HSA Help/Tax Expert Needed

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Spirit Rider
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Re: HSA Help/Tax Expert Needed

Post by Spirit Rider »

Thegame14 wrote: Fri Nov 30, 2018 11:41 am The HR Person is not a traditional HR person, she is the sister of the founder of the company so I am not 100% confident in her. Also according to Insperity, also not confident in them as well, that the company is not allowed to have health insurance retroactively applied, but wife swears this has happened last few years and last year another woman had a baby in February and had problems with insurance.

Also insperity says if I elect FSA in 2018 for 2019 and then the plan I choose in March is a HDHP plan, then the FSA is forfeited. Which would be 2 months time two incomes at $216.66 a month so basically almost $1,000....
I am not a health and welfare benefit professional, but none of this makes sense to me at all.
  • Are you sure both you and your wife's Section 125 cafeteria plans are on a calendar year basis? Your wife's plan really sounds like it is not.
  • If your wife's plan year really is calendar year and the health insurance elected in Feb/Mar really was retroactive, then it wouldn't matter if you gave the previous insurance information to the hospital, because it wouldn't be in effect and the new coverage would not be effective until it became retroactive. That might explain the other peoples problem. When the hospital filed claims before the new insurance was effective, the old carrier properly denied the claims.
  • If you have a calendar year plan and you enroll in an FSA, the availability of your wife's coverage if a qualifying life event for dropping your coverage and modifying your FSA contribution amount. However, it does not permit terminating the FSA and would make her HSA ineligible for the entire year even if/when the balance was $0.
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celia
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Re: HSA Help/Tax Expert Needed

Post by celia »

Thegame14 wrote: Fri Nov 30, 2018 9:49 am now the main problem is her company doesn't announce the new insurance plans until February and March, but we will have to present the hospital with the insurance we have at the time which will be the old insurance, so I am worried about how that will work out. She had a co-worker who was in a similar situation last year and she said it was a big pain.
I could maybe see this happen one year, but every year? How does the company get away with doing this? Do they forward the premiums for every employee to the previous carrier in Jan, Feb, and Mar, then pull them back for employees who are changing plans and give the premiums to their new carriers? I can see that this might be possible if the same number of employees come off and go on each carrier (ie you and I switch to each orher's plans), but I don't see how carriers put up with it. Do they just not pay any claims for the company until April (which I doubt they're allowed to do since doctors need to be paid in a reasonable time). Continuing to pay claims then having to pull the money back sounds problematic for them too. Then the employees are sitting in no-man's land every year just to "take advantage" of getting better insurance for a medical emergency they already had in Jan or Feb. ??? Incredible :!:

Then there's those who signed up for a FSA who might need to withdraw (unless they withdrew their money for a Jan or Feb expense).

There's probably other complications too (insurance-wise or legal) that you just don't need at this time with your wife and new kid. So I would just not make any changes at this time, since anything you change will turn into a big hassle and time-waster. I'd rather spend the time being a supportive husband and dad, if I was in your shoes. Just avoid the emotional and financial roller coaster this time. And don't plan any future medical services for Jan-March, until they align their plans with the calendar year.
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Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 »

celia wrote: Fri Nov 30, 2018 12:56 pm
Thegame14 wrote: Fri Nov 30, 2018 9:49 am now the main problem is her company doesn't announce the new insurance plans until February and March, but we will have to present the hospital with the insurance we have at the time which will be the old insurance, so I am worried about how that will work out. She had a co-worker who was in a similar situation last year and she said it was a big pain.
I could maybe see this happen one year, but every year? How does the company get away with doing this? Do they forward the premiums for every employee to the previous carrier in Jan, Feb, and Mar, then pull them back for employees who are changing plans and give the premiums to their new carriers? I can see that this might be possible if the same number of employees come off and go on each carrier (ie you and I switch to each orher's plans), but I don't see how carriers put up with it. Do they just not pay any claims for the company until April (which I doubt they're allowed to do since doctors need to be paid in a reasonable time). Continuing to pay claims then having to pull the money back sounds problematic for them too. Then the employees are sitting in no-man's land every year just to "take advantage" of getting better insurance for a medical emergency they already had in Jan or Feb. ??? Incredible :!:

Then there's those who signed up for a FSA who might need to withdraw (unless they withdrew their money for a Jan or Feb expense).

