Overview of Three CDHP Benefits


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A qick review of HSAs, FSAs & HRAs to support your employee benefits program and overall business objectives

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Overview of Three CDHP Benefits

  1. 1. The HR Connection Resource Center Presents: An Overview of three CDHP Benefits: A simple but pertinent and timely review of HSAs, FSAs and HRAs
  2. 2. Introduction • First and foremost, for full disclosure purposes, I serve clients from within the CDHP department at a local TPA organization • Serving “my” clients, and their representatives, is the highlight as well as the most rewarding aspect of my role! • Having read a HR colleague’s post to a SHRM community chat over the weekend, I was reminded of the fact that many of my fellow HR practitioner’s may have a need to know of the information provided • Finally, using my “from the trenches” approach I will share valid and reliable information retrieved directly from the Internal Revenue Service (IRS) website, as I so oftentimes reference and research to support my writings • This brief overview is provided for learning purposes only and is not to be construed as any form of legal advice however, the resource speaks for itself
  3. 3. Three CDHP Benefits Within this presentation is basic information regarding these benefits with additional rich resources to allow you to explore your options regarding: • Health Savings Account (HSA) • Flexible Spending Account (FSA) • Health Reimbursement Account (HRA) • Next, we’ll look at each one of these benefits separately using the IRS, Pub. 969 as a resource Resource: http://www.irs.gov/pub/irs-prior/p969--2012.pdf
  4. 4. HSAs • To be offered with a High Deductible Health Plan (HDHP) as defined by the IRS • The employee and/or employer can contribute to the HSA (p. 4) • There are limits imposed based on the type of HDHP plan implemented (Beginning on p. 4) • Contributions to an HSA belong to the employee and are portable (they don’t lose these funds and can take them with them if they leave) (p. 2) • There are limitations and other rules/regulations offered within the publication as well as other IRS related material • Tax liability and reporting requirements plus other areas should be reviewed for compliance by the employer as well as your employees (Throughout this publication as well as other areas of the IRS website)
  5. 5. FSAs • A pretax benefit offered by the employer to provide employees a reimbursement option for certain eligible expenses (p. 17) – Also see Pub. 502 • Typically consist of employee contributions through PR deductions but some employers will contribute. TIP! Additional rules & regulations may apply to both the employee & employer (p. 17) • Can be made available for reimbursements of qualifying expenses of both medical (Max. $2500) and dependent care (Max. $5000) • Employee is eligible for the maximum medical amount immediately when Plan Year (p. 16) begins however, is not eligible for dependent care reimbursements until funds are accrued • Please note for information regarding child care expenses review Pub. 15b as well as Pub. 503 (referenced in Pub. 15b) • “Use it or lose it” plan. Funds contributed but not used during the allotted timeframe will be forfeited (p. 17)
  6. 6. HRAs • Must be funded solely by the employer (p. 18) • No limit on the amount of funds you wish to contribute to an HRA account (p. 18) • Provided to employees to reimburse for qualified medical expenses incurred (p. 18-19) • Typically offered to assist employees with the medical plan deductible expenses associated with a high deductible health plan • Employers own the funds contributed but not used at the end of the Plan Year however, you may offer rollover of funds into the next Plan Year (p.19)
  7. 7. IRS Resources • Pub 969* - HSAs & Other Tax Favored Health Plans (HRAs & FSAs) – 2012 • Pub 15 - Employer’s Tax Guide - 2013 • Pub 15 A - Employer’s Supplemental Guide - 2013 • Pub 15 B - Employer’s Tax Guide to Fringe Benefits – 2013 • Pub 502* - Medical & Dental Expenses – 2012 Source: http://www.irs.gov/publications/index.html (08242013) *Great resource for your employees
  8. 8. Additional Resources • US Department of Labor (DOL) – ERISA, which also includes information related to ACA http://www.dol.gov/ebsa/compliance_assistance.html • US Department of Labor (DOL) – Small Business Resource Center http://www.dol.gov/oasam/programs/osdbu/sbrefa/ • Internal Revenue Service (IRS) – Small Business & Self – Employed Tax Center http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed • Affordable Care Act (ACA) - http://www.hhs.gov/healthcare/rights/index.html and http://www.hhs.gov/regulations/index.html • Society for Human Resource Management (SHRM) – Absolutely the best resource for access to current HR related information http://www.shrm.org/about/membership/Pages/default.aspx
  9. 9. TIPS and Recommendations • TIPS! Take note of certain requirements, using the rich resources provided regarding: – Ineligible employees/Legal business entity – Highly Compensated Employees (HCEs) and/or Key Employees – Nondiscriminatory requirements related to these plans • Recommendations (from the trenches): – Seek additional advice from Subject Matter Experts (SMEs) such as legal counsel or CPAs – Contact the regulatory agency for assistance as you can see when viewing their websites, they are there to help
  10. 10. Conclusion • The three CDHP benefits discussed can offer a savings to both you and your employees • Depending upon you specific circumstances & business goals and objectives, having the opportunity to explore the basics of each benefit will allow you to know where to go for additional information so that you can choose the best value added benefit to fit your needs • These three benefits can be offered in conjunction with one another. TIP! Watch for limitations when mixing these benefits • The IRS offers a rich resource base covering many areas related to employee benefits PLUS now you have information to tap into additional agencies who regulate employee benefits which will add more knowledge and professional development to your HR/Benefits Administration toolkit.