On May 28, 2019, the Internal Revenue Service (IRS)
announced increases to health savings account (HSA) limits for 2020. The annual
limit on deductible contributions will increase by $50 to $3,550 for
individuals with self-only coverage. For
all other coverage levels, the limit will increase by $100 to $7,100.
HSAs may be used only in conjunction with a high-deductible health plan (HDHP). For 2020, the minimum deductible to qualify as a HDHP will also increase by $50 for individuals with self-only coverage and $100 for all other coverage levels to $1,400 and $2,800, respectively. HSAs allow participants to make pre-tax contributions, reducing their taxable income for the year. These contributions can be invested and grow tax-free. HSAs are then used for out-of-pocket qualified medical expenses tax-free.
Annual out-of-pocket expense limits will increase as
well. The limit for individual coverage
will increase to $6,900 (from $6,750 in 2019) and family coverage limit will
increase to $13,800 (from $13,500 in 2019).
For more information, please refer to the IRS Bulletin at https://www.irs.gov/pub/irs-irbs/irb19-22.pdf.
The ACA established the Patient Centered Outcomes Research Institute (PCORI) to fund research that can help patients and those who care for them make better-informed decisions about the healthcare choices they face every day, guided by those who will use that information. The research is funded in part by health insurers and sponsors of self-insured plans through PCORI fees.
Generally, the PCORI fees apply to group health plans (including self-insured plans). The IRS chart found HERE describes which health plans are subject to the fee. Those health plans are required to report and pay fees annually using IRS form 720. Form 720 is due July 31, 2017 for plan years ending in 2016 along with payment in the following amount:
- $2.17 per covered life for plan years ending between January 1, 2016 and September 30, 2016
- $2.26 per covered life for plan years ending between October 1, 2016 and December 31, 2016
There are three methods for calculating the number of covered lives:
- Actual Count Method – Calculate the lives covered for each day of the plan year and divide by the number of days in the plan year.
- Snapshot Method – Add the lives covered on a date during the first, second, or third month in each quarter, or an equal number of dates for each quarter, and divide the total by the number of dates on which a count was used. There are two methods for counting family members: Count the actual lives covered on the designated date; or Count the participants on the designated date and multiply by 2.35.
- Form 5500 Method – Add the participants at beginning of year and end of year as reported on the Form 5500 for the plan year (this method may be used only if the Form 5500 is filed no later than the due date for the fee imposed for that plan year).
For more information, click HERE for a question and answer page provided by the IRS.