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Health FSA Limit will Remain the Same for 2021

December 22, 2020

The Affordable Care Act (ACA) imposes a dollar limit on employees’ salary reduction contributions to health flexible spending accounts (FSAs) offered under cafeteria plans. This dollar limit is indexed for cost-of-living adjustments and may be increased each year.

On Oct. 27, 2020, the IRS released Revenue Procedure 2020-45 (Rev. Proc. 20-45), which announced that the health FSA dollar limit on employee salary reduction contributions will remain at $2,750 for taxable years beginning in 2021. It also includes annual inflation-adjusted numbers for 2021 for a number of other tax provisions.

Employers should ensure that their health FSAs will not allow employees to make pre-tax contributions in excess of $2,750 for the 2021 plan year, and communicate the 2021 limit to their employees as part of the open enrollment process.

Employer Limits

An employer may continue to impose its own dollar limit on employees’ salary reduction contributions to health FSAs, as long as the employer’s limit does not exceed the ACA’s maximum limit in effect for the plan year. For example, an employer may decide to limit employee health FSA contributions for the 2021 plan year to $2,500.

Per Employee Limit

The health FSA limit applies on an employee-by-employee basis. Each employee may only elect up to $2,750 in salary reductions in 2021, regardless of whether he or she also has family members who benefit from the funds in that FSA. However, each family member who is eligible to participate in his or her own health FSA will have a separate limit. For example, a husband and wife who have their own health FSAs can both make salary reductions of up to $2,750 per year, subject to any lower employer limits.

Highlights

• The IRS announced that the health FSA dollar limit will remain at $2,750 for 2021.
• Employers may continue to impose their own dollar limit on employee salary reduction contributions to health FSAs, up to the ACA’s maximum.
• Employers should communicate their 2021 limit to their employees as part of the open enrollment process.

If you have any questions, please contact us at customerservice@consociate.com.

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AIMM

November 30, 2020

We partner with AIMM to create unique medical management strategies, based on our clients’ culture, population, goals, objectives, and budget. We understand that the most effective, most well received, medical management programs are “Patient Centric”, so through AIMM, we offer evaluation by professional nurses to identify how the quality of health care a patient is receiving can be improved, and/or decrease the cost of the care a patient is receiving.

Contact Consociate Health to learn more.

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Healthcare as a Performing Asset

November 25, 2020

Pharmaceutical benefits can be a significant cost driver for business owners, accounting for 30-32% of overall healthcare costs.

Consociate Health now offers pharmacy benefit management to our clients by administrating employer drug benefit programs. Within this new division, we will evaluate pharmacy spend, process and pay prescription drug claims. We will advise on cost containment and incentivize prescribing physicians, pharmacists, and plan members to influence decision-making and save you money. Our expertise goes beyond traditional pharmacy benefit management services. Through our knowledge of underutilization and intensity, supply chains, codes and precertification, along with our process of gathering key data sets, we are able to provide solutions based on your unique situation and employees.

To learn more about our value-based benefits, contact Consociate Health today.

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Why Self-Funding Paid Off During Shutdown

November 23, 2020

The ongoing COVID-19 pandemic has been a notable example of why self-funded health plans make sense for so many employers.

There are numerous advantages to moving from a fully-funded health plan to a self-funded plan – customized plans, control over vendors, fewer taxes, and access to data, to name a few. But one of the most significant benefits is that in a self-funded arrangement, an employer does not pay based an estimated number of claims, but rather pays only on actual claims filed.

Since the beginning of the pandemic and the resulting shutdown, medical claims have dropped across the country. There are a number of reasons for this, including a suspension of elective procedures in many states, hesitation to pursue treatment when hospitals have active COVID patients, and in general people staying home.

Employers with self-funded health plans have experienced considerable cost savings because they are paying only actual claims, which have dropped to substantially from what would be estimated in a ‘normal’ year.

