REGULATORY UPDATES
Stay informed about Consumer Directed Benefits
2023 limits for FSAs, transit/parking benefits and adoption assistance
The Internal Revenue Service (IRS) recently announced annual adjustments for 2023. This includes contribution limits for FSAs, transit/vanpool and parking benefits and adoption assistance. The following limits are effective January 1, 2023.
- The 2023 pretax contribution limit for health care FSAs and limited purpose FSAs is $3,050. This is a $200 increase from 2022.
- The 2023 maximum carryover amount is $610. This a $40 increase from 2022.
- The dependent care FSA contribution limit for 2023 remains at $5,000.
- The 2023 combined pretax contribution limit for transit/vanpool expenses is $300 per month. The pretax parking limit is $300 per month. These have both increased by $20 from 2022.
- In 2023, employees can be offered up to $15,950 tax-free, to offset qualified adoption expenses they incur in connection with adopting an eligible child. This is a $1,060 increase from 2022.
Over-the-counter contraception may be eligible for reimbursement
On July 28, 2022, the Department of Labor, The Treasury Department and the Department of Health and Human Services released a series of Frequently Asked Questions regarding coverage for contraceptive products. You can use a health savings account (HSA), health care flexible spending account (FSA) or health reimbursement arrangement (HRA) to reimburse yourself for the cost (or portion of the cost) incurred for over-the-counter contraception (as long as the cost is not paid or reimbursed by another health plan or coverage).
Commuter Benefit requirements in Philadelphia
Effective December 31, 2022, the City of Philadelphia will require businesses with 50 or more covered employees to offer workers either a pre-tax payroll deduction for mass transit, or an employer-paid benefit covering mass transit expenses. Employers should also offer a qualified bicycle expense account for employees who regularly use a bicycle for commuting to and from work.
Philadelphia employers that do not already have a compliant transportation program in place who are, or expect to be, subject to this new rule should take appropriate measures to meet the new requirements (by implementing a compliant transportation program that would be ready to take effect by December 31, 2022).
PRODUCT SPOTLIGHT
HSA provision included in Inflation Reduction Act
On August 16, 2022, the President signed the Inflation Reduction Act (IRA) of 2022.
For employers who offer a health savings account (HSA) with qualified high-deductible health plans (HDHPs), the Act provides a safe harbor that permits HDHPs to cover any insulin dosage form (e.g., vial, pump or inhaler) of any different type (e.g., rapid-acting, short-acting, intermediate-acting, long-acting, ultra-long-acting and premixed) before the individual meets the plan’s deductible. Plans will not lose their HDHP status if there is no deductible for certain insulin products.
This new safe harbor will be effective for plan years beginning after December 31, 2022. Until the new safe harbor takes effect, HDHPs can continue to rely on Internal Revenue Service Notice 2019-45, which provides that insulin and other glucose lowering agents are “preventive care” when prescribed for individuals with diabetes if certain other requirements are met. Under HSA rules, preventive care generally does not include services or benefits intended to treat existing illnesses, injuries, or conditions. Specifically, the insulin must be prescribed to prevent the individual’s diabetes from being exacerbated or to prevent the individual from developing a secondary condition..
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Products and programs ready to fit your needs
With the ever-changing legislation, we understand you need flexible solutions that meet the requirements set by law and the Internal Revenue Service (IRS). Our Consumer Directed Benefits can do just that and more.