Health Savings Accounts - HSAs are tax-advantaged medical savings accounts available to taxpayers who are enrolled in an HSA-qualified high-deductible health plan. The funds contributed to the account are not subject to federal income tax at the time of deposit. Unused amounts in one year can be carried over to following years and added to subsequent contributions.
In order to qualify for an HSA, the policyholder must be enrolled in an HSA-qualified high deductible health plan, and must not be covered by other non-HDHP health insurance or Medicare, and cannot be claimed as a dependent on someone else’s tax return.
Flexible Spending Accounts - Also known as a flexible spending arrangement, is a tax-advantaged account that allows an employee to set aside a portion of earnings to pay for qualified medical expenses.
Unlike health savings accounts FSAs are more commonly offered with traditional medical plans.
Unlike health savings accounts, funds in the account that are unused when the plan year is over are lost and cannot be carried over to the following year.
The flex spending account allows you to contribute money to the FSA for costs not covered by insurance: deductibles, co-pays, and coinsurance. In addition, you can use your FSA to pay for health care costs that health insurance doesn’t cover.
Medical Accounts HSA FSA
Contribution Limit - 2013 Individual $3,250 Per Employee $2,500
Family $6,450
Catch-up Contribution (55+) $1,000 None
Medical Plan HSA-Compatible Plan Any
HDHP
Unused Amount Carry Over Cannot Carry Over
Important notes:
Effective Jan. 1, 2011, expenses incurred for over-the-counter medicines, with the exception of insulin, will not be eligible for reimbursement under a health FSA, HRA or HSA without a prescription.
The penalty for using HSA funds for ineligible expenses is 20 percent of the HSA distribution.
Tuesday, October 30, 2012
Wednesday, October 24, 2012
W-2 Reporting for 2012 & 2013
As we move closer to the end of tax year 2012 and the beginning of 2013, you may have questions regarding whether or not your company must comply with the Affordable Care Act (ACA) requirement for reporting the cost of employer-provided health care coverage on their W-2 forms.
Legacy Benefits & Insurance Services' goal is to keep you updated on health reform concerns. Here is a summary of the current Internal Revenue Service (IRS) guidance regarding W-2 reporting:
IRS transitional relief provides that only employers issuing 250 or more W-2s are required to report the cost of employer-provided health care coverage on their W-2s for tax year 2012.
This information reported in box 12 of the W-2s is for informational purposes only.
This relief applies to future calendar years until the IRS publishes additional guidance. To date, the IRS has issued no additional guidance for 2013.
Any IRS guidance that expands the reporting requirements will apply only to calendar years that start at least six months after they issue the new guidance.
To save you valuable time we have gathered these helpful resources:
- Link to IRS website information on W-2 Reporting of Employer-Sponsored Health Coverage
- IRS Notice 2012-9: Interim Guidance on Informational Reporting to Employees of the Cost of Their Group Health Insurance Coverage
- 2012 General Instructions for W-2 and W-3
- Copy of 2012 W-2
Information provide by the Word & Brown General Agency.
Monday, October 22, 2012
What you might not know about the PPACA
Yes, you have probably heard about the individual mandate – tax. And, you may know about Medicaid (MediCal) expansion, free birth control, and the exchanges.
Here are some of the lesser known effects of the law.
1) Domestic violence help - Health care reform brings attention to a subject that usually doesn’t get much. As of Aug. 1, 2012, the law requires that all insurance plans cover screening and counseling for domestic abuse, a provision found under preventive services for women’s health. (The other women’s health benefits are more widely known and include contraceptives and routine breast and pelvic exams, pap tests and prenatal care). The law also will prevent domestic violence from being considered a “preexisting condition.”
2) Fake tanners will pay - This really has been a hot-button issue, so to speak: Since July 1, 2010, Jersey Shore wannabes have had to pay a 10 percent tax every time they visit an indoor tanning service.
3) Smokers need not apply? - Under a provision of the law, smokers can be charged up to 50 percent more than nonsmokers for health insurance beginning in 2014. Regulations now allow companies to require workers who fail to meet specific standards to pay up to 20 percent of their insurance costs.
