HSA Contribution Levels and High Deductible Health Plan Limits Set for 2016

Guidance for health savings account 2016 contributions were recently released by the Internal Revenue Service. The maximum allowable contribution individuals can make to their HSA is increasing by $100 in 2016 to $6,750 for those who have family coverage under a high deductible health plan.  This means that more of an employee’s salary can go untaxed by the government if put toward a high deductible health plan.

Although, the 1.5 percent increase only applies to family coverage. Those with individual coverage remain with a $3,350 contribution limit, same as last year.

HSAs while paired with a HDHP are tax-advantaged accounts to which employees and employers may contribute funds for employees’ health benefit expenses. Individuals can claim tax deductions up to the limits for contributions they make to the accounts when filing their annual income tax returns.

Additionally, the IRS is making some inflation adjustments in 2016 to the dollar amounts it uses to define HDHPs.

Most people are concerned with their deductible. The deductibles are not changing for 2016.  They remain at a minimum of $2,600 for family coverage and $1,300 for individual coverage. The change comes in the form of their out-of-pocket expenses. Those with family coverage will have an out-of-pocket maximum of $13,100 and those with individual coverage will be at $6,550.

A little more than last year’s out-of-pocket limits, which were $12,900 for families and $6,450 for individuals.  These new numbers can be communicated to employees or plan members during open enrollment.

(Source: Healthcare Trends Institue http://www.evolution1.com/healthcare-trends-institute/hsa-contribution-levels-and-high-deductible-health-plan-limits-set-for-2016/)

2015 PCORI Fee Reminder

PCORI Fee Overview and Guidance

The Affordable Care Act imposes fees on issuers of specified health insurance policies and plan sponsors of applicable self-insured health plans to help fund the Patient-Centered Outcomes Research Institute. The fees, required to be reported annually on the 2nd quarter Form 720 and paid by its due date, July 31st, are based on the average number of lives covered under the policy or plan. The fees apply to policy or plan years ending on or after October 1, 2012, and before October 1, 2019. HRCTS will make available an Average Covered Lives Report to all clients that are responsible to file and pay the PCORI fee each year. You can request this report by contacting your Account Management Team.

The IRS recently released the revised Form 720 that insurers and sponsors of self-insured plans will use to pay the Patient-Centered Outcomes Research Institute (PCORI) fee. The fee is due by July 31 of the year following the calendar year in which the plan/policy year ended. Sponsors of any plans that ended in 2014 must pay the 2014 fee by July 31,2015.  Plan sponsors can now complete their planning for payment of this fee. The IRS has also confirmed health insurers and self-insured health plan sponsors can deduct PCORI fees as ordinary and necessary business expenses. The fee is based on the number of covered lives including employees, retirees and COBRA participants along with their covered dependent spouses and children are all counted. However, only the employee, retiree or COBRA participant needs to be counted for an HRA or a health flexible spending account (health FSA) -- dependents covered by these accounts can be excluded.

The types of plans that must pay the PCORI Fees by July 31, 2015 include:

  • Health/accident plans
  • Health Reimbursement Arranagement (HRA) plans that are not an excepted benefit (Employer contribution is greater than $500)
  • Health Flexible Spending Account (FSA) plans that are not an excepted benefit (Plan has employer contributions with the maximum reimbursement greater than two times an employee’s salary reduction election or employer contribution is greater than $500)
  • Retiree plans

Calculating the Fee:

The amount of the PCORI fee is equal to the average number of lives covered during the policy year or plan year multiplied by the applicable dollar amount for the year.

  • For plan years that end between January 2, 2014, and before October 1, 2014 the fee will be $2.
  • For plan years that end on or after October 1, 2014, and before October 1, 2015, the fee is $2.08.
  • For plan years that end on or after October 1, 2015, and before October 1, 2016, the fee is $2.17.