Learn more about why self-funding might be the right arrangement for your business by speaking with your contact at Consociate Health today.

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Celebrating Our 25th Anniversary

November 20, 2020

2020 marks our 25th anniversary! Founded in Decatur in 1995 by Danny R. Reynolds, Consociate Health is a Third Party Administrator (TPA) that administers employee benefit programs, including claims administration, for employers and members in 48 states. As industry innovators, we have been recognized in medical and Flexible Spending Accounts (FSA) administration, health management, wellness program initiatives, and Affordable Care Act (ACA) compliance and consulting.

Consociate Health has grown to 80 employees today with staff in two Illinois locations, along with Indiana, Michigan, Missouri, Tennessee, and Florida. Consociate Health currently serves approximately 75,000 covered lives for 235 employer groups (Medical and FSA). In 2019, nearly $500 million in medical claims were processed with a 99.77% financial dollar accuracy rate, well above the industry average.

Consociate Health has been working diligently to address the extraordinary escalation of healthcare costs by partnering with our clients to develop custom and comprehensive care management programs. Consociate Health works with clients on medical plan design and cost containment opportunities including Wellness Programs, Custom Precertification, Utilization Review, Chronic Disease Management, Cancer and Dialysis Claim Management, Predictive Modeling and Pharmacy Benefit Management. Consociate’s goal is to become a partner in managing an employer’s healthcare budget and improving the health and productivity of their employees. We look forward to the next 25 years!

Read our latest newsletter.

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HSA/HDHP Limits Increase for 2021

June 17, 2020

On May 20, 2020, the IRS released Revenue Procedure 2020-32 to provide the inflation-adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) for 2021. The IRS is required to publish these limits by June 1 of each year.

These limits include:
• The maximum HSA contribution limit;
• The minimum deductible amount for HDHPs; and
• The maximum out-of-pocket expense limit for HDHPs.
These limits vary based on whether an individual has self-only or family coverage under an HDHP.

Eligible individuals with self-only HDHP coverage will be able to contribute $3,600 to their HSAs for 2021, up from $3,550 for 2020. Eligible individuals with family HDHP coverage will be able to contribute $7,200 to their HSAs for 2021, up from $7,100 for 2020. Individuals who are age 55 or older are permitted to make an additional $1,000 “catch-up” contribution to their HSAs.

The minimum deductible amount for HDHPs remains the same for 2021 plan years ($1,400 for self-only coverage and $2,800 for family coverage). However, the HDHP maximum out-of-pocket expense limit increases to $7,000 for self-only coverage and $14,000 for family coverage.

Highlights

  • Each year, the IRS announces inflation-adjusted limits for HSAs and HDHPs.
  • By law, the IRS is required to announce these limits by June 1 of each year.
  • The adjusted contribution limits for HSAs take effect as of Jan. 1, 2021.
  • The adjusted HDHP cost-sharing limits take effect for the plan year beginning on or after Jan. 1, 2021.

Important Dates

January 1, 2021

The new contribution limits for HSAs become effective.

2021 Plan Years

The HDHP cost-sharing limits for 2021 apply for plan years beginning on or after Jan. 1, 2021.

Action Steps

Employers that sponsor HDHPs should review their plan’s cost-sharing limits (minimum deductibles and maximum out-of-pocket expense limit) when preparing for the plan year beginning in 2021. Also, employers that allow employees to make pre-tax HSA contributions should update their plan communications for the increased contribution limits.

HSA/HDHP Limits

The following chart shows the HSA and HDHP limits for 2021 as compared to 2020. It also includes the catch-up contribution limit that applies to HSA-eligible individuals who are age 55 or older, which is not adjusted for inflation and stays the same from year to year.

For more information, contact Consociate Health today.

 

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The Families First Coronavirus Response Act (FFCRA)

April 8, 2020

The Families First Coronavirus Response Act (FFCRA) requires certain employers to provide employees with expanded family and medical leave for specified reasons related to COVID-19. The attached HR Compliance Bulletin includes guidance issued by the DOL regarding employee expanded family and medical leave rights under the law.

