FAST List by Category, Q4

Welcome to Compliance Friday Answers to the Service Team (FAST)!  Each Friday we publish our response to a question that the ABD Compliance Team received from a client or member of the EB Service Team.  These represent the most frequently asked (or interesting) questions we see. We post all of our FAST responses on the […]

Cadillac Tax Fully Repealed

It was probably destined for this fate the whole time.  After two delays from the originally scheduled 2018 effective date, the Cadillac Tax will never see the light of day. The Cadillac Tax was officially repealed as part of the massive H.R. 1865 omnibus bill to be signed into law by President Trump today. The official […]

Medical and Non-Medical Lactation Expenses

Question:  Which lactation expenses are eligible medical expenses for reimbursement under a FSA/HRA/HSA? Short Answer: Breast pumps, lactation supplies, and lactation consultant costs are eligible medical expenses that can be reimbursed through a FSA/HRA/HSA. General Rule: Expenses Must Qualify as §213(d) Medical Expenses A health FSA and HRA can reimburse only IRC §213(d) medical expenses.  […]

HSA Establishment Date

Question:  When is an HSA established? Short Answer: The general rule is that an HSA is established when it is first funded, and individuals cannot take a tax-free distribution for medical expenses incurred prior to the HSA establishment date.   General HSA Establishment Rule: Ability to Incur Expenses That are Eligible for Tax-Free Medical Distributions […]

What Happens to an HSA upon Death

Question:  What happens to an HSA upon the HSA holder’s death? Short Answer: The HSA will preserve its tax-advantaged HSA status if the beneficiary is a spouse, otherwise the account will lose its tax-advantaged HSA status. General Rule: HSA Designed Beneficiary HSAs permit the HSA holder to designate a beneficiary to receive the account’s funds […]

How Medicare Affects HSA Eligibility

Question:  How does Medicare enrollment affect HSA eligibility? Short Answer: Individuals who enroll in any part of Medicare lose HSA eligibility, which means they cannot make or receive HSA contributions. General Rule: HSA Eligibility The general rule is that an individual must meet two requirements to be HSA-eligible (i.e., to be eligible to make or […]

Special HSA Contribution Limit for Spouses

Question:  What is the HSA contribution limit for each spouse where both spouses are HSA eligible? Short Answer: Where at least one spouse is enrolled in family HDHP coverage, the combined HSA contributions for both spouses cannot exceed the annual family limit. General Rule: HSA Eligibility The general rule is that an individual must meet […]

2020 Health FSA Limit Increased to $2,750

Today the IRS confirmed in Revenue Procedure 2019-44 that for plan years beginning on or after January 1, 2020, the health FSA salary reduction contribution limit will increase to $2,750. This represents a $50 increase from the current $2,700 salary reduction contribution limit for plan years beginning on or after January 1, 2019. As a reminder, employer contributions […]

Early Termination of COBRA Upon Enrollment in Other Group Health Plan or Medicare

Question:  How does enrollment in another employer-sponsored group health plan or Medicare affect a qualified beneficiary’s COBRA rights? Compliance Team Response:   Short Answer: COBRA generally terminates early where the qualified beneficiary first becomes covered under another group health plan or Medicare after COBRA is elected. General Rule: COBRA Maximum Coverage Period Absent an early […]