Compliance and Regulatory
Benefits Compliance Podcast: Listen to the Latest Episode
March Get Wise Wednesdays – Register Now
Reminder: 2023 HSA Contributions and Corrections Deadline is April 15, 2024
Reminder: Upcoming ACA Form 1094/1095 Reporting Deadlines
J&J Lawsuit Places Employer-Sponsored Health Plan Fiduciary Obligations Back in the Limelight
IRS Issues Alert on Wellness Expenses Not Considered Medical Care
Employer Sends COBRA Election Notice to Incorrect Address
ERISA Advisory Council Reports on Long-Term Disability Benefits and Mental Health Disparity
DOL Issues Fact Sheet on FMLA Calculation for Airline Flight Crews
Congressional Committee Seeks Information on Promoting Defined Benefit Pension Plans
Topic: Kick-Starting Spring with a Compliance Refresher on HSAs
HSAs are useful but sometimes confusing. This employee benefit tool comes with a myriad of compliance rules. In this webinar, we will clarify eligibility rules, discuss the mechanics of HSA contributions, and learn to identify and remedy some common issues associated with HSAs.
Note: The speakers will answer as many questions as possible during the webinar. If your question isn’t answered, reach out to your advisor for further assistance.
Date/Time: March 20, 2024
3:00 to 4:00 p.m. ET
This program is pending approval for 1.0 (general) recertification credit hours toward PHR, SPHR and GPHR recertification through the HR Certification Institute. For more information about certification or recertification, visit the HR Certification Institute website at hrci.org.
Note: Those listening to a recorded webinar will not be eligible for credit.
Individuals who were HSA-eligible in 2023 have until the tax filing deadline, April 15, 2024, to make or receive 2023 HSA contributions. The 2023 HSA contribution limit is $3,850 for self-only HDHP coverage and $7,750 for any tier of HDHP coverage other than self-only. Employer HSA contributions, if any, are included in the applicable limit. Those aged 55 and older are permitted an additional catch-up contribution of $1,000. As indicated below, April 15, 2024, is also the deadline for individuals to remove 2023 excess contributions (i.e., contributions exceeding their permitted maximum) from their HSA to avoid potential penalties.
Under the HSA monthly contribution rule, an individual’s maximum 2023 annual contribution is limited by the number of months they were HSA-eligible during the calendar year. HSA eligibility is determined on the first day of each month. As a reminder, to be HSA-eligible, an individual must be covered by a qualified HDHP, not be eligible to be claimed as a tax dependent of another, not be covered by Medicare or other impermissible coverage (i.e., coverage providing benefits before the statutory HDHP minimum deductible is met, absent a specific exception).
There is an exception to the monthly contribution rule known as the full or last month contribution rule. Under the full contribution rule, an individual who was HSA eligible on December 1, 2023, is permitted to contribute up to the full statutory limit for the year based on their HDHP coverage tier. However, if the individual does not remain HSA eligible through December of the following year (i.e., December 2024), the amount exceeding their permitted maximum under the monthly contribution rule becomes taxable as income and subject to an additional 10% penalty tax.
Individuals who contributed more than their allowable HSA contribution amount for 2023 should remove the excess contributions and associated earnings by April 15, 2024. The excess and earnings will be subject to income tax. If an individual fails to remove the excess contribution by the income tax filing deadline, an additional 6% penalty applies for each tax year the excess remains in the account. Accordingly, employees who were not eligible for a contribution or contributed more than their permitted maximum through their employer’s cafeteria plan should notify their employer and work with the HSA custodian to remove the excess contribution. Employees should consult with their tax advisors for specific tax advice and guidance.
For further information, please see IRS Publication 969, and ask your broker or consultant for a copy of the NFP publication Health Savings Accounts: A Guide for Employers.
Applicable large employers (ALEs) (employers with 50 or more full-time employees (FTEs), including full-time equivalent employees in the prior year) must comply with IRC Section 6056 reporting in early 2024. Specifically, ALEs must complete and distribute Form 1095-C to full-time employees by March 1, 2024. The form should include details regarding whether the employee was offered minimum value, affordable coverage during 2023.
The forms may be mailed, electronically delivered, or delivered by hand (although proof of delivery in some manner is recommended). Remember that there is a special rule for electronic delivery of Form 1095-C: the employee must affirmatively consent to delivery of the form. Consent to receive Form 1095-C in electronic format must be given in a manner that reasonably demonstrates that the recipient is able to access the statement in the electronic format in which it will be furnished. Alternatively, consent may be given in a paper document that is confirmed electronically.
Employers who sponsored a self-insured plan during 2023 must comply with Section 6055 reporting in 2024. Self-insured ALEs must complete Section III of Form 1095-C detailing which months the employee (and any applicable spouse and dependents) had coverage under the employer's plan. If the self-insured employer has fewer than 50 FTEs, it must complete and distribute a Form 1095-B with such information. Again, the forms must be delivered to employees by March 1, 2024.
An alternative method for distributing Form 1095-B is available to self-insured employers with fewer than 50 FTEs. These employers are permitted to post a clear and conspicuous notice on their website of the document's availability and the necessary contact information to request it. Any such request must be fulfilled within 30 days. This alternative is not available for Form 1095-C. Employers must also file these forms with the IRS by February 28, 2024, if filing by paper, and April 1, 2024, if filing electronically. The filing must include the transmittal Form 1094-C (if filing Forms 1095-C) or Form 1094-B (if filing Forms 1095-B). Importantly, beginning this year, employers that file 10 or more returns of any type (e.g., counting Forms 1095, W-2, and 1099 together) to the IRS in a calendar year must do so electronically absent a hardship waiver. Please see our article for more information on this change.
Additionally, employers with employees located in states with individual mandates may also have to comply with state reporting requirements and should be aware of the applicable deadlines. For further information on ACA and/or state reporting requirements, please ask your broker or consultant for a copy of the NFP publications ACA: Employer Mandate Reporting Requirements and State Individual Mandate Reporting Requirements.
2023 Form 1094-C »
2023 Form 1095-C »
2023 Form 1094-B »
2023 Form 1095-B »
2023 Instructions for Forms 1094-C and 1095-C »
2023 Instructions for Forms 1094-B and 1095-B »