IRS Announces Employee Benefit Plan Limits for 2019

OVERVIEW

Many employee benefits are subject to annual dollar limits that are periodically increased for inflation. The Internal Revenue Service (IRS) recently announced cost-of-living adjustments to the annual dollar limits for various welfare and retirement plan limits for 2019. Although some of the limits will remain the same, many of the limits will increase for 2019.

The annual limits for the following commonly offered employee benefits will increase for 2019:

1. High deductible health plans (HDHPs) and health savings accounts (HSAs);
2.  Health flexible spending accounts (FSAs);
3. Transportation fringe benefit plans; and
4. 401(k) plans.

ACTION STEPS

Employers should update their benefit plan designs for the new limits and make sure that their plan administration will be consistent with the new limits in 2019. Employers may also want to communicate the new benefit plan limits to employees.

HSA Contribution Limit

*Not adjusted for inflation

FSA Benefits

*Not adjusted for inflation

Transportation Fringe Benefits

Adoption Assistance Benefits

Qualified Small Employer HRA (QSEHRA)

401(k) Contributions

OVERVIEW

Following the midterm elections, Republicans in the U.S. Senate have indicated that they will no longer attempt to repeal and replace the Affordable Care Act (ACA). The midterms created a power split in Congress, with Democrats retaking control of the U.S. House of Representatives and Republicans retaining control of the Senate.

Many Democrats campaigned on health care issues, including retaining the ACA’s popular protection for individuals with pre-existing conditions. Senate Majority Leader Mitch McConnell (R-Ky) has recognized that the Democrat-controlled House will not support any proposals to repeal and replace the ACA. Instead, lawmakers have indicated that they may work together, on a bipartisan basis, to make small changes to improve the ACA.

Action Steps

A Democrat-controlled House will shield the ACA from repeal for at least the next two years. As a result, the ACA will remain current law and employers must continue to comply with all applicable ACA provisions.

Attempts to Repeal and Replace the ACA

President Donald Trump promised to immediately work to repeal and replace the ACA when he took office. Although Republicans controlled both the House and Senate, they narrowly failed to pass bills to repeal the ACA in 2017.

The Republicans’ efforts to repeal and replace the ACA came to an end on July 28, 2017, when members of the Senate voted 49-51 to reject a “skinny” version of a bill to repeal and replace the ACA.

Despite these failed attempts to repeal the ACA, Congress did roll back specific provisions of the ACA, such as the individual mandate, which requires individuals to obtain health insurance to avoid paying a penalty. Also, President Trump and his administration have used the regulatory process to change specific ACA rules, such as:

1. Expanding the availability of short-term, limited-duration insurance, which is not subject to the ACA’s market reforms;
2. Making it easier for small employers to join together to purchase health insurance as an association health plan; and
3. Proposing to expand the options for health reimbursement arrangements (HRAs), such as allowing HRAs to be used to pay for individual health insurance coverage.

Next Steps

Because the midterm elections shifted the balance of power in Congress, the ACA will remain current law and employers must continue to comply with all applicable ACA provisions. Employers should continue to monitor ACA developments because it is likely that the Trump administration will continue issuing regulations that change how the ACA is implemented. It is also possible that lawmakers may work together, on a bipartisan basis, to change specific ACA provisions that are unpopular with voters or negatively impacting the insurance market.

The Affordable Care Act (ACA) imposes a fee on health insurance issuers and self-insured plan sponsors in order to fund comparative effectiveness research. These fees are widely known as Patient-Centered Outcomes Research Institute (PCORI) fees.

On Nov. 5, 2018, The Internal Revenue Service (IRS) published Notice 2018-85, which increased the PCORI fee amount for plan years ending on or after Oct. 1, 2018, and before, Oct. 1, 2019 (this is, 2018 for calendar year plans), to $2.45 multiplied by the average number of lives covered under the plan.

The PCORI fees do not apply for plan years ending on or after Oct. 1,2019. Therefore, for calendar year plans, the 2018 plan year is the last plan year that these fees will be effective.

ACTION STEPS

PCORI fee are reported and paid annually using IRS form 720 (Quarterly Federal Excise Tax Return). These fees are due each year by July 31 of the year following the last day of the plan year. This means that, for plan years ending in 2018, the PCORI fees are due by July 31, 2019. Covered employers should have reported and paid PCORI fees for 2017 by July 31, 2018.

Overview of PCORI Fees

The PCORI fees apply for plan years ending on or after Oct. 1, 2012, but do not apply for plan years ending on or after Oct. 1, 2019. For calendar year plans, the fees will be effective for the 2012 through 2018 plan years. Therefore, the 2018 plan year is the last plan year that these fees will be effective, for calendar year plans.