For policy and plan years beginning on or after Oct. 1, 2015, and before Oct. 1, 2019, the applicable dollar amount is further adjusted to reflect inflation in National Health Expenditures, as determined by the Secretary of Health and Human Services.

IRS Form 720 and Instructions:

IRS Form 720 can be accessed at http://www.irs.gov/pub/irs-pdf/f720.pdf which is an interactive document so that can be completed on line.


The PCORI fees are entered on line 133 for the appropriate plans. See pages 8 and 9 of the IRS Instructions for completing these fields. Instructions can be found at http://www.irs.gov/pub/irs-pdf/i720.pdf.



Complete the fields on page 7 and make your check or money order payable to “United States Treasury”.

Additional information on the PCORI fees can be found here:
Patient-Centered Outcomes Research Trust Fund Fee (IRC 4375, 4376 and 4377): Questions and Answers

• An IRS chart that shows which types of benefits the fee applies to:  Application of the Patient-Centered Outcomes Research Trust Fund Fee to Common Types of Health Coverage or Arrangements

IRS Form 720 Overview

IRS Form 720 instructions (see pages 8 to 9)

Please Note:
This information is provided for educational purposes only. It reflects the understanding of HRC Total Solutions and our partners using the available guidance as of the date shown and is subject to change. It is not intended to provide legal advice.  You should not act on this information without consulting legal counsel or tax advisors.  (June 4, 2015)

HSA Limits announced for 2016

On Monday, May 4th the IRS released the 2016 inflation-adjusted amounts for health savings accounts (HSAs). For calendar year 2016, the annual limitation on deductions for an individual with self-only coverage under a high deductible health plan is $3,350 and for an individual with family coverage it is $6,750. The “high deductible health plan” annual deductible cannot be less than $1,300 for self-only coverage or $2,600 for family coverage, and the annual out-of-pocket expenses cannot exceed $6,550 for self-only coverage or $13,100 for family coverage.  You can read the full details in the IRS publication - Rev. Proc. 2015-30.

                                        2015                   2016           CHANGE

Individual Coverage                    $3,350                      $3,350                  none

Family Coverage                         $6,650                       $6,750                  +$100


Create Organizational Sustainability With An Employee Benefits Strategic Plan

Many companies may feel they just got through the implementation of their 2015 benefits and can breathe a sigh of relief. However, due to the fiscal realities of healthcare costs and new ACA compliance and reporting standards your organization’s future financial performance may be impacted in ways you need to be prepared for.

Because the financial performance of a company can impact shareholder value, human capital, culture, etc. a short-term employee benefits plan may not cut it anymore. The “let’s follow what we did last year” approach needs to be replaced with a strategic planning process that can yield unique and innovative ideas that will work for your company.

Employee Benefit Plan Review recently reported on ways to create a strategic plan. The article, The Secret Weapon of Modern Benefits: A Strategic Plan calls for employers to set specific priorities and goals in regards to their total compensation package. They recommend taking the time and involving a variety of stakeholders to specifically develop an employee benefits plan using the same business approach they use to develop a new product or service.

The reason using a strategic planning model may work better than other planning efforts is because it involves a number of components in its process such as: discover/analyze/design/build/review structure. This requires commitment from up above to begin. Next, in addition to human resources and executives, employees from major functional areas should be involved to help have a broad range of representatives who may identify issues not considered by top management. Lastly, it may bring value to the process to engage an expert to facilitate your planning model.

According to the article, having a purposeful employee benefit strategic plan will help your organization establish realistic goals that can be clearly communicated. Goals that are unique to your company and which will help you avoid just duplicating your competitors best practices and calling it a day.

Finally, taking the time to develop such a plan should provide your organization with sustainability to stay ahead in your industry. And remember, you’re creating a living document, so don’t be afraid to make adjustments along the way.

Source:  Employee Benefits Plan Review. The Secret Weapon of Modern Benefits: A Strategic Plan. March 2015. PP 12-13.

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