QUESTION: How does the annual limit on health FSA salary reductions apply when employees join our company midyear and elect to participate in our health FSA? Does a reduced limit apply to new employees who were participating in their former employers’ health FSAs earlier in the year?
ANSWER: In general, and unless the plan provides otherwise, employees hired midyear may elect to make salary reductions of up to the annual limit, just like employees who are employed for the full plan year. (The limit is indexed for inflation—for $2023 it is $3,050.) Employees who participate in more than one employer’s health FSA during a plan year may make salary reductions of up to the annual limit under each employer’s health FSA unless the employers are treated as a single employer under the Code’s controlled group or affiliated service group rules. (These rules treat two or more employers as a single employer if there is sufficient common ownership or a combination of joint ownership and common activity.) Thus, your company need not apply a reduced limit to a midyear hire who was participating in an unrelated employer’s health FSA before joining your company. Likewise, an employee who works for your company and another unrelated employer at the same time could make salary reductions of up to the annual limit under your company’s health FSA and any health FSA sponsored by the other employer. But if your company and the other employer are members of a controlled group or affiliated service group, then a single limit applies, and the employee’s salary reductions to the two health FSAs must be aggregated.
Of course, employees should minimize their risk of loss by basing their elections on a careful estimate of the eligible medical expenses they expect to incur during their period of coverage. (Grace periods and carryovers are plan design choices employers may make that can also minimize risk of loss for employees.) Employers, too, may wish to minimize their risk of loss by limiting annual health FSA salary reductions to an amount lower than the limit. Note that nonelective employer contributions to a health FSA (e.g., matching or seed contributions, or flex credits) generally do not count toward the limit. However, if employees may elect to receive the employer contributions in cash or as a taxable benefit, then the contributions will be treated as salary reductions and will count toward the limit if contributed to the health FSA.
QUESTION: Our company sponsors a group health plan that offers coverage to eligible employees and dependent children. We understand that we must make coverage available until a child is age 26. At what point during the month of the child’s 26th birthday is it permissible for our plan to terminate coverage for the child?
ANSWER: Group health plans that offer dependent coverage are required to continue making coverage available for an employee’s child until the child’s 26th birthday—regardless of the child’s residency, financial dependence, student status, employment, or other factors. Your plan will satisfy the dependent coverage requirement if coverage is provided until a child attains 26 years of age. As an example, assume an employee’s child’s birthday is July 17. The plan need only offer coverage for the child through the day before his or her 26th birthday—i.e., July 16.
Keep in mind, however, that if your company is an applicable large employer (i.e., if you employed an average of 50 or more full-time employees (or equivalents) in the preceding year), you could face potential employer shared responsibility penalties if you do not offer coverage to an employee’s child through the last day of the month containing the child’s 26th birthday. Applicable large employers may be subject to these penalties if they fail to offer adequate health insurance to full-time employees “and their dependents.” For this purpose, “dependents” means an employee’s children, but excluding stepchildren and foster children, who are under 26 years of age. Regulations implementing the penalties specifically provide that a child is a dependent for the entire calendar month during which he or she attains age 26. Thus, in the example above, coverage must be offered through July 31 to avoid potential penalties. Absent information to the contrary, employers may rely on employees’ representations concerning the identity and ages of the employees’ children.
QUESTION: Our company’s major medical plan offers a choice of self-only or family coverage. Dependent coverage is provided under the family coverage option for participants’ children who have not yet reached age 26. May our plan impose an additional premium surcharge for children who are older than age 18?
ANSWER: A premium surcharge for coverage of children over age 18 is not permitted because your plan would be impermissibly varying the terms for dependent coverage of children based on age. The Affordable Care Act (ACA) requires group health plans that provide dependent coverage of children to make such coverage available for a child until age 26. In addition, the terms and conditions under which dependent coverage is provided for children cannot vary based on age, except for children who are age 26 or older. This rule is known as the “uniformity requirement.”
