Healthcare spending accounts, such as Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs), have become increasingly popular over the last decade. They help individuals and families pay for medical expenses and provide for more control over those expenses.

One frequently asked question we receive is, “can I have an HRA and HSA at the same time?”

The answer is yes. Under specific circumstances, you can have an HRA and HSA at the same time.

There are four HRA plans that are compatible with an HSA:

• Limited Purpose
• Post-deductible
• Retirement
• Suspended

Employers must also ensure their HRAs are HSA eligible before employees can utilize both accounts. There are several advantages to using both an HRA and HSA, such as lower health insurance premiums, greater control over employer contributions, flexibility on plan designs as well as additional tax savings.

Is your HRA plan HSA eligible? Are you ready to make the most of your benefits?

Contact us today for a consultation at 855.890.7239 or sales@nuesynergy.com

Are you confident your participants understand their benefit account options? Do they grasp how pre-tax accounts can help them save money and gain control over their healthcare and financial future?

Consumer research indicates they don’t.

For over 20 years, NueSynergy has partnered with agents and their employer clients to administer HSA, FSA and HRA programs that focus on bringing true value to the benefits plan. We can directly support your communications strategy and educate your participants to become more informed consumers who are ready to make important benefit decisions that fit their needs.

See how NueSynergy can help your participants during this Open Enrollment period to develop a benefit account offering that best fits their unique culture, workforce, brand and benefits program.

Contact us today for a consultation at 855.890.7239 or sales@nuesynergy.com

Are you a broker who’s been recommending self-insured, level-funded plans to your small group clients? If so, you’re not alone – more and more small employers, in an effort to keep premiums under control, are bailing on the small group market and taking advantage of one of the many self-funded options being offered to companies with as few as two employees. In the past, most brokers wouldn’t have even considered self-insuring a company with fewer than a hundred workers, and many would have set the cutoff point even higher. So why now?

The short answer is that the Affordable Care Act changed all of the rules. Younger, healthier small groups, which historically have been rewarded with below-average premiums for their relatively low claims risk, can expect their costs to go up under the new modified adjusted community rating rules. The community rating guidelines do not permit medical underwriting in the small group market, so healthier companies are being forced to pay more in order to offset the costs of older, sicker groups. It’s not fair, but it is reality.

Self-funded plans offer a great alternative: healthy companies are able to dodge the new rules and might even get a refund if they have a good year. Still, not everyone is sold on self-funding, and some companies won’t actually benefit.

For instance, a company with 25 employees might have one worker with a serious medical condition. Under a partially self-funded arrangement, the employer would cover a portion of the cost for that employee, up to a stop-loss amount, at which point the reinsurance would kick in and cover the remaining amount. Unfortunately, the expected claims costs for this employee will be reflected in the rates, so the company will pay a higher monthly amount if it’s not declined altogether.

There is another option, though. The employer can purchase a fully-insured plan in the small group market, where it won’t pay more for the sick worker, and “self-insure” a portion of the out-of-pocket costs with a Health Reimbursement Arrangement (HRA). Sure, the employer will incur some predictable HRA claims on that one employee, but if the rest of the company’s employees have a good year the employer could still come out ahead. Perhaps it will help if we put some numbers to it. We’ll keep the math easy.

Assume the company has these two options: stick with its existing $3,000 deductible HSA-qualified plan or purchase a higher-deductible plan and use a portion of the premium savings to lower the exposure for the employees.

This is an actual quote, and it’s a great example of one where the math just works. Let’s assume the employer is paying 100% of the premium. That means the company will save $146 per employee per month, or $1,752 per year. Multiply that by 25 employees, and the company would save $43,800 per year by moving to the $6,000 deductible plan.

One option would be to sink the premium savings into the employees’ HSAs. Sure, the employees would have more exposure than with the lower-deductible plan, but they’d also have some money for first-dollar coverage, which isn’t a bad trade-off. Unfortunately, the employer wouldn’t save any money with this option.

Another approach, though, would be to use the premium savings to pay for a Health Reimbursement Arrangement. The employer could reimburse claims between $3,000 and $6,000, making the plan “feel” to the employees like a $3,000 deductible plan. It would still be HSA-compatible, and since the employer is covering 100% of the premiums, the employees could certainly contribute some of their own funds to a Health Savings Account.

The administrative cost for this plan would be approximately $2,500, leaving the employer more than $40,000 to pay HRA claims. We already know that the one sick employee will use the full $3,000, but if the other 24 employees have a relatively good year, the employer can save quite a bit of money, but let’s not assume the best-case scenario. Instead, suppose that five of the 24 employees end up hitting the full $6,000 deductible, which is unlikely because that would total almost 25% of the group. Even so, the employer would end up paying $2,500 in administrative costs and $18,000 in claims for a total of $20,500. The net savings to the employer is $23,300, and that’s with a sick employee that would have killed the self-funding option. Clearly, this is a strategy worth considering.

One final thought: This is not necessarily the way we at NueSynergy would have designed the HRA (we would have been a little more creative), but this example does illustrate that there’s still a place for HRAs in a community rating environment. By self-funding a portion of the deductible, a company can reduce its fixed monthly premium while maintaining a great health plan for the employees.

