Health Savings Account

Five Stories That Matter in Michigan This Week – May 26, 2023

Health Savings Accounts and High Deductible Health Plans Limits Increased for 2024

The federal government recently announced that the inflation adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) will increase in 2024. For example, HSA contributions for an individual will increase in 2024 to $4,150 from $3,850 in 2023, and the minimum deductible on a HDHP for an individual will increase to $1,600 in 2024 from $1,500 in 2023.

Why it Matters: At a time of economic uncertainty and persistent inflation, these adjustments are intended to allow more people to access health care in a tax advantaged way.

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New Distracted Driving Laws Take Effect June 30

Beginning June 30, Michigan motorists will be prohibited from using any mobile electronic device while operating a motor vehicle, even if at a stop sign or red light. This includes sending/receiving texts, accessing social media, or recording videos.

Why it Matters: First time offences include a $100 fine and/or 16 hours of community service, in addition to one point being added to the individual’s driving record. And penalties will increase for repeated violations.

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US and Canada Announce Electric Vehicle Corridor

Last week, the United States and Canada announced plans to launch a binational electric vehicle corridor stretching from Kalamazoo, Michigan, to Quebec City. The corridor will include fast EV chargers approximately every 50 miles along the 872-mile route.

Why it Matters: Officials said the plan would increase domestic manufacturing, strengthen supply chains and create jobs while supporting climate and alternative energy transportation goals.

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Considerations for Creditors Involved in the Receivership Process

When a business enters receivership, creditors can take several actions to protect their interests and maximize their chances of recovering the money owed to them such as staying informed, participating in the process, filing a proof of claim, and monitoring asset management.

Why it Matters: By staying proactive and engaged throughout the receivership process, creditors can protect their interests and maximize the chances of recovering the money owed to them.

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June 5 Business Education Series

During this two-presentation dynamic program, attendees will learn about the SBA 504 Loan from Coty Gould with the MCDC (Michigan Certified Development Corporation), and Government Contracts from Mike Hindenach with APEX (formerly known as PTAC Procurement Technical Assistance Centers).

Why it Matters: The SBA 504 Loan presentation you will learn the basics of SBA 504 loan, the benefits and how to qualify and apply. MCDC is a non-profit certified by the US SBA to administer the SBA 504 Loan Program in Michigan. The SBA 504 loan provides small businesses with low-rate, long-term loans for building purchases, construction, and machinery and equipment. In addition, these loans require a smaller down payment than what traditional lenders can offer, allowing the business owner to preserve capital. Learn more and to register.

Related Practice Groups and Professionals

Employee Benefits | Robert Burgee
Energy, Utilities & Telecommunication | Mike Ashton
Cannabis Law | Sean Gallagher

Client Alert: IRS Announces 2023 Adjustments for HSAs & Excepted Benefit HRAs

The IRS has released its 2023 annual inflation adjustments for Health Savings Accounts (“HSAs”) as determined under Section 223 of the Internal Revenue Code. Specifically, IRS Revenue Procedure 2022-24 provides the adjusted limits for contributions to a HSA, as well as the high deductible health plan (“HDHP”) minimums and maximums for calendar year 2023.

Additionally, Revenue Procedure 2022-24 sets forth the maximum amount that may be made newly available for excepted-benefit health reimbursement arrangements (“HRAs”) as provided under 26 CFR 54.9831-1(c)(3)(viii).

The 2023 HSA/HDHP limits are as follows:

Annual Contribution Limit
- Single Coverage: $3,850
- Family Coverage: $7,750
HDHP-Minimum Deductible
- Single Coverage: $1,500
- Family Coverage: $3,000
HDHP-Maximum Annual Out-of-Pocket Expenses (including deductibles, co-payments and other amounts, but not including premiums)
- Single Coverage: $7,500
- Family Coverage: $15,000
The catch-up contribution for eligible individuals age 55 or older by year end remains at $1,000.

Plans and related documentation, including employee communications, should be updated to reflect these new limits which are effective for calendar year 2023.

