IRS Releases HSA Contribution and Coverage Limits for 2019

The IRS recently released Revenue Procedure 2018-30, which provides the 2019 cost-of-living contribution and coverage adjustments for HSAs, as required under Code Section 223(g). Specifics are below.

Annual HSA Contribution Amounts

  • 2018
  • $3,450
  • $6,900
  • $1,000
  • 2019
  • $3,500
  • $7,000
  • $1,000
  • Coverage Levels
  • Individual
  • Family
  • Catch-up

Annual Maximum Out-Of-Pocket Limits for HDHP

  • 2018
  • $6,650
  • $13,300
  • 2019
  • $6,750
  • $13,500
  • Coverage Levels
  • Individual
  • Family

Annual Minimum Deductible Amount Limits for HDHP

  • 2018
  • $1,350
  • $2,700
  • 2019
  • $1,350
  • $2,700
  • Coverage Levels
  • Individual
  • Family

Click here for more information.

HSA Contribution Limit Adjusted to $6,900 for 2018

The Treasury Department and the IRS recently decided, “in the best interest of sound and efficient tax administration,” to adjust the 2018 annual HSA contribution limit to $6,900 for eligible individuals with family coverage under an HDHP, per Rev. Proc. 2017-37.

Individuals who receive a distribution from an HSA oF an excess contribution (with earnings) based on the $6,850 deduction limit published in Rev. Proc. 2018-18 may repay the distribution to the HSA and treat the distribution as the result of a mistake of fact due to reasonable cause under Q&A-37 of Notice 2004-50, 2004-2 C.B. 196.

Alternatively, individuals who receive a distribution from an HSA of an excess contribution (with earnings) based on the $6,850 deduction limit published in Rev. Proc. 2018-18 and does not repay the distribution to the HSA may treat the distribution in accordance with section 223(f)(3), which describes the treatment of excess contributions returned before the due date of return. Thus, the excess contribution generally would not be included in gross income under section 223(f)(2) or subject to the 20 percent additional tax under section 223(f)(4), provided the distribution is received on or before the last day prescribed by law (including extensions of time) for filing the individual’s 2018 tax return.

 

Click here to read Rev. Proc. 2018-27.

What’s Old is New Again: Recycling in the Individual Market

Luke Boemker

Luke Boemker | Director Enrollment Center/Business Development

The title of one of my favorite movies, Back to the Future, seems apropos when compared to today’s individual health insurance market. With the Affordable Care Act (ACA) being anything but affordable, many consumers are looking for alternative options to cover themselves and their families. Monthly ACA insurance premiums can cost more than an average mortgage payment so other options have to rise up from the grave to give consumers access to “affordable” health insurance.

Before ACA, we had medical underwriting, we had prescreens, we had limited coverage for maternity, and we had waiting periods on pre-ex. These are many of the reasons the ACA was created—to eliminate screening questions that were seen as unfair to a consumer with medical conditions. Granted, pre-ACA coverage was not the best either, but it was a fraction of the cost of current ACA coverage. Pre-ACA, networks were also much more extensive, with the majority of options today consisting of very limited HMO or EPO choices.

On April 2, 2018, the great state of Iowa made national news in their attempt to create Individual association-style plan offerings. The Iowa Farm Bureau is looking to recreate coverage options that consumers had before the ACA. However, according to a recent Washington Post article, such plans “sponsored by a nonprofit agricultural organization…shall be deemed not to be insurance.” Rates and coverage options have not yet been approved, but it is difficult to believe that there will not be some limitations that will make these plans available only to those on the healthier end of the spectrum.

The Back to the Future opportunity is twofold. On one hand, short-term plans are beginning to resemble pre-ACA coverage. If the laws change and allow short-term back to a nearly annual, renewable contract, this market will explode for the young, invincible, and healthy population.

However, there are tradeoffs with coverage options. Most short-term plans have PPO networks, which are significantly larger than what can be found with ACA plans. On the flip side, the coverage on the short-term plans is not as extensive as one might find in the ACA. Benefits are not as rich from a copay or medication standpoint and short-term plans do not usually cover maternity, which can be an issue for younger families. Anyone with medical conditions or significant health care needs may not qualify for short-term plan offerings, while ACA plans are guarantee issue.

Let’s look at a couple illustrations that show sample price comparisons for 21, 43, and 64-year-old non-smokers with short-term versus ACA options, using Franklin County (Columbus, OH) as the test case. These are the lowest prices available in which the out-of-pocket costs are closely aligned.