If you have a client you’d like to consider an HRA for, we’ll work with you to structure it in a way that will minimize employer risk while maximizing employee satisfaction. Contact us today and let’s take a look at one of your toughest clients.

You can access your HRA to be reimbursed for qualified deductible expenses by 1) using your mobile app, 2) completing an electronic claim, or 3) submitting a paper claim. Whatever method you prefer, a copy of your EOB (Explanation of Benefits) from your insurance company is required to approve a claim for reimbursement.

NueSynergy Mobile: a claim can be filed by using the submit claim feature on the mobile app. Documentation can be added to the claim simply by taking a picture with your phone.

Electronic Claim: an electronic claim can be submitted by signing into your account at www.NueSynergy.com. In addition to completing an online form you are able to attach an electronic copy of your EOB (Explanation of Benefit).

Paper Claim: a paper claim along with a copy of your EOB can be faxed or emailed to NueSynergy. A paper claim form can be obtained by signing into your account at www.nuesynergy.com or one can be emailed to you by calling our customer service at 855-890-7239.

As most employers know by now, companies with 50 or more full-time equivalent employees are required to offer affordable health coverage that provides minimum value to their full-time employees starting in 2015 or face a significant penalty. Those that don’t offer coverage to at least 95% of their full-timers pay an “across-the-board” penalty of $2,000 per full-time employee with the first 30 excluded. Those that do offer coverage pay a $3,000 on each full-time employee that actually receives a tax credit.

What employers may not know, though, is that the penalty amounts are adjusted annually for inflation. In 2016, the across-the-board penalty increases from $2,000 to $2,160 per year while the per-employee penalty increases from $3,000 to $3,240.

The Kaiser Family Foundation has created a great flowchart to illustrate how the penalties work.

The Adoption Assistance Flexible Spending Account helps you pay for eligible adoption expenses by contributing to the account with pre-tax money from your paycheck. This means you do not pay federal or state income taxes (where applicable) on these funds. You will still have to pay Social Security taxes.

Your contribution limit is $13,460 for the 2016 tax year for each adoption. An adoption can be domestic (in the U.S.) or foreign (in another country).

Eligible Expenses
Adoption agency fees
Children under age 18
Person who is physically or mentally incapable of self-care
Special needs child
Court costs
Attorney fees
Travel expenses, including meals and lodging, while away from home
Home study and application fees
Agency fees
Medical services and counseling
Note: You must also report these expenses as part of your income tax filing.

Ineligible Expenses
Surrogate parent fees
Fees to adopt a stepchild
Fees for legal guardianship
Fees that have been reimbursed from any other source*
Fees or expenses that violate state or federal law
Getting reimbursed
NueSynergy allows for multiple methods of reimbursement. You can submit claims online through www.NueSynergy.com, through your NueSynergy mobile app, or manually by mail, fax, or email. Be sure to include a copy of the adoption agency bill or detailed court document with each reimbursement request.

Frequently Asked Questions
What is a Special Needs Child?

A special needs child must be a U.S. citizen or resident and must be certified by the state of his or her residence to meet its definition of a special needs child.

How does the Adoption Assistance FSA impact my right to take the adoption expense tax credit on my tax return?

You may be able to take both but we advise you to speak with your own tax advisor directly about this before making a final tax determination.

If I elect the Adoption Assistance FSA now, are any of my expenses from prior years eligible for reimbursement?

No. You can only claim expenses that you have in the year that you have the FSA.

What happens if I enroll in an Adoption Assistance FSA and the adoption falls through?

If the adoption was cancelled, you can stop your election. This means that you can stop any more payroll contributions into the FSA. You can’t get a refund of any money left in your FSA. You would forfeit that money because of the FSA “use-it-or-lose-it” rule.

What happens if I overestimate my adoption expenses and have money left in my FSA at the end of the plan year?

The FSA “use-it-or-lose-it” rule applies. This means that you would forfeit any money left in your FSA.

Is there an income limit for the Adoption Assistance FSA?

Yes. It’s based on your modified adjusted gross income (MAGI). For 2016, if your MAGI was more than $201,920 then you will not be able to contribute the full $13,460 to the FSA. If your MAGI was more than $241,920, then you can’t use the FSA.

When will I have access to my Adoption Assistance FSA funds to reimburse claims?

The only funds available to reimburse adoption claims are funds that already have been withheld from your pay based on your adoption assistance benefit election and that have not already been used to reimburse adoption expenses. If you were to submit a claim for more than the amount then credited to your adoption account, you immediately would receive your adoption assistance account balance and then, as additional money was withheld from you pay for adoption benefits and sent to NueSynergy, it would be sent right back to you as additional benefit payments until the claim was fully paid.

Questions?
Call Customer Service at 855.890.7239 or email at customerservice@nuesynergy.com

Note: We urge you to talk to your tax advisor. He or she can help you understand your eligibility for the FSA and the tax credit. You can read the instructions for IRS Form 8839. This form is for Qualified Adoption Expenses. You can also read Publication 15-B. Go to www.irs.gov.