As healthcare costs continue to rise, many large employers are reevaluating their group health plan offerings. A common cost-saving strategy is to exclude spousal coverage. But does this decision expose employers to penalties under the Affordable Care Act (ACA)? Let’s break down what the 2025 ACA employer shared responsibility rules say about spousal coverage, and how FSAs, HRAs, and HSAs fit into the compliance picture.
ACA Employer Shared Responsibility: The Basics
Under the ACA, Applicable Large Employers (ALEs)—those with 50 or more full-time employees—must offer minimum essential coverage to at least 95% of their full-time employees and their dependents to avoid penalties
Dependents are defined as biological and adopted children under age 26.
Spouses are not considered dependents under ACA rules, so employers are not required to offer coverage to spouses to avoid penalties.
Spousal Coverage and ACA Penalties
If an employer excludes spouses from its health plan:
No penalty applies, even if the spouse obtains subsidized coverage through the Exchange.
Penalties are only triggered if a full-time employee receives a premium tax credit due to the employer failing to offer affordable, minimum-value coverage.
2025 ACA Penalty Amounts
4980H(a) Penalty: $2,900 per full-time employee (minus the first 30), if coverage is not offered to 95% of full-time employees and their dependents.
4980H(b) Penalty: $4,350 per full-time employee who receives subsidized Exchange coverage because the offered coverage was unaffordable or did not meet minimum value.
How FSAs, HRAs, and HSAs Impact ACA Compliance
While FSAs (Flexible Spending Accounts), HRAs (Health Reimbursement Arrangements), and HSAs (Health Savings Accounts) are not substitutes for minimum essential coverage, they can play a supporting role in ACA compliance:
1. FSAs (Flexible Spending Accounts)
FSAs are employee-funded accounts used for out-of-pocket medical expenses.
They do not count as minimum essential coverage but can help reduce employees’ healthcare costs.
Employers offering limited-purpose FSAs alongside HDHPs (High Deductible Health Plans) must ensure the HDHP meets ACA affordability and minimum value standards.
2. HRAs (Health Reimbursement Arrangements)
ICHRA (Individual Coverage HRA) can be used by employers to reimburse employees for individual market premiums.
If structured properly, an ICHRA can satisfy ACA employer mandate requirements, provided the reimbursement amount is sufficient to make individual coverage affordable.
3. HSAs (Health Savings Accounts)
HSAs are paired with HDHPs and are employee-owned.
While HSAs themselves don’t satisfy ACA requirements, the HDHP must meet minimum value and affordability standards.
Employer contributions to HSAs can help reduce the net cost of coverage, improving affordability calculations.
Excluding spouses from your group health plan does not violate ACA rules and will not result in employer shared responsibility penalties, even if those spouses seek subsidized coverage elsewhere. However, employers must ensure that full-time employees and their dependent children are offered affordable, minimum-value coverage.
FSAs, HRAs, and HSAs can enhance your benefits strategy and support ACA compliance, but they must be used in conjunction with a compliant health plan—not as a replacement.
The IRS recently announced the 2026 limits for Health Savings Accounts (HSAs) and High Deductible Health Plans (HDHPs). HSA contribution and plan limits will increase to $4,400 for individual coverage and $8,750 for family coverage. Changes to these limits will take effect January 2026.
HSAs are tax-exempt accounts that help people save money for eligible medical expenses. To qualify for an HSA, the policyholder must be enrolled in an HSA-qualified high-deductible health plan, must not be covered by other non-HDHP health insurance or Medicare, and cannot be claimed as a dependent on a tax return.
Navigating the complexities of the Family and Medical Leave Act (FMLA) can be challenging, especially when it comes to maintaining health coverage for employees on unpaid leave. This guide will help you understand what to do when an employee on FMLA leave fails to pay their health insurance premiums on time, and how it affects Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), Health Savings Accounts (HSAs), and COBRA.
Employer Obligations
Under FMLA, employers must maintain health coverage for employees on leave as if they were still working. This obligation ends if the premium payment is over 30 days late, unless your company policy allows a longer grace period.
Steps Before Dropping Coverage
Before dropping an employee’s health coverage, provide written notice at least 15 days before coverage ends, specifying the termination date if payment isn’t received. Send the notice at least 15 days before the end of the grace period.
Termination of Coverage
Coverage can be terminated retroactively if your company policy allows, otherwise, it ends prospectively at the grace period’s end.
Impact on FSAs, HRAs, and HSAs
FSAs: Employees can choose to continue or revoke their FSA coverage during unpaid FMLA leave. Payment options include pre-pay, pay-as-you-go, and catch-up contributions.
