TASC Landmines for HSAs, FSAs, and HRAs

Recently, MIBS hosted a seminar presented by Nancy Dantzman, Vice President at TASC and Craig Sayers, MIBS’ regional director with TASC. It was a very informative and lively event.

Nancy jumped right in discussing Flexible Spending Accounts (FSA) which offer variability when setting them up.

FSA Flexible Spending Account

An FSA is an account employees can use to pay certain out-of-pocket health care costs not paid by other health plans, pretax.

The FSA can be set up with the employer and/or the employee contributing. When employees contribute pretax, this lowers the payroll taxes that the employer has to pay so both parties experience savings on their tax liability.   In groups with high employee contribution, the employer’s payroll tax savings may be enough to pay for any administration charges for the FSA.   Employers are not required to make contributions but certainly can.

The IRS sets the contribution limit each year and the limits for 2019 are:

FSAs are known for their use it or lose it provision, however, groups may offer participating employees more time through either a carryover option or the grace period option to use any funds still in the account.

In the carry over option, the employee can carry over $500 to the following plan year.

With the grace period option, the employee has until two and a half months after the end of the plan year to incur eligible expenses.

Types of FSAs

Health Care or General Purpose FSAs are very popular. Employees elect at the beginning of the year what they want to contribute for the plan year.

Qualified Medical expenses include:

• Medical costs not paid by a health plan including, deductible, coinsurance, and copays
• Medication or over the counter drugs and vitamins, as long as there is a prescription and medical diagnosis
• Dental and Vision costs not covered by another plan
• Medical supplies with prescription and diagnosis

The key to making vitamins, over the counter medications and supplies eligible, is to understand that these items cannot be just for improving your general health.   There needs to be a specific condition that is being treated by the item and it needs to be prescribed by a doctor.

Dependent Care FSAs are used to pay eligible dependent care services for children younger than 13 and adult dependents incapable of caring for themselves. This is an annual election so members need to estimate how much they will contribute for the year.

Transit FSAs offer a separate account that employees can use to pay their transportation costs pretax.   This is a monthly election and if they do have money left at the end of the year, those funds can roll over into the next year as long as they are enrolled in the plan. Because it is monthly, members can change their contribution monthly.

Limited purpose FSA can only be used for eligible dental and vision expenses not reimbursed by another plan.   This FSA is the type normally seen with an HSA because an HSA member cannot have a general purpose FSA because the HSA account can pay for eligible medical expenses.

Each type of FSA is a separate account and money cannot be transferred between accounts.

Who can use the FSA account?

• Employee and spouse
• Dependents claimed on your tax return

Who is eligible to participate in an FSA?  Employees who are eligible to enroll in the group’s health plan. The group must have a group health plan in place to set up the FSA.

Members participating in the FSA need to keep their receipts because the IRS requires substantiation for reimbursement.

Discrimination Testing is also required annually.

If over 100 employees are enrolled, the group is required to file 5500 forms.

HRA Health Reimbursement Arrangement

An HRA is an employer funded plan that reimburses employees for medical expenses not covered by the group’s insurance. Employer contributions are considered tax deductible to the employer.

Setting up an HRA offers a lot of choices in how the group wants to set it up. Example, the group elects a $5000 deductible, they can customize what portion of that deductible will be reimbursed.

• First $2500 of deductible is employee’s responsibility, any claims above $2500, the employer will reimburse.
• Employer reimburses the first $1000, employee is responsible for claims above $1000 up to $4000 and then employer will reimburse for claims above $4000 up to $5000.

If a group offers more than one health plan to their employees, they can limit which plan the HRA will reimburse. Example, the group offers a $500 dollar deductible plan and a $4000 deductible plan and can put the HRA on the $4000 deductible plan but not the $500 deductible plan.

Employees will only be reimbursed for qualified medical expenses and will need to provide their EOB to substantiate the request for reimbursement.

HRAs are considered a medical plan so they require their own SBC. If you use TASC, TASC will create this SBC for you.   If you do not use TASC, the group will still need to make sure they have an SBC for their HRA.

HSA Health Savings Account

When an employee is enrolled in a qualified high deductible plan, they can open an HSA bank account. Any money the insured deposits into the account, is a line item deduction on their personal tax return. The IRS sets the limits for this account and these can change on an annual basis.

Limits are listed below:

You cannot pair an HSA with an FSA covering the same medical expenses. You can pair an HSA with a limited FSA because the limited FSA only covers dental and vision.

At the end of the seminar, Nancy stressed repeatedly, never, never, never Google HSA information. Currently, there are a lot of proposals and possible changes for these plans so use your MIBS or TASC resources to get answers to your questions regarding HSAs.

TASC Resources

Craig Sayers concluded the seminar with some very exciting new changes with TASC. TASC is introducing their Universal Benefit Account which uses one debit card for all accounts offered.   The TASC card is smart enough to know which account to draw funds from at the point of purchase.

Accounts available

• FSA

• HRA

• HSA

• Dependent Care FSA

• Transit account

• Parking account

• Bike Account

• Miscellaneous accounts per group’s request (examples: work clothes, workplace tools, home office, professional business, cobra premium collection, state continuation premium collection, etc.)

Enrolled members have access to an online website via computer, tablet or smart phone to see balances of all of their accounts. TASC sets this up and manages it for the group.

Members can do the following:

• Can set up Card Decline Protection with a link to their bank account and if there are not enough funds in their TASC card, it will draw funds from their bank account up to a pre-authorized amount set by the member.

• TASC Wallet makes it easy to manage their TASC card no matter where you are. They can request a new card, lock a card that is missing, and even find a nearby ATM.   They can also securely store and access digital copies of your other benefit cards as well as receipts and bills related to your benefit plans.

• Picture to Pay allows members to take a picture of a medical bill and submit via the TASC app. TASC will figure everything out from the image and pay the provider using the appropriate account.

• Enrolled members will automatically receive Identity Theft Protection of $25,000 for them and their dependents.

TASC does have products that are not included in the Universal Benefit Account including:

• Compliance

• IL Continuation

• Cobra

• Retiree billing

• FMLA

• ERISA

• Payroll

Understanding how to use these products can give agents creative ways to adjust group benefits to fit the needs of your client. In today’s work environment, retaining employees goes beyond just their medical benefits. Agents who understand what their employers want to provide for their employees and how to make this easy for the employer, will definitely stand out from their competitors.

Examples:

A hair salon chain created an account that provided money quarterly for their stylists to sharpen their tools.

One company created an account to give a uniform allowance.

Companies that hire employees who work outside of the business location, can offer accounts to pay for office supplies and/or transportation costs

One company, in order to attract new graduates, created an account to help pay student loans.

Agents who use TASC, bring their clients the most complete compliance protection as well as creative solutions for specific needs to retain those very important employees. TASC will make sure the group’s selected products are set up correctly and make our agents look good. Also, TASC is always up to date on the most current changes in the law (rules are known to change), so using TASC will keep your clients compliant with those changes.

Finally, agents referring their clients to TASC will receive a commission of 15% for the first year and 7.5% on renewal for products purchased with TASC.    

If you have any questions, please contact your assigned Customer Service Representative.