A DOL, HHS, and IRS request for information (RFI) is seeking input about how the preventive health services mandate applies to over-the-counter (OTC) preventive items and services, including the potential benefits and costs of requiring plans and insurers to cover these items at no cost without a provider’s prescription. Agency guidance has previously advised that OTC items and services generally must be covered without cost-sharing only when prescribed by a provider.
The RFI seeks information on current access to and utilization of OTC preventive products, as well as operational challenges for plans, insurers, third-party administrators, and pharmacy benefit managers. For instance, the request asks about operational challenges that may be associated with using telepharmacies and mail orders within and across states or localities. The agencies are also interested in “lessons learned” from providing coverage for OTC COVID-19 diagnostic tests during the COVID-19 public health emergency. The RFI explains that the agencies are particularly focused on OTC preventive care items that can be purchased without a prescription now or in the future, such as contraceptives, tobacco-cessation products, folic acid during pregnancy, and breastfeeding supplies.
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.
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 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.
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.
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.
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.”
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.
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: Next year, we plan to amend our company’s cafeteria plan to add a health FSA under which participants elect a coverage amount for the year and pay for it with pre-tax salary reductions. There will be no employer contributions, so participants’ health FSA salary reductions will equal the elected annual coverage amount. The health FSA will be offered to all employees who are eligible for coverage under our major medical, dental, and vision plans. We know that these other plans must offer continuation coverage under COBRA, but will our health FSA also be subject to COBRA?
ANSWER: Unless maintained by a church, the federal government, or a small employer (all employers maintaining the plan must have employed fewer than 20 employees on a typical business day during the preceding calendar year), health FSAs must offer COBRA coverage to all qualified beneficiaries who lose coverage due to a qualifying event and must provide all required COBRA notices. But health FSAs that meet the following three conditions are permitted to provide COBRA coverage on a more limited basis than other group health plans:
Maximum Benefit Condition. The maximum benefit payable under the health FSA during a year to any participant cannot exceed two times the participant’s salary reduction election under the health FSA for the year or, if greater, the salary reduction election plus $500. Your health FSA will satisfy this condition because the annual coverage amount equals the annual salary reduction election.
Availability Condition. Other group health coverage must be available to health FSA participants for the year due to their employment. The other group health coverage must be “major medical” or other coverage that is not limited to excepted benefits (e.g., limited-scope dental or vision coverage). Since all employees eligible for the health FSA will also be eligible for your company’s major medical plan (and assuming that the entry dates for both plans are the same), this condition will be satisfied by plan design.
COBRA Premium Condition. The maximum premium that may be charged for a year of COBRA coverage under the health FSA must equal or exceed the maximum benefit available under the health FSA for the year. Health FSAs funded entirely with participant contributions generally meet this condition because COBRA premiums must be calculated based on the cost to the plan of providing coverage, and the cost to the plan will generally equal the elected annual coverage amount because employees tend to incur claims nearly equal to their elected coverage amounts.
Most, if not all, health FSAs will qualify for the special limited COBRA obligation, and those that do may limit COBRA coverage in two ways: (1) the maximum COBRA coverage period may terminate at the end of the year in which the qualifying event occurs; and (2) the health FSA is not required to offer COBRA coverage to qualified beneficiaries whose accounts are “overspent” as of the date of the qualifying event. An individual’s account is overspent if the remaining annual limit (the difference between the annual election amount and the reimbursable claims submitted before the date of the qualifying event) is less than or equal to the COBRA premiums that would be required for the remainder of the year.