4) Breastfeeding support - The provision states employers shall provide reasonable, unpaid break time and a private, non-bathroom location for an employee to express breast milk for her nursing child for up to one year after the child’s birth. Employers with fewer than 50 employees are excluded if it would cause “undue hardship.”
5) Caloric reality - The law requires restaurants with 20 or more locations to list calorie counts on menus, menu boards and even drive-thrus. The entire nutrition label also would have to be available in writing upon request.
6) Mental health focus - PPACA mandates coverage parity, putting mental health treatment on par with medical care, which means deductibles; copayments and doctor visits can’t be more restrictive for mental illnesses than medical and surgical coverage.
7) A pricier pizza - Papa John’s CEO John Schnatter got national attention in August when he said that health reform will cause consumers to pay more for their pizza. He estimates that the law will cost 11 to 14 cents more per pizza, or 15 to 20 cents per order. That’s because under PPACA, the company will have to offer health care coverage to more of its 16,500 total employees or pay a penalty to the government. The National Restaurant Association said the law could adversely affect restaurants’ ability to maintain already slim profit margins because it requires companies of more than 50 employees to provide affordable health insurance.
8) Your FSA (Flexible Spending Account) - A popular consumer-driven health care tactic is also changing because of the PPACA. As of Jan. 1, 2011, flexible spending accounts may no longer be used to purchase over-the-counter drugs or medicines. But the most significant change to FSAs under the law will be the implementation of the $2,500 cap on health care FSA contributions beginning in 2013. Previously there was no cap.
The information in this blog was gathered from an October 1, 2012 on-line article in benefitspro.com. Click Here to review the complete article.
Here are some of the lesser known effects of the law.
1) Domestic violence help - Health care reform brings attention to a subject that usually doesn’t get much. As of Aug. 1, 2012, the law requires that all insurance plans cover screening and counseling for domestic abuse, a provision found under preventive services for women’s health. (The other women’s health benefits are more widely known and include contraceptives and routine breast and pelvic exams, pap tests and prenatal care). The law also will prevent domestic violence from being considered a “preexisting condition.”
2) Fake tanners will pay - This really has been a hot-button issue, so to speak: Since July 1, 2010, Jersey Shore wannabes have had to pay a 10 percent tax every time they visit an indoor tanning service.
3) Smokers need not apply? - Under a provision of the law, smokers can be charged up to 50 percent more than nonsmokers for health insurance beginning in 2014. Regulations now allow companies to require workers who fail to meet specific standards to pay up to 20 percent of their insurance costs.
4) Breastfeeding support - The provision states employers shall provide reasonable, unpaid break time and a private, non-bathroom location for an employee to express breast milk for her nursing child for up to one year after the child’s birth. Employers with fewer than 50 employees are excluded if it would cause “undue hardship.”
5) Caloric reality - The law requires restaurants with 20 or more locations to list calorie counts on menus, menu boards and even drive-thrus. The entire nutrition label also would have to be available in writing upon request.
6) Mental health focus - PPACA mandates coverage parity, putting mental health treatment on par with medical care, which means deductibles; copayments and doctor visits can’t be more restrictive for mental illnesses than medical and surgical coverage.
7) A pricier pizza - Papa John’s CEO John Schnatter got national attention in August when he said that health reform will cause consumers to pay more for their pizza. He estimates that the law will cost 11 to 14 cents more per pizza, or 15 to 20 cents per order. That’s because under PPACA, the company will have to offer health care coverage to more of its 16,500 total employees or pay a penalty to the government. The National Restaurant Association said the law could adversely affect restaurants’ ability to maintain already slim profit margins because it requires companies of more than 50 employees to provide affordable health insurance.
8) Your FSA (Flexible Spending Account) - A popular consumer-driven health care tactic is also changing because of the PPACA. As of Jan. 1, 2011, flexible spending accounts may no longer be used to purchase over-the-counter drugs or medicines. But the most significant change to FSAs under the law will be the implementation of the $2,500 cap on health care FSA contributions beginning in 2013. Previously there was no cap.
The information in this blog was gathered from an October 1, 2012 on-line article in benefitspro.com. Click Here to review the complete article.
