequently, Medicare entitlement will rarely be a COBRA qualifying event because it will rarely cause a loss of plan coverage for active employees.
Be aware, however, that it is permissible under the MSP rules for Medicare entitlement to cause a loss of coverage for covered retired employees. In such a case, Medicare entitlement would constitute a qualifying event for the affected spouse and dependent children (not for the covered retiree), permitting them to elect up to 36 months of COBRA under the plan.
Source: Thomson Reuters
by Lexi Garcia | Sep 21, 2023 | Blog
QUESTION: At the beginning of the year, we distributed new SPDs to participants in our company’s ERISA-covered group health plan. We are planning to make some changes to the plan’s terms. When and how do we need to communicate these changes to participants?
ANSWER: ERISA requires that participants be notified of any material modification in a welfare plan’s terms or any change in the information required to be in an SPD. This can be done by providing a summary of material modifications (SMM) describing the change. In addition, under a special rule for group health plans, notice must be provided when there is a material modification in plan terms that affects content required to be included in the summary of benefits and coverage (SBC) and is not reflected in the most recently provided SBC. Here is an overview of the SMM rules:
- What Is a “Material” Change? Except for the definition of a material reduction in group health plan covered services (discussed below), there is no guidance regarding when a modification is material. It appears to be a facts and circumstances determination. We suggest that you err in favor of preparing and distributing SMMs.
- Who Must Receive SMMs? SMMs must be provided to the same individuals who must receive SPDs—generally, participants but not beneficiaries. Note that individuals who do not have the right to automatically receive SPDs or SMMs may have the right to receive a copy upon written request to the plan administrator.
- Deadlines for Providing SMMs. The timing requirements depend on the nature of the change. Any modification that is considered a “material reduction in covered services or benefits provided under a group health plan” must be disclosed no later than 60 days after the date the modification was adopted. (If participants regularly receive SMMs at intervals of not more than 90 days, a plan administrator may wait beyond the 60-day limit to describe the modification in the regularly published form.) Reductions in covered services or benefits include, among other things, the elimination or reduction of benefits payable under the plan, a premium increase, and the imposition of new conditions or requirements. For other changes (i.e., group health plan changes that are not material reductions and changes to plans other than group health plans), the SMM must be provided no later than 210 days after the end of the plan year in which the modification or change was adopted. We suggest a common-sense approach to these deadlines—depending on the type of modification, it may be advisable to provide the SMM before the statutory deadline. This is particularly true if the plan administrator wants the modification to apply on its effective date. Delivery methods must comply with the SPD distribution rules. If the change is included in an SPD that is distributed by the applicable SMM deadline, a separate SMM need not be furnished.
- Style and Content. Like SPDs, SMMs should be written in plain language and must comply with general understandability requirements. The SMM also must work in an understandable way with the SPD it is modifying—for example, by clearly identifying the SPD being modified and the affected SPD provisions. The DOL has provided no prescribed format or model language for SMMs. We suggest including the plan name, the SPD to which the SMM relates, a description of the changes (or the language to be substituted in the SPD) and their effective dates, an explanation that the SMM and SPD must be read together and should be kept together, and whom to contact with questions.
Source: Thomson Reuters
by Lexi Garcia | Aug 28, 2023 | Blog
QUESTION: We’ve heard that the rules governing the emergency services covered by our group health plan changed in 2022. What are the revised requirements?
ANSWER: The Affordable Care Act (ACA) patient protections applicable to group health plans that provide benefits for emergency services were revised and expanded for plan years beginning on or after January 1, 2022. The revised requirements are as follows—
- No Prior Authorization. The services must be covered without the need for any prior authorization, even if provided out-of-network.
- No Participating Provider Requirement. The services must be covered without regard to whether the provider is a “participating provider” or “participating emergency facility” (i.e., without regard to whether the provider or facility is in-network or otherwise has a contractual relationship with the plan).
- Limited Out-of-Network Provider Restrictions. If the services are provided by a nonparticipating provider or nonparticipating emergency facility, the restrictions that may be applied are limited. For example, the plan may not impose any administrative requirement or coverage limitation that is more restrictive than the requirements or limitations that apply to emergency services received from participating providers and facilities. And cost-sharing may not be greater than the cost-sharing that would apply if the services were provided by a participating provider or facility. A host of rules regulate the process for plan payments to nonparticipating providers—and the amount that must be paid—including intricate rules for how cost-sharing is calculate.
- Restricted Use of Diagnosis Codes. The plan must not use diagnosis codes as the sole basis for limiting required coverage of an emergency medical condition.
- Limited Application of Other Terms or Conditions. The services must be covered without regard to any other coverage term or condition of the plan, other than the exclusion or coordination of benefits, a permissible waiting period, and applicable cost-sharing.
Source: Thomson Reuters