Although your plan may not impose a surcharge for these children, revising or repricing the plan’s coverage tiers without making the structure age-based may allow your company to accomplish the same financial goals. For example, a plan design in which the cost of coverage increases for tiers with more covered individuals would not violate the ACA’s age 26 mandate, so long as the increase applies without regard to the age of any child. Although you did not specify whether your plan is grandfathered, it is important to note that changing coverage tiers can adversely affect a plan’s status as a grandfathered plan.
LEAWOOD, Kansas – NueSynergy, Inc., one of the nation’s fastest growing employee benefits and billing administrators in the country, is pleased to announce its preferred partnership with INSURICA, one of the largest privately-held independent agencies in the United States.
“NueSynergy continues to drive the consumer-directed health care industry forward with an employer-centric focus. As INSURICA looks to its future, it’s important for us to work with a preferred partner who shares our values and commitment to our existing and prospective clients,” said Ann Moses, Vice President and Branch Leader of INSURICA.
NueSynergy continues to achieve exceptional business results with innovative products like its COBRAcare+ administration. With COBRAcare+, NueSynergy works with INSURICA to take the extra step to check available health coverage and compare it to the employer’s COBRA benefits and premium cost. If the COBRA-eligible individual selects a coverage option other than COBRA, one of INSURICA’s licensed agents will help get them set up – and the employer no longer has an obligation to fulfill. It’s a true win-win for the individual and the employer.
“NueSynergy has concentrated on expanding our overall infrastructure as we continue to expand our nationwide presence,” said Josh Collins, president of NueSynergy. “As we continue to focus on proactive benefits solutions for employer clients, we look to trusted partners like INSURICA to build new client relationships.”
About NueSynergy
NueSynergy is known for industry-leading service, innovative technology, and excellence in providing full-service administration of consumer-driven and traditional account-based plans to employers of all sizes and sectors. Headquartered in Leawood, Kansas, NueSynergy also has locations in Arizona, Florida, Idaho, North Carolina, Virginia, Washington, and Rzeszów, Poland.
NueSynergy offers a fully integrated suite of administration services, which include Health Savings Account (HSA), Health Reimbursement Arrangement (HRA), Flexible Spending Account (FSA), Lifestyle Savings Account (LSA), and COBRAcare+ administration as well as SpouseSaver Incentive Account, Combined Billing, Direct Billing, and Specialty Solutions. For more information, visit www.NueSynergy.com.
About INSURICA
Placing over $1 billion in annual premiums for their clients, INSURICA is among the 50 largest insurance brokers in the United States and is currently the 42nd largest privately-held independent agency in the country.
Headquartered in Oklahoma City, INSURICA employs more than 700 colleagues in 35+ offices located throughout Oklahoma, Alabama, Arizona, Arkansas, California, Colorado, Florida, Mississippi, and Texas. INSURICA is constantly looking to expand their network with partners who bring additional value and expertise to the enterprise and our clients. For more information, visit www.INSURICA.com.
ORLANDO, Florida – EBenefitsHub is pleased to announce its addition of NueSynergy as an Exclusive National Core Partner. “We are excited to include the fully integrated suite of administration services assembled by Josh Collins, President, and the rest of the NueSynergy team over the past 27 years,” said EBenefitsHub Founder and CEO, Nick Gregory, ChWE. “NueSynergy has earned respect for its industry-leading service, innovative technology, and excellence in providing full-service administration of consumer-driven and traditional account-based plans among other solutions.”:
Flexible Spending Accounts, Health Reimbursement Arrangements, Health Savings Accounts, Lifestyle Spending Accounts, SpouseSaver Incentive Accounts, COBRAcare+ Administration, Premium Only Plans, Combined Billing, Direct Billing, and Private Label Solutions.
“NueSynergy continues to expand its national presence by offering a wide variety of forward-thinking, employer-centric products and services,” said Josh Collins, president of NueSynergy. “It’s important for us to work alongside an elite and diverse group of reputable companies to build solutions and long-term relationships for our mutual clients.”
With this announcement, NueSynergy joins a collection of exclusive, best-of-breed CorePartner organizations to provide services and products to BenefitsPros across the country. The result is the fusion of advanced knowledge, experience, services, technology, and products to create a synchronized hub for BenefitsPros and their business clients.
