Health Savings Accounts Benefit Both Employees and Employers
As an employer, you might often think of things like healthcare plans and retirement accounts as “benefits” that you offer to employees. And yes, those things do quite literally benefit them. But you might be surprised to learn that a comprehensive benefits package also works in your favor, in a number of ways. This is particularly true with regard to health savings accounts.
A health savings account can be established when you participate in a low-premium, high-deductible group healthcare plan. The account helps your employees to budget and plan for large out-of-pocket healthcare expenses, such as deductibles, co-payments, and medications. And since the account is funded with pre-tax dollars, diverted from their paychecks, employees appreciate the potential income tax savings.
But that’s not all! Health savings accounts benefit employers in a number of ways, too.
It’s not exactly a raise, but functions like one. Because the money placed into a health savings account is not taxed, employees keep a bit more of their money by lowering their taxes. In 2023, individuals can contribute $3,750 and those with family coverage can contribute $7,750 to an HSA. That adds up to a significant amount of pre-tax income that is diverted toward important expenses.
HSAs serve as a back-door retirement planning tool. Retirement plans are already viewed by employees as important parts of a competitive benefits package. But because health savings accounts are portable, and because unused funds roll over year after year even into retirement, an HSA can actually function as a long-term financial planning tool.
You can make matching contributions. Employers are not required to contribute to HSAs, but they can establish a matching funds benefit if they want.
Workers who feel supported and valued are productive, loyal employees. A comprehensive benefits package is one of the most compelling reasons new employees will seek out a new company, and current employees will decide to stay. Creating a healthy, financially successful workforce helps both employers and employees alike.
For more information on establishing a health savings account, give us a call. We will help you determine whether you’re eligible to participate in this valuable benefit.
5 Things You Must Do When You Turn 65
The Baby Boomer generation has begun to head into retirement, with millions reaching retirement age every year. If you’re turning 65 soon, make sure to take these five steps to secure your Medicare coverage and prepare for retirement.
Mark the Medicare enrollment window on your calendar. You can begin enrolling in Medicare three months before your birthday month, throughout that entire month, and for three months afterward. Make sure you enroll in a Medicare plan before this window expires, because you could face higher penalties for life if you enroll too late.
Call your employer’s human resources department. If you or your spouse are still working, you might not be required to enroll in Medicare yet. It depends upon the size of your employer and the type of health insurance plan in which you’re enrolled. However, some people choose to enroll anyway, and then Medicare serves as supplementary insurance.
Make the first important choice. Will you enroll in Original Medicare (Parts A and B)? Or will you opt for a Medicare Advantage plan instead? Advantage plans roll Part A and Part B coverage into one plan that is administered via a network of providers. Many of these plans also include Part D (prescription) coverage and certain other additional benefits.
Consider additional options. If you choose Original Medicare, you should also consider additional options such as a Medicare Supplemental Plan (Medigap), which can cover out-of-pocket expenses. A Part D plan helps with the cost of prescriptions, and additional insurance such as vision or dental insurance can be a wise choice.
And since Medicare (Original or Advantage) offers very limited coverage with regard to stays in long-term care facilities, you might also consider enrolling in Long Term Care Insurance.
Call an insurance specialist. You’re entitled to free help when it’s time to enroll in Medicare. We can help you identify and compare all of your Medicare plan options when you turn 65, and each year thereafter when the Annual Election Period rolls around. And there’s never any cost to you! Just give us a call if you’re about to turn 65, and we can start helping you right away.
Understanding the 2023 Employer Mandate Penalties for Not Providing Health Insurance
Providing a group health insurance plan to your employees is one of the best ways to attract and retain top talent. And because healthier, happier workers are also more productive, providing health insurance benefits you too. But if you’re running a company with 50 or more full-time employees, health insurance is not just a benefit; it’s a requirement.
The Employer Shared Responsibility Provisions (ESRP) of the Patient Protection and Affordable Care Act, otherwise known as the employer mandate, requires businesses with 50 or more full-time employees to provide a group health insurance plan. Companies that don’t comply with the mandate can face penalties from the IRS.
For 2023, the updated penalties are detailed on the IRS website as follows:
“An applicable large employer that fails to offer minimum essential coverage to 95% of full-time employees (Section 4980H(a) penalty): 2023 penalty is $2,880 per full-time employee if only one full-time employee receives subsidized coverage through the Exchange or Marketplace, a 4.7% increase from the $2,750 amount for 2022.
An applicable large employer that fails to offer affordable or minimum value coverage (Section 4980H(b) penalty): 2023 penalty is $4,320 per full-time employee who receives subsidized coverage through the Exchange or Marketplace, a 5.2% increase from the $4,120 amount for 2020.”