As always, please keep in mind that participation in a health FSA (or any other non-HDHP) will result in HSA ineligibility, unless the health FSA is limited to: (1) limited-scope dental or vision excepted benefits; and/or (2) post-deductible expenses.

The 2023 EBHRA limit is as follows:

The maximum amount that may be made newly available for the plan year for an excepted benefit HRA (“EBHRA) is $1,950. This amount is effective for plan years beginning in 2023.

If you have any questions about these products or would like assistance with updating documentation or employee communications, feel free to contact us.

As you are well aware, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Aaron L. Davis works in employee health and welfare benefits. He is also Chair of the firm’s labor law practice and serves as Firm Secretary. He has litigation experience in a diverse range of employment matters, including Title VII, the Age Discrimination and Employment Act, the Americans with Disabilities Act, the Family Medical Leave Act, and the Fair Labor Standards Act. You can reach him at 517.377.0822, or email her at adavis@fraserlawfirm.com.

Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2019 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.

IRS Announces 2022 Adjustments for HSAs & Excepted-Benefit HRAs

The IRS has released its 2022 annual inflation adjustments for Health Savings Accounts (“HSAs”) as determined under Section 223 of the Internal Revenue Code. Specifically, IRS Revenue Procedure 2021-25 provides the adjusted limits for contributions to a HSA, as well as the high deductible health plan (“HDHP”) minimums and maximums for calendar year 2022.

Additionally, Revenue Procedure 2021-25 sets forth the maximum amount that may be made newly available for excepted-benefit health reimbursement arrangements (“HRAs”) as provided under 26 CFR 54.9831-1(c)(3)(viii).

The 2022 HSA/HDHP limits are as follows:

Annual Contribution Limit
- Single Coverage: $3,650
- Family Coverage: $7,300
HDHP-Minimum Deductible
- Single Coverage: $1,400
- Family Coverage: $2,800
HDHP-Maximum Annual Out-of-Pocket Expenses (including deductibles, co-payments and other amounts, but not including premiums)
- Single Coverage: $7,050
- Family Coverage: $14,100
The catch-up contribution for eligible individuals age 55 or older by year end remains at $1,000.

Plans and related documentation, including employee communications, should be updated to reflect these new limits which are effective for calendar year 2022.

The 2022 EBHRA limit is as follows:

The maximum amount that may be made newly available for the plan year for an excepted benefit HRA (“EBHRA) is $1,800. This amount is effective for plan years beginning in 2022 (but it is unchanged since EBHRA’s inception in 2020).

If you have any questions about these products or would like assistance with updating documentation or employee communications, feel free to contact us.

As you are well aware, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.

Fraser Trebilcock is committed to providing you valuable information. Please watch for upcoming alerts on these and other topics.

We have created a response team to the rapidly changing COVID-19 situation and the law and guidance that follows, so we will continue to post any new developments. You can view our COVID-19 Response Page and additional resources by following the link here. In the meantime, if you have any questions, please contact your Fraser Trebilcock attorney.

Brian T. Gallagher is an attorney at Fraser Trebilcock specializing in ERISA, Employee Benefits, and Deferred and Executive Compensation. He can be reached at (517) 377-0886 or bgallagher@fraserlawfirm.com.

Client Alert: Additional Time to Contribute to HSAs

In addition to recent guidance allowing Health Savings Accounts (HSAs) to reimburse for over-the-counter medications (see our Client Alert), the Internal Revenue Service (IRS) has issued IRS Notice 2020-23 as well as frequently asked questions (FAQs) which, in part, describe relief for HSA contributions:

Notice 2020-23
FAQs

Specifically, contributions to HSAs may be made up until July 15, 2020. Additionally, if excess contributions had been made in 2019 and were treated as being taxable, individuals can avoid the 6% excise tax if the excess amount (plus income on that amount) is withdrawn by July 15, 2020. This does not apply to contributions that were made via salary reduction or if deductions were taken on the excess amounts. Contributions must be taxable.