  Short Term* ACA**
Age Premium
21 $      84.73 $      355.47
43 $     106.16 $      482.38
64 $     284.53 $    1,066.41
*$2500 Deductible, 20% Co-Insurance, $7500 MOOP
**$2400 Deductible, 20% Co-Insurance, $7350 MOOP

A 21-year-old “invincible” can purchase a middle-of-the-road short-term plan for less than their monthly cell phone bill. A similar plan offering in the ACA would compare more closely to their monthly rent or car payment. The ACA plans are averaging four times more costly than short-term coverage options in nearly all age ranges. When you annualize the premium savings for a 64-year-old consumer, you see savings of over $9,000. For those on a fixed or limited income, this is necessary money in their pocket.

When looking at sample family rates of 35, 33, 6, and 4 year olds, the price difference is even more dramatic. ACA rates, without a subsidy, are approaching, and possibly even exceeding, what a family of four would pay for their monthly mortgage and escrow payment. The rate is almost five times more expensive for ACA versus short term.

Short Term* ACA**
Ages Premium
35, 33, 6, 4 $    333.00 $        1,592.04
*$4000 Family Deductible, 20% Co-Insurance, $12,000 Family MOOP
**$4000 Family Deductible, 20% Co-Insurance, $14,700 Family MOOP

With all things being equal, it is difficult to pass up the significant monthly savings of $1,259 dollars for the family of four. Annualized savings amount to more than $15,000.

With short-term medical and association-style options potentially becoming en vogue again, one has to wonder what will become of the ACA. With many national carriers having exited the Marketplace in a majority of states, and many states with only one or two carrier options, it appears the death spiral for ACA is in full effect. Limited competition creates higher rates; higher rates drive the healthy population into alternative options. When the healthy leave the Marketplace, all that remains are those with medical conditions or those who are receiving a substantial subsidy that offsets the majority of their ACA premium.

Consumers will make health care decisions based on how it impacts them the most: their pocket book. If they can qualify medically and achieve premium savings like what is outlined in the above illustrations, more and more will flock to short-term or association-style options, like those being proposed in Iowa and potentially other states in the near future.

Like the late, great Yankee’s catcher Yogi Berra once said, “It’s like deja vu all over again.”

Questions about short-term plans? Contact your Cornerstone representative today to learn more.

Judge Grants Class-Action Lawsuit Regarding CSRs

In October 2017, the Trump administration announced they would no longer make Cost-Sharing Reduction (CSR) payments to insurers. On April 23, BenefitsPro reported that, in a win for insurers, Judge Margaret Sweeney of the U.S. Court of Federal Claims has granted a Wisconsin-based insurer’s request for class-action status.

The government has challenged the request and is expected to appeal the class action status to avoid billions in CSRs if it loses in court.

Click here for more information.

Seniors Being Targeted in New Medicare Scam

According to Butler County prosecutor Mike Gmoser, April has been designated as Prosecutor’s Senior Awareness Month.

New Medicare cards will be issued beginning April of 2018 and will no longer include the recipient’s Social Security number. Gmoser warns those with Medicare ID cards to watch out for phone calls asking them to verify their old number, which is their Social Security number. Scammers are also likely to ask for money so they can expedite the transfer of the new card so it doesn’t interrupt health care needs.

Gmoser said the new Medicare cards will always come by mail, and you will never get a call from Medicare or Social Security regarding your new number.

Click here to learn about other scams that may put you or a loved one in danger.

 

RESOURCES

Look out for new Medicare scam targeting seniors

IRS Releases New Revisions to Benefit Limits for 2018

Changes effective the beginning of 2018…

On March 5, 2018, the IRS released Revenue Procedure 2018-10. The bulletin contains a change affecting contributions to Health Savings Accounts (HSAs), in effect decreasing the family maximum HSA contribution limit from $6,900 to $6,850.

  • The change is effective January 1, 2018, and is for the entire 2018 calendar year.
  • The self-only maximum HSA contribution limit remains unchanged.
  • Current 2018 HSA contribution limits are $3,450 (self-only) and $6,850 (family).
  • All the other contribution limits, HDHP limits and out-of-pocket limits remain the same for 2018.

The IRS typically adjusts the HSA limits for inflation each year approximately six months before the beginning of the impacted year. As a result of the new tax law enacted December 22, 2017, the annual inflation adjustment factor changed from the Consumer Price Index (CPI) to a new factor called “chained CPI,” used to calculate benefit-related inflationary adjustments. The new bulletin supersedes limits set back in May 2017.

