BASE^® Blog

Health Savings Accounts (HSAs) continue to grow in popularity yet remain one of the most misunderstood solutions in an employer’s benefit strategy.  With many misconceptions, the gist of the HSA is that it is a type of personal savings account set up to pay for health care costs now, or in the future, with the opportunity to diversify retirement portfolios!

The BASE® Health Savings Account (HSA) is designed to help individuals save and pay for qualified medical expenses, while allowing the opportunity to save for the future, and/or invest funds.  The HSA allows employees in a qualifying High Deductible Health Plan (HDHP) to save money on a pre-tax basis to pay for qualifying medical expenses now or in the future.

The HSA is available to businesses of any size with an HDHP in place with an opportunity to provide a means for their employees to pay for thousands of eligible items such as copays, over-the-counter medications, dental, vision, and more with tax-free dollars.  HSAs offer a triple tax break – contributions are pre-tax, the money grows on a tax-deferred basis, and can be used tax-free for eligible medical expenses.

Below, we will debunk a few of the misconceptions of the HSA:

MISCONCEPTION 1 - You Can’t Take Your HSA with You When You Change Jobs:  An employee can take the HSA with them when leaving a job, unlike the FSA.  The employee can maintain the HSA through the current administrator or roll over to a new one.  As long as the employee maintains, or enrolls in a new HDHP, the employee can continue to contribute to the HSA.

MISCONCEPTION 2 - The HSA Funds Must Be Used by Year-End:  This is one of the biggest misconceptions.  Unlike the FSA, the HSAs do not have a use-it-or-lose it rule.  The money rolls over from year to year and can be used to pay for medical expenses at any time.  

MISCONCEPTION 3 - HSAs Are Complicated:  HSAs are a simple way to reduce taxable income, cover qualified health care expenses, and invest for the future.  We know that when it comes to health care, things can be complex, but these pre-tax savings accounts are one of the easiest solutions for paying for health care expenses.

MISCONCEPTION 4 - It is a Health SAVINGS Account, Not Health SPENDING Account:  For many, the HSA is a quick and easy way to pay for their everyday health care expenses.  But by only utilizing the account for health care expenses, employees are not using their HSA at its fullest potential.  The HSA can be used for both health care expenses and investment opportunities that allow the employee to invest once the employee has met the threshold.

MISCONCEPTION 5 - HSAs are Only for Older/ Sick Employees:  The HSA is for any eligible employee, regardless of age or health.

We want every business to experience the BASE® Difference.  With BASE®, employers will be offered a custom technology solution custom to their business alongside a service experience that is second to none.  Employers will experience:

• Multi-account coordination
• Online portals to serve them and their employees, along with an easy-to-use mobile app
• Flexible contribution options and debit card for employees
• Comprehensive planning & reporting
• And more

The BASE® HSA offers excellent tax benefits to help individuals make the most of every health care dollar, making it a powerful tool for diversifying retirement portfolios.  For more information, call BASE® at 888.386.9680 or visit www.BASEonline.com. 

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The 2021 PCORI fee filing is due by August 2, 2021. The deadline is always July 31, but due to the filing date occurring on a Saturday it is delayed until the following business day. The fee is payable in connection with Health Reimbursement Arrangements (HRAs) for policy/plan years ending after October 1, 2012 but stop applying for policy/plan years ending after September 30, 2029.

If an employer utilizes the Section 105 BASE® HRA, QSE HRA, ICHRA, or Integrated HRA, they should check out the IRS Form 720 on how to handle the PCORI fee.  Not all HRA clients will be required to pay the fee per IRS and Department of Labor (DOL) guidance.

• HRA (only 1 employee) - Business owners with these HRA plan designs in place are exempt from paying the PCORI fee.  (Note: QSE HRA plans must pay fee regardless of participant size according to Notice 2017-67).
• HRA (2 or more employees) - Business owners with two or more employees that have an HRA in place are still required to pay the fee by August 2, 2021.

IMPORTANT TO NOTE:  Employers are responsible to report, file, and pay this fee once a year, no one can file on their behalf.  A current form can be found here, with instructions.  Employers that fail to pay the fee, or the incorrect amount, could be subject to penalties.

How is the PCORI fee calculated?  The fee is imposed on a plan sponsor/employer of an HRA and is based on the number of participating employees covered under the plan.  The fee will be adjusted annually for inflation based on increases in the projected per capita amount of National Health Expenditures.  The current fee is $2.54 with a plan year ending before October 1, 2019, and $2.66 with a plan year ending on or after October 1, 2019, and before October 1, 2020.

Why did major industry groups push for a 10-year extension?  The fee is imposed on health insurance issuers and self-insured health plan sponsors to fund the Patient-Centered Outcomes Research Institute (PCORI).  Currently, it maintains a portfolio of research that addresses a wide variety of conditions and topics including assessment of prevention, diagnosis, and treatment options, including a COVID-19 prevention/treatment study, improving health care systems, and communications and dissemination research.  The research projects also target certain populations of interest such as:  racial and ethnic minorities, low socioeconomic status, women, and older adults and individuals with multiple chronic conditions.  With annual incoming funds averaging about $480 million since 2014, the operation has paid for more than 700 projects that are influencing health care to justify the extension.

For complete instructions on completing the Form 720, please visit the IRS website. 

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There have never been so many options for employers to provide health benefits to their employees.  In 2020, a game changer arrived – the ICHRA.  It is estimated to help hundreds of thousands of employees with over 800,000 employers adopt, but because it is still so new, questions arise every day.  Let’s answer a common one…

“Can an employer offer a group health plan to their FULL-TIME employees and the ICHRA to their PART-TIME employees?”

The answer is:  YES!  But you cannot offer the same type of employees a choice between the group health plan and the ICHRA.

The BASE® Individual Coverage Health Reimbursement Arrangement is an IRS-approved tax savings plan that gives businesses, of any size, a great alternative for providing employees their health benefits.  Employers have the ability to choose to offer to all employees, or to specific classes, with no contribution caps.  With the ICHRA in place, employers are streamlining their benefit options, cutting costs without reducing the value of the provided health benefits, and are able to provide on different levels for all types of employees.

For the question above, the ICHRA allows the employer to define eligibility for the group health plan and the ICHRA by separating the employees into classes, and in this case, split the full-time employees and part-time employees.  The employer can then provide the full-time employees with a group health plan and the part-time employees with the ICHRA, reimbursing them for their individual coverage and/or out-of-pocket medical expenses.  Please note, class size minimums may be required.

With the ICHRA, there are many benefits to both the employer and employee.  The employer can attract and retain employees with an increased benefits package when many businesses are unable to provide part-time employees with benefits.  The employer has control of the funding limits with the freedom to choose the level of reimbursement, and all reimbursements are 100% deductible as a business expense.  Employers can see real savings by not providing a traditional group health plan to any or all employees and enjoy peace of mind knowing that all plan administration is handled by BASE®.  The ICHRA provides employees with additional money to help with the rising cost of health care and reimbursements received are considered nontaxable income.

The ICHRA helped to change the game by helping employers to avoid the “one-size-fits-all” approach when it comes to providing health care.  For more information on implementing the Individual Coverage HRA into the business, call 888.386.9680 or visit www.BASEonline.com.

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