The specific questions and answers relating to HSAs are as follows:

Q. Does this relief provide me more time to contribute money to my HSA or Archer MSA for 2019?

A. Yes. Contributions may be made to your HSA or Archer MSA, for a particular year, at any time during the year or by the due date for filing your return for that year. Because the due date for filing Federal income tax returns is now July 15, 2020, under this relief, you may make contributions to your HSA or Archer MSA for 2019 at any time up to July 15, 2020. For more details on HSA or Archer MSA contributions, see Publication 969, Health Savings Accounts and other Tax-Favored Health Plans.

Q. I made an excess contribution to my HSA in 2019. Can I avoid the 6% excise tax if I withdraw the excess amount (and income on the excess amount) by July 15, 2020?

A. Yes, provided that you didn’t make the contributions to the HSA through a salary reduction or similar arrangement with your employer, and you didn’t (or don’t) take a deduction for the excess contribution when you file your tax return. Also, if you file your return by July 15, 2020, and don’t withdraw those excess contributions by that date, you can still avoid the excise tax if you withdraw the excess (and income on the excess amount) by October 15, 2020.

The latter FAQ states that the withdrawal relief does not apply to contributions that were made via salary reduction or if deductions were taken on the excess amounts. This is because the excise taxes are only avoided if excess contributions are timely withdrawn, and only if the contributions are treated as taxable. The FAQ is unclear as to whether there is a blanket exclusion for contributions through salary reduction, or just those which are not taxable.

Timely filing of returns, as well as amended returns, are still required to accomplish the above. Automatic extension are not allowed if returns are not timely filed.

As you are well aware, the law and guidance are rapidly evolving in this area. Please check with your Fraser Trebilcock attorney for the most recent updates.

This alert serves as a general summary, and does not constitute legal guidance. Please contact us with any specific questions.

Client Alert: IRS Announces Increases for Health FSAs and HSAs

The IRS has just released its 2017 annual inflation adjustments, in which it announced that the dollar limitation under Code section 125 on voluntary employee salary reductions for contribution to health flexible spending arrangements (health FSAs) is increasing to $2,600. Previously the limitation was $2,550. The authority for this increase can be found in Rev. Proc. 2016-55: https://www.irs.gov/pub/irs-drop/rp-16-55.pdf. This link takes you to the IRS annual inflation adjustments for more than 50 tax provisions. Another item to note is that the qualified transportation fringe benefit remains at $255.

Although open enrollment season is about to be in full swing for most, employers should ensure that their salary reduction agreements and related enrollment materials are updated to reflect this increase. Additionally, employers will want to review their Code section 125 cafeteria plan documents to ensure these also allow for such an increase.

Moreover, earlier this year in Rev. Proc. 2016-28, the IRS released the HSA limits for 2017:

IRS Revenue Procedure 2016-28 provides the adjusted limits for contributions to a Health Savings Account (“HSA”) as determined under Section 223 of the Internal Revenue Code, as well as the high deductible health plan (“HDHP”) minimums and maximums for calendar year 2017. The 2017 limits are as follows:

Annual Contribution Limit
- Single Coverage: $3,400
- Family Coverage: $6,750
HDHP-Minimum Deductible
- Single Coverage: $1,300
- Family Coverage: $2,600
HDHP Maximum Annual Out-of-Pocket Expenses (including deductibles, co-payments and other amounts, but not including premiums)
- Single Coverage: $6,550
- Family Coverage: $13,100
The catch-up contribution for eligible individuals age 55 or older by year end remains at $1,000.

Plans and related documentation, including employee communications, should be updated to reflect these new limits.

As always, please keep in mind that participation in a health FSA will result in HSA ineligibility, unless the health FSA is limited to: (1) limited-scope dental or vision excepted benefits; and/or (2) post-deductible expenses.

This correspondence is intended to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

Questions? Contact us to learn more.

Elizabeth H. Latchana specializes in employee health and welfare benefits. Recognized for her outstanding legal work, in both 2018 and 2015, Beth was selected as “Lawyer of the Year” in Lansing for Employee Benefits (ERISA) Law by Best Lawyers, and in 2017 as one of the Top 30 “Women in the Law” by Michigan Lawyers Weekly. Contact her for more information on this reminder or other matters at 517.377.0826 or elatchana@fraserlawfirm.com.

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