Monday, October 15, 2012
Interesting Numbers
Today I found a website that the Kaiser Family Foundation developed: www.StateHealthFacts.org.
Here are a few facts that I found interesting, you can decide what they mean:
Here are a few facts that I found interesting, you can decide what they mean:
CA US
- Life Expectancy at Birth 80.4 78.6
- Overweight/Obese Children 30.5% 31.6%
- Overweight/Obesity Adults 61.6% 63.8%
- Cancer Incidence Rate per 100,000 436.7 462.1
- Smoking Among Adults by Sex
- Male 15.0% 19.1%
- Female 9.2% 15.1%
- Violent Crime Rate per 100,000 440.6 403.6
Here is how CA rates compared to the other 50 states and the District of Columbia:
- Population below the Federal Poverty Level: 24% tied for 5th worst
- Unemployed (Aug 2012): 10.60% 3rd worst
- Annual Group Health Insurance Premium* (employee only) $5,255 32nd among states
- Annual Group Health Insurance Premium* (family) $15,837 43th among states
I was surprised by some of these facts and others I was not. The site has lots of data if you are interested. Happy researching.
* Total amount paid by both the employer and employee.
Monday, October 1, 2012
Are HSAs Good?
There have been many articles written about the growth of Health Saving Account compatible health plans and their value to consumers.
I have many clients that have found these plans valuable. The reason, in many cases they are cost effective for the purchaser of the plan and can provide a tax shelter for medical expenses.
One thing that is often not mention when discussing the benefits of the HSA compatible plan is that since the policyholder has a high deductible and has to pay the first dollar expenses, you can create a more informed consumer.
The articles state three things often happen when using a HSA compatible plan: the communication between the doctor and patient increases resulting in less unnecessary tests, the consumer brings to understand the true cost of medical services, and consumers will often shop for services.
One of the problems with our medical system today is that the patient normally does not understand the costs of services and therefore uses the most expensive service available. For example, when I was a baby, if a baby starts crying, parents first though was that the baby was teething and would rub a little whiskey on their gums, this would often solve the problem. Today, we have trained the parents to run down to the ER. So instead of a solution that costs a few cents, we use the most expenses door in the healthcare system and the cost is hundreds of dollars.
So if HSA compatible plans can make us smarter consumers, then we should promote them and the concept of understanding the true cost of services. If we all spent the time to learn more how to reduce the cost of services, then cost health insurance will also go down.
I have many clients that have found these plans valuable. The reason, in many cases they are cost effective for the purchaser of the plan and can provide a tax shelter for medical expenses.
One thing that is often not mention when discussing the benefits of the HSA compatible plan is that since the policyholder has a high deductible and has to pay the first dollar expenses, you can create a more informed consumer.
The articles state three things often happen when using a HSA compatible plan: the communication between the doctor and patient increases resulting in less unnecessary tests, the consumer brings to understand the true cost of medical services, and consumers will often shop for services.
One of the problems with our medical system today is that the patient normally does not understand the costs of services and therefore uses the most expensive service available. For example, when I was a baby, if a baby starts crying, parents first though was that the baby was teething and would rub a little whiskey on their gums, this would often solve the problem. Today, we have trained the parents to run down to the ER. So instead of a solution that costs a few cents, we use the most expenses door in the healthcare system and the cost is hundreds of dollars.
So if HSA compatible plans can make us smarter consumers, then we should promote them and the concept of understanding the true cost of services. If we all spent the time to learn more how to reduce the cost of services, then cost health insurance will also go down.
Monday, September 24, 2012
Cut The Fat Out
A new report released by the Trust for America’s Health and the Robert Wood Johnson Foundation states that if the rates of obese and overweight children and adults continue on the current track only the District of Columbia would have an obesity rate less than 40 percent by 2030. The report also warns that health care costs will increase alongside U.S. waistlines.
The reason that we should be concerned about the rising obesity levels, is because it will bring hefty health care bills due to treatments for of weight-related illnesses such as diabetes and hypertension. For example, the report predicts New Jersey would see a possible 34.5 percent spike in spending during the time period.
