The IRS Announces New Guidelines for 2020
You can read all about the new IRS guidelines regarding mid-year changes to health and dependent care Flex Spending Accounts (FSAs) here. Additionally, we’ll break it down as to what it means for you and your employees who’ve already made 2020 FSA elections. Furthermore, here is another great article about this topic on Forbes.
Generally, employees make their FSA elections at the end of the previous year for the coming new year. Once these elections are made, typically they cannot be changed mid-year. In the words of Mike Barrett, we advise folks to consider the following when planning new year elections:
“A rearview mirror is the best crystal ball”
FSAs are really a use it or lose it type of account. Although, employers can elect to allow for a short grace period or a small carryover each year but not both. If employees misjudge how much healthcare they’ll consume in the coming year, they may, at worst, lose some money or miss out on some tax advantages. All in all, though, FSAs are a great way to pre-fund a tax advantage account for healthcare and dependent care expenses.
However, due to the COVID-19 pandemic, a lot of things have changed! This includes the need for dependent care and even healthcare. Fortunately, the IRS has taken FSAs into consideration.
Depending upon whether your employees now realize they are overfunded or underfunded with their health and/or dependent care FSAs, they can make the appropriate mid-year change.
What Can Be Changed?
Here are all the things that employees can change mid-year to FSAs:
- Make a new election to employer-sponsored FSA on a prospective basis
- Decrease FSA election on a prospective basis
- Increase FSA election, within the 2020 FSA contribution limits, on a prospective basis
- Revoke 2020 FSA election amounts on a prospective basis
- Employers may amend their § 125 cafeteria plan to have an extension of time for incurring claims. This is for plans which either have the grace period ending in 2020 or a plan year ending in 2020.
The last bullet point deserves a little more of an explanation. Typically, employers may allow either, but not both, a carryover or a grace period for unused FSA funds. The current carryover limit is $550 and the current grace period is up to 2 months and 15 days. The IRS is now allowing an extension of time for incurring claims to be available to both § 125 cafeteria plans with a grace period and a carryover.
The IRS lists some practical examples in their publication (pages 10 & 11) that help clarify different scenarios.
Changes for Health Savings Accounts (HSAs)
To be eligible to contribute to an HSA, one must be enrolled on a high deductible HSA qualified plan.
We’ve all seen an increase in telemedicine appointments lately! Typically, telemedicine arrangements provide coverage before the minimum annual deductible is met which would disqualify a plan from being HSA qualified. However, section 3701 of the CARES Act amended § 223 of the code to temporarily allow HSA-eligible plans to cover telehealth and other remote services.
The COVID-19 pandemic is affecting many different aspects of the healthcare world. We will continue to write about these changes as they evolve.
BBG has a long history of many of its employees working from home. Recently, the rest of the team has joined in this practice. As a result, some of the newbie home workers needed tips from our more veteran home workers!
This blog post is a compilation of advice from the BBG workers who have been working from home for years. I was actually surprised by some of these suggestions but as I’ve transitioned myself into this world of remote work, I’m appreciating and embracing the tips. We hope you find these useful as we all do our part to flatten the curve of this COVID-19 pandemic!
BBG’s Best Tips on Working from Home
#1 Create a Healthy Workspace at Home
This is the number one suggestion when working from home. If possible, it’s advisable that your home workspace be separate from other spaces that you typically use for relaxing. Additionally, you want it to be one that is free of distractions so that you can stay on task. Ideally, a room created as an office will provide this. However, if that’s not possible consider creating a separate space in a corner of a room.
A particular co-worker said that keeping your personal phone away from your workspace will aid in limiting distractions. While this may not be possible if you need to make work calls from your cellphone, we do advise turning off notifications from social media, email and other phone apps that may be a distraction.
Obviously, you’ll want your home workspace to be comfortable and well-lit so here are a few resources we’ve found.
A BBG colleague who has been doing this for years, recommended this large electric foot warmer heated mat if your space is cold and/or you have the tendency to be cold. This is a nice way to experience mild radiating heat.
Working in a well-lit area, especially one with natural light is helpful for mood. When natural light is not possible, having lights that are easy on the eyes and can be adjusted for brightness is useful. Many of us use this lamp we found on Amazon.
#2 Dress for Work
Working in pajamas and bathrobes is oh so tempting!! I may or may not be guilty of doing this myself. 😉
However, our colleagues with veteran experience of working from home recommend starting the morning out by getting dressed just as you would if you were going into the office. One colleague said, “yes it’s nice to be comfortable but it may also affect your work.”
If your normal office attire is highly professional such as suits and ties, you probably would want to relax it to a more business casual attire at home.