Issuers and plan sponsors must pay PCORI fees annually on IRS Form 720 by July 31 of each year. The fee will generally cover plan years that end during the preceding calendar year. For the 2018 plan year, PCORI fees are due by July 31, 2019.

PCORI Fee Amounts

The PCORI fees are calculated by multiplying an applicable rate for each tax year by the average number of lives covered under the plan. The applicable rate for each tax year is as follows:

1. $1 for plan years ending before Oct. 1, 2013 (that is, 2012 for calendar year plans); and
2. $2 for plan years ending on or after Oct. 1, 2013, and before Oct. 1, 2014.

• For plan years ending on or after Oct. 1, 2014, the IRS published the adjusted PCORI fee amount each year, which is calculated based on the percentage increase in the projected per capita amount of the national health expenditures published by the Department of Health and Human Services (HHS) each year.

1. On Sept. 18, 2014, IRS Notice 2014-56 adjusted the PCORI fee amount to $2.08 times the average number of covered lives for plan years ending on or after Oct. 1, 2014, and before Oct. 1, 2015.
2. On Oct. 9, 2015, IRS Notice 2015-60 adjusted the PCORI fee amount to $2.17 times the average number of covered lives for plan years ending on or after Oct. 1, 2015, and before Oct. 1, 2016.
3. On Nov. 4, 2016, IRS Notice 2016-64 adjusted the PCORI fee amount to $2.26 times the average number of covered lives for plan years ending on or after Oct. 1, 2016, and before Oct. 1, 2017.
4. On Oct. 9, 2017, IRS Notice 2017-61 adjusted the PCORI fee amount to $2.39 times the average number of covered lives for plan years ending on or after Oct. 1, 2017, and before Oct. 1, 2018.

Under Notice 2018-85, the adjusted PCORI fee amount for plan years ending on or after Oct. 1. 2018, and before Oct. 1, 2019, is $2.45 multiplied by the average number of lives covered under the plan. This amount was calculated based on the percentage increase in the projected per capita amount of the national health expenditures, published by HHS on Feb. 14, 2018 (Table 3).

America’s Affordable Care Act allows individuals and families to apply for major medical insurance each year without the need to answer any health questions and includes coverage for pre-existing conditions. The Annual Open Enrollment Period to apply for coverage is November 1^st through December 15^th 2018 and with that in mind, we are happy to provide you with an update on the program and important information related to applying for coverage.

Medical costs can cripple one’s finances and carrying health insurance offers you many benefits including the peace of mind that you and your family are protected in the event of an accident or illness. Peace of mind is priceless. Click here to read more on the benefits of having health insurance.

What you need to know

Open Enrollment is from November 1st to December 15th, 2018. Plans are elected during this time frame with a coverage inception date of January 1st, 2019. You must act by December 15th, 2018 in order to obtain coverage. This is typically for individual policies; group policies may have a different inception date based on renewal.

Here is a great article that offers Open Enrollment tips and some things to consider before choosing a plan that’s right for you.

A great resource guide for up-to-date information is Healthcare.gov. Not only do they publish informative articles about open enrollment, they also offer information regarding wellness. Articles are published frequently that will help keep you up to date with the ever changing healthcare system. Be sure to subscribe to their newsletter to receive information on updates.

Click here for a quick reference guide on terminology often used in insurance quotes and proposals. Getting familiar with these terms will help you to better understand your proposals.

How to Apply

Contact us, your local agent regarding a quote. One of our experienced professionals will be happy to provide you with pricing and the plans available to you.

Our agent will need the following information:

• Name
• Date of Birth
• Smoker/Non-Smoker
• Zip code

Choosing a Plan

There are 4 categories that the plans are placed into: Bronze, Silver, Gold and Platinum

• Each of these compare costs that are shared between you and the provider.
• Each plan will list highlights about what the plan entails.

There are 4 policy types that you should be familiar with:

• Health Management Organization (HMO) – coverage is typically limited and you can only see physicians within your network. These types of policies refer to “preventive care”. Preventive care is referred to wellness checkups, etc. in order to prevent any health issues.
• Preferred Provider Organization (PPO) – this plan type is a network of providers such as hospitals and doctors. Cost will typically be less when you see a doctor within your plan’s network. Referrals are not required when you need to see a specialist.
• Point of Service (POS) – Cost is less if you use providers within your network. POS plans do require a referral from your primary care physician to see anyone out of network. Keep in mind that some plans are open access and do not require a referral from a primary physician.
• Exclusive Provider Organization (EPO) – A plan where coverage is only covered if you go to see a doctor, a specialist or hospitals within the plan’s network (except in the event of an emergency).

We hope that you have found this information helpful when it comes to deciding the right policy for you and your family. As always we are happy to help you choose said policy and thank you for allowing us the opportunity to serve you.