Compliance Q&A: Severance Pay and Health Insurance: What You Need to Know About Level Funded Plans and Family HSA Contributions at 65
- October 29, 2024
- Posted by: Gus Altuzarra
- Category: Compliance Q&A
10.24.24 | SEVERANCE PAY AND HEALTH INSURANCE
Q. Can an employer offer to keep an employee insured under the medical policy under a severance arrangement?
A. Terminated employees are likely not eligible for continued coverage under the medical policy so this is not an option. However, if the employer is subject to COBRA, the employer can offer to pay COBRA premiums (or a portion) for the terminated employee under a severance arrangement. If the COBRA premiums are paid directly to the carrier, this part of the severance benefit should be tax-free.
9.26.24 | LEVEL FUNDED PLANS AND PCORI FEE
Q. Are level funded health plans considered to be self-funded? World they be subject to pay the PCORI fee if they had an integrated HRA?
A. Yes, level funded plans are considered to be self-funded for ERISA and insurance purposes. Sponsors of level funded plans are responsible for the PCORI fees. Level funded plans and HRAs can be combined for PCORI fee purposes so that only one fee is paid if the HRA and level funded plan share the same plan year and plan sponsor.
10.10.24 | FAMILY HSA CONTRIBUTION WHEN ONE MEMBER TURNS 65
Q. An employee in a group plan with fewer than 20 employees has employee plus spouse coverage and contributes the family maximum to an HSA. The spouse just turned 65 and has enrolled in Medicare but will remain on the group plan. Can the employee still contribute the family maximum to the HSA?
A. As long as the employee has family HDHP coverage, the employee will be able to contribute the family max to an HSA even though the spouse enrolls in Medicare. Eligibility to contribute is based on the employee (HSA account holder).