Maybe you can even relax from business casual to something a bit more comfortable but the point is to get out of those PJs, shower and get dressed!
#3 Keep Communicating with Colleagues
It’s easy to feel isolated from your co-workers while working at home. That’s why it’s more important than ever to stay in touch with them when you work remotely. One colleague said, “sometimes you get the feeling ‘they already know what I am doing.’ But, in fact, they just need to hear from you to confirm that.”
At BBG many of us have started using Microsoft teams as a way to stay in touch.
There is no water cooler talk while working remotely so it’s important to create a space for open communication. Another option, which BBG uses for client interaction, is Zoom video conferencing. Amazingly they are offering expanded support during the COVID-19 pandemic.
#4 Take Breaks & Stock up on Healthy Snacks
Long periods of sitting still and working at a desk can produce lethargic feelings. Take appropriate breaks to get up to stretch and move.
A couple of colleagues mentioned that they are snacking more while working from home because it’s available. A colleague who has been doing this for some time gave a great suggestion of stocking up on healthy snacks such as fruits and vegetables. Fuel your brain rather than draining it!
Another colleague suggested drinking more water. It’s easy to sit at a desk and not be thirsty so proactively drinking water is a good habit to build.
Well, this one could overlap with the suggestion to not work in your PJs but BBG’s main concern here is that our remote workers actually work too much. Dedicated workers who have home offices need to practice boundaries and know when to turn off work for the day. It’s advisable to still keep normal working hours when working at home. Actually, it becomes even more important because the separation from home and office is a short walk.
One colleague stressed this point by saying, “DON’T think that just because you are home you need to work 24/7.”
Healthy boundaries between work and home life become even more important working remotely so setting up strick hours from the start is the way to build this habit.
#6 Have a Good Co-Worker
This my favorite tip and unfortunately one that I cannot embrace in my apartment, but…how precious is that face?!
The BBG colleague who made this suggestion was kind enough to supply a picture of his co-worker.
Um. if I had this face looking up at me during the day, I would be greatly comforted.
BBG wrote a post in the past about how dogs can play a role in healthcare but how about them playing a role in creating a healthy office environment?
I’m certain that pets all across the world are happy that their masters are now working from home. After all, they are pack animals and thrive when they are with people of other pets. Additionally, humans thrive in a community so enjoy this time of sharing offices.
We would love to see pictures of your office companions so please share them with us!!
#7 Practice Safety with Your Devices
Here is a great article from the Tampa Day Times about how to keep your devices safe. The number of people now working from home has grown exponentially which means we all may be vulnerable to attackers who want to take advantage of this. As this article outlines here are some ways to stay safe:
- Update your software
- Check your router password
- Use strong passwords
- Beware of Coronavirus-themed phishing emails
Again, check out this article to read more about this.
In closing, we are discovering this takes some self-discipline. The key to building healthy habits is to start implementing them form the beginning. Stay in touch and encourage one another; we are all in this together!
Here are some other great articles we’ve read around the web on this topic:
Lastly, if BBG can further assist you with more granular details on the following, please reach out:
- Communication software (phones, extensions, instant messaging)
- Habits (how we keep in touch deliberately)
- How our “work from home colleagues” set up their lives to remain engaged
- How to be attentive to separating work/home-worlds and be able both to “plug-in” and “un-plug”
- We can share limitations and potential pitfalls that we work to eliminate.
- How we train our dogs not to bark while we are on the phone…just kidding on that one 😉
Every year the Internal Revenue Service (IRS) announces new contribution limits for tax-advantaged accounts. Many of these accounts are indexed for inflation so the limits rise year over year. This article is geared at educating you about the new contribution limits for two tax-advantaged accounts in relation to healthcare.
Flex Spending Account (FSA) 2020 Limits:
FSA limits have been announced for 2020. If you have health insurance through your job, you can utilize an FSA for using pre-tax money to cover your out-of-pocket healthcare expenses. FSAs are more of a use it or lose it type of account so it’s best to estimate the amount of healthcare you typically consume before making your elections.
The IRS announced on October 31, 2013, that employers would be allowed to either offer a carryover or a grace period for FSAs effective in 2014. If you have access to an FSA through your employer we advise you check with them on whether or not they offer one of the following options:
- Two and a half months grace period in the new year to use up the previous year’s dollars
- $500 carryover to use in the new year
Here are the health FSA contribution limits for 2020 compared to 2019 and 2018:
Dependent care FSA limits are not indexed for inflation and so they remain at:
Health Savings Account (HSA) 2020 Limits:
If you are on an HSA qualified plan you are able to contribute to an HSA. If you qualify, HSAs have several benefits over FSAs:
- The contribution limits are higher
- You never lose the money
- You can invest HSA funds in mutual funds
Here are the HSA contribution limits for 2020 in comparison to 2019 and 2018:
We realize healthcare costs continue to increase so any opportunity to save on taxes should be considered. Please check with your employer’s human resource department to confirm which of these accounts you may be eligible for.
