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 2020-45opens PDF file (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.
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.
• 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 firstname.lastname@example.org new email.
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.
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.
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.