Clearly, those are not consequences that any business wants to face. But you have time to comply with the law so that you don’t face this outcome when you file your taxes next year. If your company is growing and soon to surpass 50 full-time employees, call us right away to discuss your health insurance plan options. We can help you identify the plan that works best for your situation, while helping you to maintain compliance with the law.
Important ACA Deadlines for Employers and Employees to Note
The Affordable Care Act helps employers provide important healthcare benefits to their employees. But as with any large government action, the Act specifies numerous regulations and deadlines to which we must adhere. With tax season looming, there are a few important dates that both employers and employees should know.
All Applicable Large Employers (ALEs), or those with 50 or more full-time employees, must offer Minimum Essential Coverage to at least 95 percent of eligible workers and their dependents. The cost of coverage must be “affordable” according to IRS methods of calculating affordability, and information on employee coverage must then be supplied to the IRS by certain deadlines during tax season each year.
Businesses with fewer than 50 full-time employees might also choose to provide health insurance coverage to employees, either through the Small Business Health Options Program (SHOP) or via employer-sponsored plans.
These smaller businesses must provide proof of health insurance coverage to their employees with a 1095-B form. These forms will come from the insurance carrier, not the employer.
Finally, individuals who have opted to insure themselves through Covered California will also receive documentation of their coverage. This comes as a 1095-A form sent by the insurance carrier. You’ll need this form to calculate the Premium Tax Credit on your tax returns.
Here are important dates to know:
February 28, 2023. For those ALEs who choose to file paper 1095-C forms to the IRS, they must do so by February 28. This option is only available to those employers who file fewer than 250 1095-C forms, and proposed regulations will reduce that threshold to just 10 forms by the end of 2023.
March 2, 2023. 1095-B or 1095-C forms, as applicable to the business, must be given to all full-time employees by March 2 (this deadline was changed from the previous January 31). Employees who obtain coverage through Coverage California will receive their 1095-A from the insurance provider.
March 31, 2023. For ALEs who file their 1095-C forms electronically, the deadline for doing so is set on March 31. ALEs who file more than 250 1095-C forms are required to do so electronically, but there are many benefits of this method even for smaller employers who opt in. Employers receive instant acknowledgement of submission and a response indicating whether the submission was accepted or rejected.
Employers who miss the above deadlines or file their forms incorrectly can be subject to penalties under Internal Revenue Code 6721/6722. Penalties can range from thousands to millions of dollars, depending upon the size of the company and the extent of errors.
If you have any questions about the above deadlines or filing your 1095-C forms, call us right away for assistance. The earlier we address any problems you’re having, the more likely it is that we can help you meet the deadlines.
Your Health Insurance Plan Can Support Your Wellness Goals
Most of us think of health insurance in terms of treating injuries and illnesses while keeping costs affordable. But your healthcare plan can do a lot more than just help you when you’re sick or hurt; it can actually help you get healthier and stay that way through various wellness programs.
The concept is fairly simple: Health insurance providers realized that providing care for a healthy group of people is more affordable. Because promoting wellness keeps their costs down, they pass along some of those savings to you through free or discounted wellness programs.
For those of you considering your New Year’s resolutions, you might be excited to learn that your health insurance plan might cover (or offer significant savings toward) the cost of programs such as:
- Smoking cessation
- Addiction treatment
- Weight loss support
- Medical weight loss treatment or surgery
- Nutrition coaching
- Gym memberships
- … and possibly more, depending upon your plan
Of course, these programs don’t just help you live a happier, more fulfilling life. When you work to improve your health and wellness, you can also lower your out-of-pocket spending on healthcare expenses such as deductibles, copayments, and medications.
As the saying goes, an ounce of prevention is worth a pound of cure. We all know that losing weight can reduce the odds of developing diabetes, heart disease, and many other ailments. Quitting smoking, drinking alcohol, or other unhealthy habits can lower your risk of cancer. And just the simple act of eating better and exercising regularly can ward off everything from chronic disease to the common cold.
You save money, your health insurance provider saves money, and everyone is happy. But how do you know which wellness programs your healthcare plan offers? Talk to one of our licensed agents who can provide you with group or individual plan options. Remember, we’re here to help you understand your plan’s benefits so that you can make maximum use of your plan.
Retirement Contribution Limits and Medicare Premium Changes for 2023
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.
Use an HSA to Offset Medicare Expenses in Retirement
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.
Small Group Special Enrollment Begins November 15
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.
Is It Time to Add a Vision Plan to Your Healthcare Package?
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.
Supplemental Insurance Plans Can Bridge the Gap for Employees
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.