As you head into 2021 it is a good time to take stock of any legislative changes that impact your benefit plans. Below is a recap of the changes we are aware of so far for 2021.
Annual Limit Changes
Last spring, the IRS announced health savings account (HSA) contribution limits for 2021. In a nutshell, the limits are going up $50 for self-only coverage and $100 for family coverage. The annual limit on HSA contributions will be $3,600 for self-only and $7,200 for family coverage. That’s about a 1.5 percent increase from this year.
You will want to be sure to communicate these changes during open enrollment as well as update your payroll and plan administration systems.
Below is a table outlining the contribution and out-of-pocket limits for HSAs and High-Deductible Health Plans (HDHPs):
|Contribution and Out-of-Pocket Limits for Health Savings Accounts and High-Deductible Health Plans|
|HSA contribution limit (employer + employee)||Self-only: $3,550
|HSA catch-up contributions (age 55 or older)||$1,000||$1,000||No change|
|HDHP minimum deductibles||Self-only: $1,400
|HDHP maximum out-of-pocket amounts (deductibles, co-payments and other amounts, but not premiums)||Self-only: $6,900
|Source: IRS, Revenue Procedure 2020-32|
The IRS has also announced that employer-sponsored health coverage will satisfy the Affordable Care Act (ACA) affordability requirement next year if the lowest-cost, self-only coverage option an employer offers does not exceed 9.83 percent of an employee’s household income.
The 2021 threshold is up slightly from 9.78 percent in 2020 but below the 2019 rate of 9.86 percent.
The affordability threshold is the highest percentage of household income an employee can be required to pay for monthly health insurance plan premiums, based on the least expensive employer-sponsored plan offered that meets the ACA’s minimum essential coverage requirements.
The IRS annually adjusts the affordability threshold by considering the ratio of premium growth to income growth in the preceding calendar year. The agency announced the 2021 affordability threshold—also known as the shared-responsibility affordability percentage, or cost-sharing limit—on July 21 in Revenue Procedure 2020-36.
Flexible Spending Account limits have not yet been published by the IRS.
Recent Supreme Court Cases
Bostock v Clayton County
This decision ruled that discrimination against LGBTQ employees is covered under Title VII of the Civil Rights Act. While this most directly impacts employment policies, employers may want to review coverage for gender dysphoria and related services.
Little Sisters v Pennsylvania
This decision upheld that religious affiliated nonprofit employers can opt out of providing contraceptives to employees which are otherwise required to maintain compliance with the ACA. The scope is fairly narrow, so any decision to remove these benefits should be made in conjunction with your broker and/or legal counsel.
Recent Legislative Changes
CARES Act Expands HSA-Eligible Purchases and Telemedicine Benefits
As part of the Coronavirus Aid, Response and Economic Security (CARES) Act signed into law at the end of March, account holders can now use HSAs, health reimbursement arrangements (HRAs) or health flexible spending account (FSAs) to pay for over-the-counter medications without a prescription. The coronavirus-related legislation also allows HSAs, HRAs and FSAs to pay for certain menstrual care products, such as tampons and pads, as eligible medical expenses. These are permanent changes and apply retroactively to purchases beginning Jan. 1, 2020.
In addition, the CARES Act allows HDHPs to cover telemedicine free of cost sharing for through 2021. A new safe harbor permits HDHPs to cover telehealth and other remote care services before participants have met their deductible without affecting their eligibility to make HSA contributions. These provisions are temporary and will sunset Dec. 31, 2021, unless Congress extends them or makes them permanent.
Families First Coronavirus Response Act (FFCRA)
While not directly related to insurance, do keep in mind that the FMLA expansion and emergency sick leave provisions of these laws continue through the end of 2020. This might be a good time to review your company time off benefits and policies in preparation for future calamities.
Legislative changes are one aspect to consider as you prepare for open enrollment but there are many others as well. Download our open enrollment guide: A Guide to Better Open Enrollment.
If you have any questions about how the legislative changes may impact your operations or your open enrollment season, I urge you to reach out. You can get help by starting here!