If current trends hold, businesses also would face heavy price tags because of obese employees who have higher compensation claims and are more likely to be absent. The report projects a loss of economic productivity between $390 billion and $580 billion in two decades. The report called on obese individuals to cut their body mass index, or BMI, a metric that measures healthy body weight, by 5 percent in order to offset obesity-related illness and financial costs. For some people, this could mean a 10- to 15-pound weight loss.
I have read articles that in Japan employees receive incentives to maintain healthy statistics. Plus in many companies, they require daily workouts. Maybe companies in the US should consider similar policies.
Also remember, if these trends continue, more people that will require healthcare services and those costs will increase the amount each of us will need to pay to fund the system.
The reason that we should be concerned about the rising obesity levels, is because it will bring hefty health care bills due to treatments for of weight-related illnesses such as diabetes and hypertension. For example, the report predicts New Jersey would see a possible 34.5 percent spike in spending during the time period.
If current trends hold, businesses also would face heavy price tags because of obese employees who have higher compensation claims and are more likely to be absent. The report projects a loss of economic productivity between $390 billion and $580 billion in two decades. The report called on obese individuals to cut their body mass index, or BMI, a metric that measures healthy body weight, by 5 percent in order to offset obesity-related illness and financial costs. For some people, this could mean a 10- to 15-pound weight loss.
I have read articles that in Japan employees receive incentives to maintain healthy statistics. Plus in many companies, they require daily workouts. Maybe companies in the US should consider similar policies.
Also remember, if these trends continue, more people that will require healthcare services and those costs will increase the amount each of us will need to pay to fund the system.
Monday, September 17, 2012
Choosing Benefits
Did you know that a survey from Aetna finds that Americans rank choosing health care benefits as the second most difficult major life decision behind saving for retirement?
Survey participants reported that choosing health care benefits is more difficult than purchasing a car, making decisions about medical tests or treatments, parenting, and selecting homeowners, renters or auto insurance. Consumers who found health care benefits decisions difficult cited these reasons: the available information is confusing and complicated (88 percent), there is conflicting information (84 percent) and it is difficult to know which plan is right for them (83 percent).
The survey also finds consumers also remain in the dark about health reform. More than three-quarters of consumers believe that all of the key elements of reform are important for their families or them. However, 41 percent of respondents said they need more information on health care reform to understand its impact.
Why should you care?
Most companies feel that their employee benefit program is an important recruiting and retention program. Also, since healthcare premiums are a major expense for most companies, they want to ensure that the benefits are perceived as benefit by their employees.
So how do you help?
Communication is key elements in helping your employees understand their benefits and making wise decisions. Larger companies have specialists in their HR department that communicate the benefits and help the employees make informed decisions.
But what does a company do if they do not have the resources to have a specialist on staff?
Find broker who provides these services. My company is not only available for the open enrollment presentation, but we provide the opportunity for the employees to spend time discussing their needs to ensure that have a benefit package that works for them and their family.
Remember if your employees do not value your benefit package, then your company is not getting value for the premiums they are paying.
Survey participants reported that choosing health care benefits is more difficult than purchasing a car, making decisions about medical tests or treatments, parenting, and selecting homeowners, renters or auto insurance. Consumers who found health care benefits decisions difficult cited these reasons: the available information is confusing and complicated (88 percent), there is conflicting information (84 percent) and it is difficult to know which plan is right for them (83 percent).
The survey also finds consumers also remain in the dark about health reform. More than three-quarters of consumers believe that all of the key elements of reform are important for their families or them. However, 41 percent of respondents said they need more information on health care reform to understand its impact.
Why should you care?
Most companies feel that their employee benefit program is an important recruiting and retention program. Also, since healthcare premiums are a major expense for most companies, they want to ensure that the benefits are perceived as benefit by their employees.
So how do you help?
Communication is key elements in helping your employees understand their benefits and making wise decisions. Larger companies have specialists in their HR department that communicate the benefits and help the employees make informed decisions.
But what does a company do if they do not have the resources to have a specialist on staff?
Find broker who provides these services. My company is not only available for the open enrollment presentation, but we provide the opportunity for the employees to spend time discussing their needs to ensure that have a benefit package that works for them and their family.