Also, attached is a HR Compliance Bulletin that contains questions and answers issued by the DOL to provide compliance assistance to employers and employees on their responsibilities and rights under the FFCRA.

Under the FFCRA, covered employers must post a notice of the FFCRA requirements in a visible place on its premises. The attached HR Compliance Bulletin includes FAQs issued by the DOL on this notice requirement. The required notice poster is, also, attached for your use.

If you have any questions, please contact us at customerservice@consociate.com.

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The CARES Act and Health Plan Coverage

April 3, 2020

On March 27, 2020 President Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) into law to provide $2.2 trillion in federal funding to address the coronavirus crisis.  The new law also includes several provisions affecting health plan coverage. The attached Compliance Bulletin summarizes the CARES Act’s changes for health plans.

The attached Know Your Benefits article explains how the CARES Act repeals the Medicine Cabinet Tax provision of the Affordable Care Act, expanding the list of qualifying expenses that can be purchased with Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs).

FSA/HRA/HSA Plan Changes to allow Tax-Free Coverage for OTC Drugs and Menstrual Products

Effective Jan. 1, 2020, the CARES Act provides that OTC medicines are qualifying medical expenses that may be paid for (or reimbursed) on a tax-free basis by a health FSA, HRA or HSA. This change eliminates an ACA provision that required individuals to have a prescription for an OTC medication (except insulin) to pay for it on a tax-free basis with their health FSA, HRA or HSA.

In addition, effective Jan. 1, 2020, menstrual care products are qualifying medical expenses that can be paid for (or reimbursed) on a tax-free basis by a health FSA, HRA or HSA. Menstrual care products include tampons, pads, liners, cups, sponges or similar products used by individuals with respect to menstruation.

These changes are discretionary for employers that sponsor health FSAs and HRAs. However, because HSAs are individual accounts, and not employer plans, employers do not control how HSA funds are used.

What if Consociate Health Administers my FSA/HRA/HSA Benefits?

Consociate Health is ready to process any manual claims submitted (when a Debit Card is not used) for reimbursement on these products. We are also setup behind the scenes with our Debit Card Vendor to make sure your consumers can begin to utilize their benefits debit card for the purchase of these products as soon as possible.

Please Note:  Your members can not yet purchase OTC or menstrual care items using their benefits debit card. Consociate Health is ready, but several steps must be taken by merchants before the members will be able to use their benefits debit card at the Mass merchandiser and Pharmacy locations.

The below steps will need to occur before the benefits debit card will be able to be used for the newly eligible items.

  • IIAS Standards (SIGIS) board must first adopt these new standards and publish the revised Eligible Product List.
  • Merchants (i.e. Walmart, Walgreens, CVS and smaller drug and grocery stores) must update their systems with the new Eligible Product List.

We expect merchants to start adopting changes for the OTC items around April 15th. However, merchants may take anywhere from 4-6 weeks to complete the changes that will allow consumers to purchase these items with a card swipe. All of this will undoubtedly result in inconsistencies in shopping experiences for the consumer (i.e. OTCs may be allowable at one merchant, but not another) as the industry makes this important transition. We expect any issues like this to be temporary and resolved in a fairly short timeframe.

If consumers try to purchase these items with their benefits card before the systems have been updated and the transaction is denied, they can submit a claim for reimbursement.

If you have any questions, please contact us at customerservice@consociate.com.

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Making Sense of Your Prescription Drug Plan

Your employer offers a prescription drug plan, but do you know how to use it? Do you understand the benefits the plan provides, and how the prescription drug choices you and your doctor make can affect you, your family and your employer?
Understanding your drug plan and prescriptions can help you save money, stay healthier and receive greater satisfaction from your health plan.