“We have engineered a modernized suite of snap-on digital solutions coupled with an arsenal of resources necessary for employee benefits providers to prevail within today’s competitively complex employee benefits landscape,” said Nick Gregory. “BenefitsPros can design and build their digital benefits hub . . . as they wish.
“With the help of NueSynergy and our other CorePartners, BenefitsPros can embrace the digital revolution, bridging the gaps while cutting away the bad plumbing of detached digital and manual processes . . . their way. They can neutralize competitors, expand client offerings, harvest more clients, and future-proof success. In a sea of sameness, BenefitsPros can brand, position, and differentiate to create an unfair advantage.”
About NueSynergy
NueSynergy, Inc., a privately held company, is one of the nation’s fastest growing employee benefits and billing administrators in the country. Headquartered in Leawood, Kansas, NueSynergy also has locations in Arizona, Florida, Idaho, North Carolina, Virginia, Washington, and Rzeszów, Poland.
NueSynergy offers a fully integrated suite of administration services, which include Health Savings Account (HSA), Health Reimbursement Arrangement (HRA), Flexible Spending Account (FSA), Lifestyle Savings Account (LSA), and COBRAcare+ administration as well as SpouseSaver Incentive Account, Combined Billing, Direct Billing, and Specialty Solutions. For more information, visit www.NueSynergy.com.
About EBenefitsHub
EBenefitsHub has engineered a modernized suite of snap-on digital solutions synchronized within its holistic EBHub Dashboard and “white label” All-In-One MobileFirst App. The EBHub “ecosystem” is coupled with an arsenal of resources necessary for benefits professionals to prevail within today’s competitively complex benefits landscape. BenefitsPros can design/build their digital benefits hubs . . . on their terms. With the help of EBHub CorePartners, BenefitsPros can embrace the digital revolution; bridging the gaps while cutting away the bad plumbing of detached digital and manual processes.
They can neutralize competitors, expand client offerings, harvest more clients and future-proof success. In a sea of sameness, BenefitsPros can brand, position and differentiate to create an unfair advantage. The result is seamlessly harmonized employee benefits, engagement and communications, merged into a powerfully holistic platform for BenefitsPros and their clients:
QUESTION: As required, our company’s group health plan has extended COBRA election and payment deadlines due to the COVID-19 emergency. How do we handle these deadlines once the outbreak period ends?
ANSWER: As you note, certain COBRA deadlines have been extended—but for no longer than one year—by disregarding (tolling) the COVID-19 “outbreak period,” which began March 1, 2020, and is set to end on July 10, 2023. Agency guidance issued in March 2023 provided examples illustrating the effect of the outbreak period’s end on COBRA election and premium payment deadlines:
Electing COBRA. If a participant experiences a qualifying event and is provided a COBRA election notice on or before July 10, 2023, the individual’s 60-day period to elect COBRA begins to run on July 10, 2023 (making the deadline September 8, 2023). If the qualifying event occurs after July 10, 2023, there is no extension, and the 60-day period is measured from the date the COBRA election notice is provided. Although not expressly addressed, it appears that if a qualifying event occurs on or before July 10, 2023, and the COBRA election notice is provided after that date, the COBRA election deadline would be measured from the provision of the notice.
Paying COBRA Premiums. The guidance provides an example of a COBRA election made on October 15, 2022, retroactive to October 1, 2022. The initial COBRA payment, covering premiums from October 2022 through July 2023 must be made no later than 45 days after July 10, 2023 (i.e., August 24, 2023), with subsequent payments due according to the regular COBRA timeline (the first day of each month of coverage, with a 30-day grace period).
In addition to COBRA deadlines, the end of the outbreak period also affects certain other plan-related deadlines, including those for claims and appeals and HIPAA special enrollments. The agencies have noted that nothing in the Code or ERISA prevents group health plans from continuing to extend deadlines and have encouraged plans to do so—at least for a while—as the outbreak period comes to an end. Keep in mind, however, that any extension beyond what is required should be cleared with plan insurers and stop-loss insurers, as applicable.
