Due to the rising cost of living and other factors, government agencies routinely assess available data and then release changes to various contribution limits and the cost of Medicare premiums. These changes are announced toward the end of each year and take effect in January of the following year. Here’s what you need to know as we approach 2023.
Changing contribution limits to retirement plans. Those saving for retirement can now contribute a bit more to their 401k, 403b, Thrift Savings Plan, or most 457 plans. The new annual limit is $22,500, plus an additional catch-up contribution of $7,500 for those over age 50.
For IRAs, the contribution limit has been raised from $6,500 to $7,500, with an additional catch-up contribution of $1,000.
New Medicare premiums. Of course, once you’ve reached retirement age, the cost of healthcare might consume a significant portion of your budget. We have good news for those of you enrolled in Medicare: The standard Part B premium will decrease just a bit, from 170.10 this year to $164.90 in 2023.
A small number (about seven percent) of Medicare beneficiaries will pay higher premiums, due to their higher annual incomes. Contact your Medicare broker to learn about your own Medicare premium amount.
Contributions to health savings accounts. For those enrolled in high-deductible healthcare plans, contributions to health savings accounts represent a valuable opportunity to save for out-of-pocket healthcare expenses. You can also enjoy certain tax benefits for doing so. The good news is that in 2023, you can now save a bit more in your HSA: Up to $3,850 for individuals and $7,750 for those on family plans.
Contributions to flexible spending accounts. You can now stash up to $3,050 in your health flexible spending account, an employer-sponsored account that allows you to pay for uncovered healthcare expenses without owing income taxes on that money.
If you have questions about any of these benefit plans, or on how the new Medicare premiums might impact you, give us a call. One of our benefits specialists will be happy to help.
If you are age 60 or so and gearing up for an expected retirement in a few years, you might feel concerned about the high cost of healthcare. You’re wise to consider this aspect of retirement planning, because it is true that Medicare won’t cover everything you need in retirement. You will still owe premiums and copayments, along with annual deductibles and even coinsurance charges for hospital stays. So how can you prepare for these expenses, which can be considerably large, knowing that the cost of health insurance continues to rise?
One option, that is growing in popularity, is to use a health savings account (HSA) to set aside more money for retirement.
As you know, you’re limited to an annual contribution to your qualified retirement plan, and you might be worried whether the distributions will be enough to cover your expenses. On top of that, you might have gotten a late start to retirement planning, as many people do. But a health savings account can actually serve as an extra retirement planning vehicle, if you know how to utilize it properly.
Funds are contributed to an HSA on a pre-tax basis, meaning they can earn you a valuable tax benefit each year. But if you don’t use the money in your HSA to cover qualified healthcare expenses during any given year, the money rolls over to the next year. And you can even take the account with you into retirement, and then use the funds for expenses like Medicare premiums, deductibles, and copayments. You can also take withdrawals to cover the cost of prescription medication or special equipment needed for a medical condition.
In 2022, individuals could contribute up to $3,650 to an HSA, and those with family healthcare coverage could save up to $7,300. These limits are sometimes adjusted upward in response to rising costs and changes to healthcare plans. But as you can see, it would be possible to save a significant amount of money toward future healthcare expenses!
Give us a call to discuss the benefits of a health savings account, and we’ll help you decide if this type of account is right for you now and in the future.
Unlike with individual health insurance, employers can establish a group healthcare plan at any time of the year. There is no wait for an open enrollment period. However, your business is required to meet minimum participation requirements, and you might be required to contribute a certain amount toward premiums.
We have good news: The Small Group Special Enrollment period makes it easier for small businesses to establish a healthcare plan for their employees, because your company will not owe a premium and only one employee must enroll in order to establish a group plan.
In other words, a small business can utilize this opportunity to establish a group healthcare plan at no cost to themselves. And your employees can take advantage of this opportunity to enroll in a group plan, which might allow them to take advantage of the larger networks of hospitals and providers often associated with such arrangements.
As a bonus, if you have established a cafeteria plan for your employees, they can use pre-tax dollars to cover their healthcare plan premiums. This benefit allows them to lower their taxable income for the year and potentially earn a significant tax break which they are sure to appreciate.
Smaller employers, take note: If you don’t meet Affordable Care Act participation or contribution requirements, you do have the opportunity to enroll in a healthcare plan specifically geared to small businesses.
The Small Group Special Enrollment Period begins November 15 and continues through December 15. That means you have one month to evaluate your options and complete your small group enrollment, so let’s get started today. Give us a call to learn more about what’s available to you, and we’ll walk you through your options. Then you will be well prepared to make a decision for yourself and your employees when enrollment opens next month.
No matter what level of healthcare plan you choose, it is unlikely to always cover absolutely everything you want or need. In many cases we simply accept the burden of a few expenses outside of our plan’s coverage. But some things are too important to leave to chance… And it’s possible that vision care is one of those things.