Prescription Drugs and Your Employer

Employees who understand their benefit plans make more informed choices about the medical services they receive, and can reduce the amounts they are required to pay out their own pockets by choosing less expensive alternatives. Making cost-effective choices also helps keep employer costs down.

Prescription drugs are one of the most costly elements of employer-sponsored health plans. Helping reduce costs for your employer can lead to lower premium increases in the future and the continued availability of your health and prescription drug plans.

Generic vs. Brand Name Drugs

Choosing generic drugs over the brand name is generally less expensive. However, many people question whether generic drugs are as good, effective or safe as their brand name counterparts. The perception is that since many generic items found in grocery stores tend to be of lesser quality, the same must be true for medications.

Fortunately, in the case of prescription and over-the-counter (OTC) medications, generic substitutes are the equivalent of brand name drugs. The U.S. Food and Drug Administration (FDA) regulates the chemical equivalency of generic drugs to ensure they are just as safe and effective as the brand name drugs they mimic.

Not all medications have generic equivalents, particularly newer drugs with patent protection. After the patent expires on a brand name drug, other pharmaceutical companies can manufacture that drug under a generic name. Generic drugs are usually less expensive than the brand name versions, due to lower development and marketing costs. Consistently choosing generics over brand name drugs, when available, is one of the best strategies for saving money on your prescription drugs.

Follow Directions Completely

Nearly half of all dispensed prescriptions are taken inappropriately. These “non-compliant” patients are doing one or more of the following:

  • Taking medications at the wrong time of day
  • Under-dosing or stopping too soon
  • Sharing prescriptions with others
  • Mixing medicines with alcohol, tobacco, certain foods or other drugs
  • Failing to fill or refill prescriptions altogether

Is Your Drug Plan Hard to Swallow?

Not taking your prescription in accordance with your doctor’s orders can result in serious health complications. Taking the incorrect dosage, or not completing a full course of antibiotics, for example, can worsen your condition. Poor patient compliance has historically cost billions of dollars in medical bills, resulted in lower quality patient health and even caused unnecessary deaths.

Talk to Your Doctor

The best way to ensure that you know all you can about a drug you have been prescribed, and its generic equivalents, is to talk openly with your doctor. Below are some suggested questions that you may want to ask.

  • Is there a generic substitute for this drug available?
  • Are there any drug interactions that I should be aware of?
  • Does this medication cause any side effects?
  • If I forget to take a dose, what should I do?

Also, make sure your doctor knows about any previous reactions you have had to medications. In addition, be sure to call your doctor immediately if you have any problems or adverse side effects from a new prescription.

Choosing generic drugs when available, following your doctor’s and pharmacist’s instructions fully, and talking openly with your doctor will help you make the most of our prescription drug plan. These strategies can help you not only save money on the prescription itself, but also avoid future health problems that could be costly.

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HHS Increases Civil Penalties for HIPAA Violations

March 31, 2020

The Department of Health and Human Services (HHS) recently published a final rule increasing the civil monetary penalties for violations of laws enforced by HHS, including the HIPAA privacy and security rules. HHS is required to adjust these penalties for inflation each year to improve their effectiveness and maintain their deterrent effect. The new penalty amounts are effective for penalties assessed on or after Jan. 17, 2020.

2020 HIPAA Civil Penalties

HHS may assess civil penalties when it discovers a HIPAA violation. The penalty amount depends on the facts involved.

  • For violations where the covered entity does not know about the violation (and by exercising reasonable diligence, would not have known about the violation), the penalty amount is between $119 and $59,522 for each violation.
  • If the violation is due to reasonable cause, the penalty amount is between $1,191 and $59,522 for each violation.
  • For corrected violations that are caused by willful neglect, the penalty amount is between $11,904 and $59,522 for each violation.
  • For violations caused by willful neglect that are not corrected, the penalty amount is $59,522 per violation, with an annual cap of $1,785,651 for all violations of an identical requirement.
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