There's probably other complications too (insurance-wise or legal) that you just don't need at this time with your wife and new kid. So I would just not make any changes at this time, since anything you change will turn into a big hassle and time-waster. I'd rather spend the time being a supportive husband and dad, if I was in your shoes. Just avoid the emotional and financial roller coaster this time. And don't plan any future medical services for Jan-March, until they align their plans with the calendar year.
She said it happened 3 years ago and HR told her it is going to happen again this year. I am trying to see how much of the hospital bill I can pay pretax by trying to use some of these tax advantaged accounts, but this is getting much too complicated. I think best bet is to each sign up for the $2,600 FSA and take a similar plan to the one we have now next year, not switch to a HDHP plan.
TropikThunder
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Re: HSA Help/Tax Expert Needed

Post by TropikThunder »

This makes no sense, and I can’t imagine an insurance provider (not to mention BOTH insurance providers) putting up with it. You have Aetna coverage (and pay premiums to Aetna) in Jan, Feb, and Mar. Then you choose the new plan with Cigna in April and the company back dates it to Jan 1. That means Aetna received premiums for coverage it wasn’t providing: how do you make them give the money back? Cigna is liable for coverage for three months where it received no premiums: how do you make them approve claims? There are limited situations where health insurance coverage can be retroactive (Medicare, COBRA), but they all require the prior premiums to be paid. Who pays Cigna for Jan, Feb, and Mar? You’ve already paid Aetna. This doesn’t pass the logical smell test.
Last edited by TropikThunder on Fri Nov 30, 2018 1:34 pm, edited 2 times in total.
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Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 »

TropikThunder wrote: Fri Nov 30, 2018 1:18 pm This makes no sense, and I can’t imagine an insurance provider (not to mention BOTH insurance providers) putting up with it. You have Aetna coverage (and pay premiums to Aetna) in Jan, Feb, and Mar. Then you choose the new plan with Cigna in April and the company back dates it to Jan 1. That means Aetna received premiums for coverage it wasn’t providing: how do you make them give the money back? Cigna is liable for coverage for three months where it received no premiums: how do you make them approve claims? This doesn’t pass the logical smell test.
I think it will still be United Healthcare, but they are given a choice of about 8 plans with different buy ups or buy downs. Her coverage is UHC Choice Plus 1000 and she pays $40 a month for family coverage 1,000/3,000/10,000. but there are 7 other options with different OOP costs, deductibles, and out of pocket maxes. Last year they offered a HDHP that was $1,500/$3,000/$7,350, so I was thinking that plan with $6,900 in an HSA means we will likely be able to pay all of 2019 medical costs from the HSA, and then in 2020 when we aren't having a baby go back to the non HDHP plan which has the lower individual deductible, as most years we don't use a lot of medical costs.

They offer UNHC Choice plus 500,1000,1500, 2500, 6000, and UNHC choice plus HDHP 1,500, 3,000 and 5,000
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celia
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Re: HSA Help/Tax Expert Needed

Post by celia »

celia wrote: Fri Nov 30, 2018 12:56 pm And don't plan any future medical services for Jan-March, until they align their plans with the calendar year.
I should re-phrase the last part to "until they stop making employee choices retroactive."

There's no problem with not being aligned with a calendar year. In fact, I worked for a school district for a while whose insurance plans ran Oct to Sept with open enrollment the first half of Sept. You almost need to do this with a school district else new employees would have to choose something in Sept, then could select differently in November for a Jan. 1 effective date.

The only problem with being out of sync with the calendar year is that FSAs and HSAs are calendar-year oriented. But once you jump in or out, you likely want to stay that way for several years.
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Thegame14
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Re: HSA Help/Tax Expert Needed

Post by Thegame14 »

celia wrote: Fri Nov 30, 2018 2:06 pm
celia wrote: Fri Nov 30, 2018 12:56 pm And don't plan any future medical services for Jan-March, until they align their plans with the calendar year.
I should re-phrase the last part to "until they stop making employee choices retroactive."

There's no problem with not being aligned with a calendar year. In fact, I worked for a school district for a while whose insurance plans ran Oct to Sept with open enrollment the first half of Sept. You almost need to do this with a school district else new employees would have to choose something in Sept, then could select differently in November for a Jan. 1 effective date.