If you’re young and healthy, without any vision problems, you might feel that routine vision exams fall outside the scope of your healthcare needs. But many things can change over the years, such as…
- The addition of a spouse or children to your family, who need vision care
- Age-related decline in vision (very common after age 40 or so)
- Diseases of the eyes that can strike anyone, regardless of a history of perfect vision
- Other health problems that often display warning signs during a vision exam
Those on a family healthcare plan should carefully consider the cost of uncovered vision care, particularly if the family includes several children. Even parents with perfect vision can pass on a recessive gene to children which creates the possibility of needing vision care. And of course, all of us are at risk of age-related vision problems, even relatively mundane ones such as hyperopia (or far sightedness, the need for reading glasses).
Regardless of your past perfect bill of eye health, absolutely anyone can develop conditions such as cataracts, glaucoma, and macular degeneration. These conditions are often detected early in their progression during a routine eye exam, when they are treatable, and your eyesight can be saved. But left undiagnosed, the prognosis can be grim if the conditions are allowed to progress.
And it might surprise you to learn that many health conditions, such as diabetes, high blood pressure, heart disease, lyme disease and even brain tumors first show subtle warning signs that are detected by an ophthalmologist or optician. Seeking routine vision care can be yet another part of your comprehensive plan to keep you healthy. As we all know, early detection and treatment of any medical condition not only saves you money but can also save your life.
So, is it time to consider adding a vision plan to your health insurance package? Call us to learn more, and we will share the details so you can decide.
Enrolling employees in a high-deductible health insurance plan is a popular choice for many reasons. Low premiums keep overhead down for both you and your workers, and they can enroll in a health savings plan that offers numerous tax and savings benefits. But most healthcare plans include limits on coverage, and sometimes expenses outside those limits can occur.
If employees have shared their concerns about uncovered expenses, meeting high deductibles, and the rising cost of healthcare in general, you might consider adding supplemental insurance plans to your menu of options.
If your employees encounter unexpected medical bills, a supplemental insurance plan is designed to bridge the gap. These insurance plans are voluntary, so they make a great choice for those feeling concerned about their budgets, without adding another monthly premium for everyone on the group plan.
The best thing about supplemental insurance plans is their flexibility. We recognize that the expenses incurred by serious illnesses or accidents often fall outside of just medical bills. When a covered individual experiences a qualifying event under the plan, they can receive a cash payment to use however they see fit.
Supplemental insurance benefits can be used to pay for uncovered medical expenses, but also for things like childcare or housekeeping during the course of a serious medical event. This flexibility provides peace of mind to employees during one of life’s most stressful times.
For you, the employer, offering supplemental insurance will help you maintain a happier, more productive workforce. The promise of financial stability and a full menu of insurance offerings attract high value employees and encourage company loyalty. It’s no wonder supplemental insurance plans have become one of the most popular menu items for many companies with a well-rounded benefits package.
Contact us to learn more about supplemental insurance, and how it can help both you and your employees.
If you’re enrolled in a healthcare plan through Covered California, it can be easy to enroll in the fall and then forget about your enrollment status for the rest of the year. But there’s one very important reason to double check on your basic information from time to time: You want your subsidy to be calculated correctly!
If you receive a subsidy to help with the cost of your premiums, you probably know that it is based on your income and household size. Any changes in those areas can impact the calculation of your subsidy.
In the event that your income decreases or your household size increases, you could qualify for a larger subsidy. Updating that information promptly within the system can help make your healthcare plan even more affordable for you.
But there’s another reason to regularly update your basic information: If your income increases or your household size decreases, you could qualify for a smaller subsidy. While that’s not likely to be good news to you, it’s better to receive the accurate subsidy throughout the year. Otherwise, if Covered California determines your subsidy was overpaid during the year, you could owe that money back to the government at tax time in the spring.
So you definitely want to avoid that unpleasant surprise!
If your income, household size, or address change at any point during the year, you are required to report those changes to Covered California within 30 days of the change.
Take a quick inventory of those facts now, and report any necessary changes right away. You take care of this task quickly by logging into your online portal, or by contacting our office for help.
Employers, take note: According to the Medicare Prescription Drug, Improvement, and Modernization Act in 2003, you are required to send Medicare Part D Notices of Creditable Coverage by October 15.
These notices detail whether your group-sponsored healthcare plan is expected to cover as much as the standard Medicare Part D plan regarding prescription drug costs. What is standard coverage under Medicare?
- Deductible: $480
- Initial coverage limit: $4,430
- Out-of-pocket threshold: $7,050
Your plan is considered “creditable” if:
- It provides coverage for brand and generic prescriptions
- It provides reasonable access to retail providers and mail order coverage
- It pays on average at least 60% of prescription drug expenses
You should supply these notices of creditable coverage to all employees who are eligible for Medicare, which would include:
- Retirees and their dependents
- Active Medicare-eligible employees and their dependents
- COBRA participants
As an alternative, you might wish to simply send the notice to all employees, either separately or as part of a packet of information on healthcare enrollment or other benefits. This can save you the trouble of determining which employees are Medicare-eligible.
If you wish to send electronic notices rather than paper copies, you need to follow several strict guidelines. We can help you understand these procedures or answer any other questions you have about Medicare Part D Notices of Creditable Coverage. Please call our office and we’ll be happy to assist you.