HRAs: Employers must extend COBRA rights to HRAs. Employees can use their HRA balance during COBRA coverage, and employers should calculate a reasonable premium for the HRA.
HSAs: Employees can continue contributing to their HSA during COBRA coverage and use HSA funds to pay for COBRA premiums.
COBRA and ACA Rules
A COBRA election notice isn’t required for coverage loss due to nonpayment. However, failure to return to work after FMLA leave is a COBRA qualifying event. ACA allows cancellation for nonpayment, but stricter state laws may apply.
Restoring Coverage
If an employee returns from FMLA leave after coverage was dropped, their health coverage must be restored.
Managing health coverage for employees on FMLA leave requires careful attention to legal requirements and company policies. By following these steps, you can ensure compliance and support your employees during their leave.
HIPAA special enrollment rights allow eligible employees to enroll in health plans outside the regular enrollment period due to specific life events. These rights also impact Health Reimbursement Arrangements (HRAs), Health Savings Accounts (HSAs), and Flexible Spending Accounts (FSAs).
When and Who Receives the Notice?
Notices must be provided to all eligible employees at or before the time they are first offered the opportunity to enroll. This includes employees who:
Decline coverage due to other health insurance and later lose eligibility.
Become eligible for state premium assistance under Medicaid or CHIP.
Acquire a new spouse or dependent by marriage, birth, adoption, or placement for adoption.
What Should the Notice Include?
The notice must describe special midyear enrollment opportunities and inform participants about deadlines for enrollment requests—30 days for most events, 60 days for Medicaid or CHIP-related events.
Distribution Methods
Include the notice with plan enrollment materials and, if conditions are met, distribute it electronically.
Impact on HRAs, HSAs, and FSAs
Special enrollment rights can affect contributions and usage of HRAs, HSAs, and FSAs:
HRAs: Adjust contributions or usage to align with new coverage.
HSAs: Review HSA contributions and ensure compliance with IRS rules.
FSAs: Update FSA elections to reflect changes in coverage or dependent status.
Consequences of Non-Compliance
Failing to provide the notice timely can lead to enrollment issues and potential penalties from the Department of Labor (DOL).
Providing HIPAA special enrollment notices is essential for compliance and helps employees make informed decisions about their health coverage and financial accounts. Understanding the impact on HRAs, HSAs, and FSAs ensures that employees can effectively manage their health-related financial accounts in conjunction with their health plan enrollment.
Health Savings Accounts (HSAs) are a valuable tool for managing healthcare expenses, especially for those enrolled in high-deductible health plans (HDHPs). However, understanding the contribution limits can be tricky, particularly for married couples with self-only HDHP coverage. In this post, we’ll clarify whether spouses with self-only HDHP coverage can share their HSA contribution limits and provide insights into maximizing their contributions.
HSA Contribution Limits
For 2025, the HSA contribution limits are as follows:
Self-Only HDHP Coverage: $4,300
Family HDHP Coverage: $8,550
Additionally, individuals aged 55 or older can make a “catch-up” contribution of up to $1,000 to their HSA.
Special Rule for Married Individuals
When at least one spouse has family HDHP coverage, a special rule allows the spouses to share the higher family contribution limit. Either spouse’s HSA can receive contributions up to the family maximum, but their combined contributions cannot exceed the family limit. It’s important to note that HSAs are individual accounts, and married couples cannot maintain a joint HSA.
Scenario: Both Spouses Have Self-Only Coverage
In the situation where both spouses have self-only HDHP coverage, the special rule for married individuals does not apply. Each spouse’s contributions will be subject to the self-only limit, including any catch-up contributions if they meet the age requirement. One spouse cannot increase the other spouse’s maximum HSA contributions by contributing less.
Maximizing Contributions
If both spouses with self-only coverage each maintain HSAs and contribute the maximum amount, their aggregate contributions will be slightly more than the family limit ($8,600 versus $8,550). However, they lose the flexibility to place a disproportionate amount of the contribution into one spouse’s HSA. To maximize their aggregate contribution, married couples should:
Maintain two HSAs.
Maximize contributions to each HSA.
Considerations for Choosing Coverage
When deciding whether to elect self-only HDHP coverage from their respective employers or family HDHP coverage from one employer, married couples should consider various factors, including:
Premium costs
Provider networks
Deductible and other cost-sharing amounts
Any spousal surcharges
Understanding HSA contribution limits and rules is crucial for married couples with self-only HDHP coverage. By maintaining individual HSAs and maximizing contributions, they can effectively manage their healthcare expenses. Always consider the broader implications of your HDHP coverage choices to ensure you make the best decision for your financial and healthcare needs.