The only problem with being out of sync with the calendar year is that FSAs and HSAs are calendar-year oriented. But once you jump in or out, you likely want to stay that way for several years.
That is the problem, I was thinking of jumping into a HDHP plan because of the lower out of pocket max because the hospital bill will hit the max, and I can do a HSA which I like the idea of, but then jump out of it in years where we want a lower individual deductible since we don't use insurance that often.
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Edie
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Re: HSA Help/Tax Expert Needed

Post by Edie »

Thegame14 wrote: Fri Nov 30, 2018 2:12 pm
celia wrote: Fri Nov 30, 2018 2:06 pm
celia wrote: Fri Nov 30, 2018 12:56 pm And don't plan any future medical services for Jan-March, until they align their plans with the calendar year.
I should re-phrase the last part to "until they stop making employee choices retroactive."

There's no problem with not being aligned with a calendar year. In fact, I worked for a school district for a while whose insurance plans ran Oct to Sept with open enrollment the first half of Sept. You almost need to do this with a school district else new employees would have to choose something in Sept, then could select differently in November for a Jan. 1 effective date.

The only problem with being out of sync with the calendar year is that FSAs and HSAs are calendar-year oriented. But once you jump in or out, you likely want to stay that way for several years.
That is the problem, I was thinking of jumping into a HDHP plan because of the lower out of pocket max because the hospital bill will hit the max, and I can do a HSA which I like the idea of, but then jump out of it in years where we want a lower individual deductible since we don't use insurance that often.
Why wouldn't you want to stay in the HDHP plan in years you aren't using insurance that much? What's the premium difference between the non-HDHP plan and the HDHP plan? The HSA is a wonderful savings vehicle, and having a lower OOP max on the HDHP (if that's the 7,350 OOP max you listed) is beneficial also.
Atgard
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Re: HSA Help/Tax Expert Needed

Post by Atgard »

For what it's worth, I had a situation where we had a child while my employer was in the midst of switching insurance companies and "back dating" the insurance ... although I think it was just for one month, meaning they obtained coverage around the 15th of the month, and back-dated to the 1st.

It was still a major pain at the hospital though, with me on the phone with our CFO who was telling me "You're covered, the policy will be back-dated once we get it" and the hospital saying "you have no insurance" and me trying to explain to the CFO that, without a time machine, we were not covered and couldn't leave the hospital. Fun times.
pdavi21
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Re: HSA Help/Tax Expert Needed

Post by pdavi21 »

Is it a family plan with a family deductible? This will make it NOT an HDHP in the case that the individual deductible (2000) is below double the limit (2700) EVEN IF the individual deductibles are above the individual limit (1350).
It's a weird law that dings families bad...
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking
pdavi21
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Re: HSA Help/Tax Expert Needed

Post by pdavi21 »

Thegame14 wrote: Thu Nov 29, 2018 8:21 pm DW and I are having a baby February 2019. We can contribute to FSA at work up to $2,600 each for a total of $5,200. DW has family coverage insurance provided by her employer but we can change it for 2019 if it makes sense. Right now the plan we have DW pays $25 a month and it has a deductible of $1,000 per person, $3,000 family. According to Insperity her HR outsourced service provider this is not a HSA and she cannot open one through her employer.

I called Fidelity and asked them about opening an HSA and they said no problem as long as you qualify based on IRS publication 969 you can sign up and it is all self reported no one checks to make sure you qualify, but I assume if I am wrong it will be bad. According to IRS publication 969 a HDHP is one that has an individual deductible of $1,350 or family deductible of $3,000. Since her plan is a family plan and the deductible is $3,000 IMO we qualify for an HSA, and they even said I can fully fund the max of $6,900 for 2018 and I can do a transfer from an IRA to not have to come out of pocket for 2018 and then in 2019 I can fund in through payroll deductions.

Which one is right? Fidelity says I am right I can do it, Insperity says no. I read the publication and believe it qualifies. Worst case I guess, I don't qualify for 2018 and can choose the official HDHP for 2019 that has a lower out of pocket max, be able to fund the $6,900 for the HSA since I assume having a baby will max out our family out of pocket max for the year.

Please advise.
Is it a family plan with a family deductible? This will make it NOT an HDHP in the case that the individual deductible (1000) is below the family deductible limit (2700) EVEN IF the individual deductibles are above the individual limit (1350). Which they aren't even.
It's a weird law that dings families bad. Honestly, it hit me worse with 2k individual and 4k family - not a HDHP.

I reposted with a reply to you directly, because this is in fact the case...sorry bro.
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking
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