Read all changes from the recent Bulletin here:

IRS Bulletin IRB 2018-10, March 5, 2018

 

Still have questions? Contact Cornerstone today!

Changes To Social Security Age Restrictions To Look Out For In 2018

U.S. News recently reported that the Social Security retirement age will increase in 2018. Those who will turn 62 in 2018 (born in 1956) will need to wait until age 66 and four months to claim their full Social Security retirement benefit. This age restriction is two months longer than those who turned 66 in 2017 and four months longer than older baby boomers born between 1943 and 1954 who have a full retirement at age 66.

The retirement age is expected to continue increasing in two-month increments each year until it hits 67 for everyone born in 1960 or later.

Due to this change, brokers in the senior market should focus their marketing efforts on the turning-66 demographic, rather than turning-65. For more information, contact your Cornerstone representative today.

Medicare Clients to Receive New Cards Starting April 2018

Medicare has a major change coming this year and I want to make sure you are aware. The Centers for Medicare and Medicaid Services (CMS) will be replacing all members’ cards starting in April 2018. They are replacing the cards based on a provision in the Medicare and CHIP Reauthorization Act of 2015 (MACRA). MACRA section 501 requires CMS to remove Social Security numbers (SSN) from Medicare cards and to replace the use of SSNs with new, randomly generated Medicare beneficiary identifiers, or MBIs by April 2019, to protect the individual’s identity.

This massive card replacement will affect clients who use Medicare Supplement Insurance to fill in the gaps in their Medicare Part A and Part B coverage. Individuals insured with a Medicare Advantage plan will also get new original Medicare cards, but they should continue to use their Medicare Advantage plan cards when seeking medical care.

The new cards will look just like they have in the past with a red, white, and blue palette, except these cards will not include the individual’s SSN, and will instead have a Medicare number. The MBI on their Medicare card includes both numbers and letters for optimal security. See below what the new cards will look like with the new MBI number:

Starting April 2018, newly eligible beneficiaries will get a card with a unique number regardless of where they live. For those individuals who currently have a Medicare card, CMS will begin mailing new Medicare cards over a period of approximately 12 months based on geographic location and some other factors. Ohio and Kentucky will be of the last states to get the new cards. Below is a chart that shows, based on the area, when individuals will receive their new card:

Beginning in April 2018, individuals with Medicare will be able to go to Medicare.gov/newcard to sign up for emails about the card mailing and to check the card mailing status in their state. Individuals may use their card immediately upon receiving it. They will be able to use either the SSN-based or the new random alphanumeric-based numbers through December 2019. Beginning January 1, 2020, only the new cards will be accepted.

With any change in Medicare comes confusion. This is a great opportunity to reach out to your clients to explain any changes and what they can expect. Click here for a one-page flyer from CMS that outlines the details of the new Medicare card. This is a great reference for your clients.

Trump Administration Proposes Rule for Short-Term Health Plans

Under a proposed rule by the Trump administration released on Tuesday, insurers will again be able to sell short-term health insurance good for up to 12 months. This rule would allow short-term plans to add more choices to the market at a lower cost and could offer broader provider networks than ACA plans in rural areas.

Health and Human Services Secretary Alex Azar said, “We want to open up affordable alternatives to unaffordable Affordable Care Act policies.”

Here are some talking points regarding the rule:

  • 60 days to comment on the proposed rule before changes are made to the current rules
  • If approved, insurers may be able to sell short-term health insurance for up to 12 months
  • Comments also being sought to extend beyond 12 months and if there are ways to guarantee renewability of the plans
  • No changes to requirements for STM plans – subject to pre-ex and not held to ACA requirements/not ACA compliant, med questionnaire required, etc.

 

RESOURCES

Trump Administration Proposes Rule to Loosen Curbs on Short-Term Health Plans

Fact Sheet: Short-Term, Limited-Duration Insurance Proposed Rule

Click here to review the proposed rule

Proposed rule would loosen restrictions on short-term health plans

Narrowing Medicare “Doughnut Hole” Will Close In 2019

For Medicare Part D beneficiaries with high prescription drug expenses, the “Doughnut Hole” means they pay more for their medicine once costs reach a certain threshold. Narrowing each year since the Affordable Care Act was passed in 2010, the gap was scheduled to close in 2020. With the 2/16 budget deal, the doughnut hole will now close in 2019.

Read the full story here.