And remember: Notices must be sent by October 15, so the time to get started is now.
Healthcare plans can be complicated, and trigger confusion for consumers. In particular, many participants in healthcare plans experience difficulty detangling the details of their plans with regard to healthcare service pricing and their own out-of-pocket spending. The Transparency in Coverage rules created by the federal government in 2020 were designed to answer critical questions regarding price and quality of healthcare services, with changes rolling out through 2024. A deadline for one important milestone was set for July 1 of this year.
As of July 1, cost-sharing data must be provided to consumers via machine-readable files that shall be published on a publicly available website.
What is the purpose of the machine-readable files? These files must be provided by the health insurance company to consumers, and should detail pricing information for covered items and services according to in-network negotiated rates along with historical data on out-of-network amounts that have been allowed.
In the future, a third file must disclose prescription drug rates and historical costs. However, the requirement for release of this file has been delayed due to the need for further guidance.
Information within all applicable files must be updated monthly.
What else is required of healthcare plan providers? When publishing the required information, healthcare plan providers must pay careful attention to regulations regarding:
- The required font size, accessibility, and security settings
- Files must not be PDF or Excel format
- Published data must include negotiated rates for all covered items and services for each plan level, relating to all medical codes, and including all contracted rates and providers
- Out-of-network files must include allowed amounts for items and services, based on billed charges and historically allowed amounts
- If there are fewer than 20 out-of-network claims for a service by a provider, the information is not required to be included
What do consumers need to do? The required files must be made available on a publicly-accessible website. Consumers will not be required to establish a user account, password, or any other credentials in order to access this information. The website must not require users to submit any personal information.
Consumers should check with their health insurance provider to learn where the required files will be published, and ask their healthcare plan representative for assistance with interpreting the data when necessary.
Again, the above requirements all relate to machine-readable files which must be published by July 1, 2022. Both group plan sponsors and individuals should contact their healthcare plan representatives if they have any questions.
You enrolled in a High Deductible Healthcare Plan (HDHP) because it helps you to achieve lower monthly premiums. In addition, a Health Savings Account (HSA) or Health Reimbursement Arrangement (HRA) helps you to manage the out-of-pocket expenses associated with these types of healthcare plans. However, changes in the cost of living would render these types of plans and accounts much less useful if certain limits were not occasionally adjusted.
That’s the reasoning behind certain changes recently released by the IRS.
First, let’s review how minimum deductibles for HDHPs will change in 2023:
- The minimum deductible for individual coverage will rise from $1,400 in 2022 to $1,500 in 2023
- The minimum deductible for family coverage will rise from $2,800 in 2022 to $3,000 in 2023
Maximum annual out of pocket limits will change, too:
- For individuals, the maximum of $7,050 will climb to $7,500 next year
- For families, the maximum of $14,100 will climb to $15,000 next year
Yes, all of those changes indicate a bit more spending on your healthcare plan next year. But in response, the IRS has also changed the annual contribution limits to HSAs and HRAs accordingly:
- For individuals, the HSA contribution limit will rise from $3,650 this year to $3,850 next year
- For families, the HSA contribution limit will rise from $7,300 this year to $7,750 next year
- For HRAs, the contribution limit of $1,800 will rise to $1,950 next year
As for catch-up contributions, for those aged 55 and older, that limit remains at $1,000 per year.
If you have questions about your healthcare plan, HSA, or HSA, do call us to review your options. We can help you learn more about these plans and how they can benefit you.
Your employees utilize a High Deductible Healthcare Plan because it helps them to maintain lower premiums. Plus, a Health Savings Account or Health Reimbursement Arrangement helps them to manage the out-of-pocket expenses associated with these types of healthcare plans. But because the cost of living does change over time, these plans would lose their appeal and usefulness if we did not occasionally adjust certain limits with regard to them.
That’s exactly what the IRS has done, with regard to maximum out of pocket limits and minimum deductibles on HDHPs for next year. And likewise, the contribution limits for HRAs and HSAs will rise slightly in 2023.
Here’s what will change with regard to HDHPs:
- Individual coverage minimum deductibles will rise from $1,400 this year to $1,500 next year
- Family coverage minimum deductibles will rise from $2,800 this year to $3,000 next year
- Out of pocket maximums for individuals will rise from $7,050 this year to $7,500 next year
- Out of pocket maximums for families will rise from $14,100 to $15,000 next year
As for HSAs, the maximum annual contribution will change as follows:
- For individuals, the maximum contribution is $3,650 this year and $3,850 next year
- For families, the maximum contribution is $7,300 this year and $7,750 next year
The maximum catch-up contribution for those aged 55 and older will remain at $1,000 per year, because that limit is not subject to a cost of living adjustment.
And for HRAs, the maximum annual contribution limit will change as follows: The current limit of $1,800 for 2022 will rise to $1,950 in 2023.
Update your payroll and plan administration systems now, so that you can communicate these changes to plan participants correctly and according to regulations later this year. Materials such as open enrollment notices and summary plan descriptions should reflect the new limits as appropriate.
Call our office if you have any questions about the new limits, and we will help you access the information that pertains to your situation.