Theme pic by Emma Matthews Digital Content Production on Unsplash
‘Tis the season for open enrollment in the world of health insurance! Open enrollment for Medicare 2020 has already begun (October 15th – December 7th, 2019). Additionally, individual open enrollment is underway (November 1st – December 15, 2019). Lastly and most important to this article is the fact that many employers are in the midst of their group health plan open enrollment. Many group plans renew January 1st so it’s a busy time of year for employers, brokers, and insurance carriers.
This article is designed to assist employers in knowing what to focus on during this busy season.
The most important thing we need to focus on is the premiums that you pay to the insurance carriers. We know this is a huge expense and we work with you to keep this competitive to what’s available in the marketplace.
Most of the January 1st group health insurance renewals are out. Perhaps your increase is palatable enough to forgo shopping and just renew as is. However, that is more the outlier than the norm. Typically, it’s best to assist us with the necessary data needed in order to shop your policy with the competing carriers in the marketplace. By now, your account managers at BBG have been working hard to gather the necessary data for shopping. These items include:
- Current Census
- Average Total Number of Employees (ATNE). This is based on how many total employees you employed each month and dividing by 12. Estimates are used for the remaining months of the year.
- Names of your employees who are eligible but waive off the plan
- The reason they are waiving
- If you are a 51+ group we’ll need what is called an Employer Risk Assessment Form (ERAF)
The above will allow us to obtain street rates in the small group market place and potentially underwritten rates in the 51+ marketplace. Street rates are off the shelf rates that are based on your group’s census alone. They are still subject to underwriting but give us a good benchmark to know if we should pursue underwritten rates
Medical Health Questionnaires (MHQs)
The dreaded MHQs need not be so dreaded anymore! Most insurance carriers prefer to receive electronic MHQs via programs like FormFire. Some carriers now require FormFire MHQs. BBG has dedicated team members who can assist your employees in completing this process. We’ve worked hard this year to streamline the process to allow us to help a larger number of you in a shorter amount of time.
So when are MHQs needed? This answer is different depending upon what market segment you are in…
1-50 Small Groups
If you have 50 and under total employees, FormFire MHQs will be needed to obtain underwritten rates from any competing carriers. However, BBG is all about efficiency so we first obtain street rates to determine if this is even worthy of your time. If we determine that it is then we highly suggest proceeding with FormFire.
The only exception here is when we obtain community rates. Community rates are different from underwritten rates and are typically more expensive than their underwritten counterparts. We’ve been finding that mostly micro groups and other groups with certain characteristics that may adversely impact underwriting are served best by community rates.
51-99 Mid-Size Groups
If you have between 51-99 total employees some carriers require MHQs to release any underwritten rates. However, there are a few carriers who will release underwritten rates if your renewal is <25% and you’ve completed an ERAF.
100+ Large Groups
Typically MHQs are not needed in the 100+ market segment; although, there are exceptions where MHQs can be helpful. Your account manager will assist to know when this applies to you.
When Not to Shop the Market
There are only two instances when it makes sense to not shop the market. 1.) If you are in the 51-99 market and your incumbent carrier asks for your “no shop” number. A no shop number is an increase you are willing to accept in agreement for not shopping.
In our experience, if a carrier is asking for your “no shop” number, they are willing to play ball and negotiate. If you are not sure what a reasonable no shop number is, talk to your account manager and they can assist you with this. However, you can always be aggressive and ask for a flat increase. What’s the worst they can say? No? If the carrier cannot meet it, we can always shop your policy.
2.) Or if you are in the 1-50 market your incumbent carrier may be able to provide some rate relief in an agreement to not shop your policy. The amount of rate relief available in the small group market is much smaller but if you received a favorable renewal a few points of rate relief may be enough for you to decide to stay put. Your account manager and BBG will let you know if this is a feasible option for your specific group.
At BBG, we are fully aware that the most important work we do is to assist the employers we work for in keeping healthcare costs and the coverage your employees receive competitive to what’s in the marketplace. The most important benchmark number we look at is your average cost per employee per year. This number is found by taking your total costs and dividing by your total employees enrolled in the health plan. We realize your enrollment can fluctuate and by looking at this number we are looking at a comparable number year over year.
Open enrollment is always a busy time of the year but the exercise of shopping, completing FormFire, and allowing BBG to negotiate with the carriers on your behalf is the important work. This work allows you to maintain strong benefits year after year.