Remember if your employees do not value your benefit package, then your company is not getting value for the premiums they are paying.
Wednesday, September 5, 2012
Can Not Blame Everyone
During the healthcare debate, I believe that two groups are at times unfairly blamed as part of the problem: employers and health insurance brokers.
A recent article mentioned that the latest National Federation of Independent Business survey reveals more than half of small business employers view the cost of insurance as their “most critical problem.”
“Fears over increasing health insurance costs continue to dominate the list of concerns for small businesses, very much in spite of the president’s health insurance reform law—certainly not an endorsement of the policy, nor a good sign for the future of the sector,” says Holly Wade, senior policy analyst and survey author.
Please remember that employer in California pay for at least 50% of the cost of the employee premium, and in many cases more.
So who do the employers turn to for help? The health insurance broker.
Our job is to help the employer review the 100’s of plans available and help them find value for the premium that they pay. A good broker will show you that they researched the market and provide you information necessary to confirm that you are getting value. For example, when I meet with a new or existing client about their renewal, I am armed with a 100+ page report that shows every carrier available to that client sorted by carrier and by premium costs based on their unique situation.
And how do most agents get compensated? Commissions, in other words, if we do not perform and provide quality service, we do not get paid.
So next time you hear our Insurance Commissioner blame employers and insurance agents (trying to cut our commission or us out of the process) for high costs of health insurance, maybe you should ask has he ever had to make payroll or has ever been paid for performance?
A recent article mentioned that the latest National Federation of Independent Business survey reveals more than half of small business employers view the cost of insurance as their “most critical problem.”
“Fears over increasing health insurance costs continue to dominate the list of concerns for small businesses, very much in spite of the president’s health insurance reform law—certainly not an endorsement of the policy, nor a good sign for the future of the sector,” says Holly Wade, senior policy analyst and survey author.
Please remember that employer in California pay for at least 50% of the cost of the employee premium, and in many cases more.
So who do the employers turn to for help? The health insurance broker.
Our job is to help the employer review the 100’s of plans available and help them find value for the premium that they pay. A good broker will show you that they researched the market and provide you information necessary to confirm that you are getting value. For example, when I meet with a new or existing client about their renewal, I am armed with a 100+ page report that shows every carrier available to that client sorted by carrier and by premium costs based on their unique situation.
And how do most agents get compensated? Commissions, in other words, if we do not perform and provide quality service, we do not get paid.
So next time you hear our Insurance Commissioner blame employers and insurance agents (trying to cut our commission or us out of the process) for high costs of health insurance, maybe you should ask has he ever had to make payroll or has ever been paid for performance?
Monday, August 27, 2012
Spreading the Risk
In my last blog “Better Benefits Less Cost”, I discussed the concept of Risk Pools. One on the ways to reduce premiums is to spread the risk of the high benefit users over greater number of low to no use premium payers.
The healthcare reform law states that in 2014 the insurance companies will have to accept everyone without regard of pre-existing conditions. Most experts believe that this will increase the amount of unhealthy into the system.
On the other hand, the individual mandate is suppose to increase the overall pool with healthy premium payers. These are the individuals that could currently get insurance today and choose not to. So why would they? The Supreme Court ruled that if they do not, then they could be charge a tax.
The starting point for tax in 2014 is $95 per year. So will the young healthy person choose to pay the premiums of the tax? Well if the health insurance premium continues to cost around $100+ month for the young person, which do you think they would choose? Even when the tax increased to $295 per year, would they choose the tax or the premium?
This scenario is why many experts expect the rates to increase: more unhealthy people in plans without the large number of healthy people to offset the costs.
The healthcare reform law states that in 2014 the insurance companies will have to accept everyone without regard of pre-existing conditions. Most experts believe that this will increase the amount of unhealthy into the system.
On the other hand, the individual mandate is suppose to increase the overall pool with healthy premium payers. These are the individuals that could currently get insurance today and choose not to. So why would they? The Supreme Court ruled that if they do not, then they could be charge a tax.
The starting point for tax in 2014 is $95 per year. So will the young healthy person choose to pay the premiums of the tax? Well if the health insurance premium continues to cost around $100+ month for the young person, which do you think they would choose? Even when the tax increased to $295 per year, would they choose the tax or the premium?
This scenario is why many experts expect the rates to increase: more unhealthy people in plans without the large number of healthy people to offset the costs.
Friday, August 24, 2012
Better Benefits Less Cost
I am often approached by people who say that say they are excited that in 2014 healthcare reform will provide better plans for less money. I assume that by better plans they mean more benefits.
When I hear that I simply scratch my head. Insurance is a risk pool, which means that lots of people put in a little amount of money to cover large expenses for a few. As far as health insurance goes I hear that only about 8% are the heavy users that account for over 90% of the costs.
The Affordable Care Act has already set the Medical Loss Ratio (the amount insurance companies can use to administer policies) at 20% for individual and small group plans and 15% for large groups plans. With that in mind, premiums are continuing to rise. And when you hear about rebates (normally in other states) they are far less that the annual premium increase.
Then if you increase the benefits that are being paid out by the insurance company, what will happen to premiums? They have to go up.
The solutions are getting more healthy (not using benefits) people into the system or reduce benefits paid (reduced services or reduced payments to providers). We will discuss getting the healthy to buy insurance and reducing payments in the future blogs.
When I hear that I simply scratch my head. Insurance is a risk pool, which means that lots of people put in a little amount of money to cover large expenses for a few. As far as health insurance goes I hear that only about 8% are the heavy users that account for over 90% of the costs.
The Affordable Care Act has already set the Medical Loss Ratio (the amount insurance companies can use to administer policies) at 20% for individual and small group plans and 15% for large groups plans. With that in mind, premiums are continuing to rise. And when you hear about rebates (normally in other states) they are far less that the annual premium increase.
Then if you increase the benefits that are being paid out by the insurance company, what will happen to premiums? They have to go up.
The solutions are getting more healthy (not using benefits) people into the system or reduce benefits paid (reduced services or reduced payments to providers). We will discuss getting the healthy to buy insurance and reducing payments in the future blogs.
Wednesday, August 22, 2012
Who’s going to pay for health reform’s taxes?
Who’s going to pay for health reform’s taxes?
Here the taxes, who pays them, and when it goes into effect.Higher Income Individuals & Families
Who pays: About 2.5 million households — individuals making more than $200,000 per year, couples $250,000.
How much: A 0.9 percent Medicare tax on wages above those threshold amounts; an additional 3.8 percent tax on investment income.
When: 2013
Artificial-sun worshippers
Who pays: The 28 million people who visit tanning booths and beds each year — most of them women under 30, according to the Journal of the American Academy of Dermatology.
How much: A 10 percent tax on the price of tanning.
When: Took effect in 2010.
'Cadillacs' coverage
Who pays: Insurance companies or businesses that provide plans with premiums of more than $10,200 per person or $27,500 per family, not including dental or vision coverage.
How much: 40 percent excise tax on any amount of premium that exceeds the threshold.
When: 2018
Health industry
Who pays: Insurers, drug companies, medical device makers. And some of their customers.
How much: More than $165 billion over 10 years
When: Began last year for drug companies; starts in 2013 for device makers, 2014 for insurance companies.
Comment: How will this reduce costs for consumers?
Flexible Spending Accounts
Who pays: People who set aside tax-free savings to pay for health care.
How much: About $33 billion over 10 years
When: Contribution limit begins in 2013.
Comment: if you are big user of these accounts, you will have use after tax dollars for these treaments.
Taxpayers who take write-offs
Who pays: People with big medical or dental bills who itemize deductions.
How much: Taxpayers have to spend more than 7.5 percent of their adjusted gross income on medical care to qualify for a deduction. The threshold will rise to 10 percent. So a household with income of $50,000 would have to spend $5,000 on health care before deducting amounts above that.
When: 2013 (delayed until 2017 for taxpayers age 65 or over)
Comment: Like the Flexible Spending Account reduction, people to use their plans (the sick) are unfortunately losing tax breaks. Why?
Information was obtained from the following article: http://Here the taxes, who pays them, and when it goes into effect. ?
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