HCSO HRA in 2015

HCSO HRA in 2015

We have received many questions regarding the ever changing HCSO and how your BeneFLEX HRA will comply.  Below are examples and some of the most common FAQs to keep you informed so you can choose the best option for you and your employees. The most important fact is BeneFLEX’s ability to help you going forward.

The best option moving forward: Combine BeneFLEX’s Excepted Benefit HRA with the City Plan to meet the City of San Francisco HCSO obligation.

WHY??? The HRA Works!!! The HRA HCSO has saved our clients many many thousands of dollars while helping to take care of their employee’s medical expenses. With the changes that were released, you have the opportunity to continue your Dental/Vision/LTC HRA and continue to save money. (See chart below for details.)

HCSO HRA Ordinance Change The San Francisco Board of Supervisors passed an amendment to the Health Care Security Ordinance on June 17, 2014. The amendment phases in (over 3 years) a requirement that all new health care expenditures eventually be made irrevocably.

3 Year Ordinance Timeline                                       

2015
Year (1)
Continue your Excepted Benefit HRA for Dental/Vision/LTC up to 206* hours per quarter. New guidelines effective January 1, 2015 mandate 60% of HCSO Rewards must be irrevocable** for 2015.
 2016
Year (2)
Continue your Excepted Benefit HRA for Dental/Vision/LTC up to 103* hours per quarter. New guidelines effective January 1, 2015 mandate 80%
of HCSO Rewards must be irrevocable** for 2016.
2017
Year (3)
BeneFLEX will administer the 24 month spend down and the employer will keep any HRA funds after 24 months. NO NEW HRA REWARDS.

Should I continue to put new 2015 hours worked into the HCSO HRA for 2015? Yes!  Employers are continuing the restricted HCSO HRA in 2015. 

*Hours projected for a full-time 40 hours per week. **”Irrevocable Health Care Expenditure” or “Irrevocable Expenditure” means any amount of health care expenditure that has not been retained by and cannot at any time be recovered or returned to the Covered Employer.

IMPORTANT 2015 FAQs
Q1.  How does the City’s HCSO 60% irrevocable mandate for 2015 affect our current HRA Dental/Vision rewards?  A1.  The 60% irrevocable rewards starts for hours worked in 2015. In 2015, you will use the same excepted benefit HRA for dental and vision, you will just use a different split. In 2014, you could do an average of 20 hours a week. In 2015, you will do a 60/40 split.  60% going into an irrevocable plan like the City option or Boon Group and 40% going into your BeneFLEX HRA.  

Q2.
  Can BeneFLEX still do my 24 month spend down for the 2013, 2014, 2015, & 2016 HRA? A2.  Yes, BeneFLEX will administer the 24 month required spend down. All unspent rewards will return to the employer as allowed by the city ordinance. Review the ordinance below or contact BeneFLEX with questions.

Q3.  How do I calculate the 40% to the HRA and 60% to the City in 2015? A3.  BeneFLEX has provided a new excel template (BeneFLEX HCSO Calculator) which will help you calculate the hours and new dollar amounts by category.

Q4.  Will the BeneFLEX HCSO Calculator take into account and give me credit for any irrevocable health care expenses we are making? Examples: employer paid health insurance premiums, dental or vision premiums, etc. A4.  Yes, the City ordinance allows employers to take credit for irrevocable expenses for health care. Those expenses will lower the amount you need to pay toward your irrevocable payments of 60% in 2015.

Q5.  What are the Excepted HRA Benefits you mention for the earned 2014, 2015, & 2016 rewards? A5.  The City listed the following excepted benefits that have to be offered in the HRA.
● Dental benefits limited to treatment of the mouth;
● Vision benefits limited to treatment of the eye;
● Medical indemnity insurance;
● Long-term, nursing home, home health, or community-based care; and
● Coverage limited to a specific disease or illness.

Q6.  Can I still do the BeneFLEX HCSO HRA and the Boon Group plan for 2015? A6. The City allows you to run two plans concurrently to meet your HCSO obligations. If you have started with the Boon Group, you can continue to split the employees with 40% of the hours to BeneFLEX HCSO HRA and give the Boon Group the remaining 60% of the hours. The Boon Group is a monthly plan and employees can go in and out of it by month, based on their average hours.

Q7. In your example, you show splitting hours 60/40%. You split out 40% hours to BeneFLEX and 60% hours to the Boon Group. Will the Boon Group allow us to split the hours? A7.  Yes, the Boon Group has created a partial insurance plan. They have a letter from the City saying their insurance meets the required irrevocable spend.

Q8. 
How will an employer pay for the BeneFLEX HCSO HRA? A8.  The same way as before. The City has approved that the monthly fees may come from the employee’s HCSO HRA account.

Q9.  How will the employer pay for the 60% irrevocable accounts with the City or Boon Group? A9.  Employers do not pay for the City option or Boon Group, both options keep 100% of the funds submitted and take the fees from those employee’s accounts.

Q10.  You mentioned insurance. Should I confer with my broker? A10.  Yes, your broker should be a part of this important decision. Call us if you have any questions.

Going Forward
Your 2015 Excepted Benefit HRA must:
1. Reimburse Excepted Benefits as identified by the City and approved by the HRA105 tax code (see qualified FAQs Q3).
2. Make HRA funds available for 24 months with 60% going to the City to be irrevocable.
3. Only award an average of 40% of hours per week in the HRA quarterly.
4. Etc… BeneFLEX will help you follow the City guidelines.

Printable Forms: HRA Order Form for 2015 Dental/Vision/LTC HRA Waiver Form – for California Insurance Exchange For more information about HCSO HRA Ordinance changes, visit http://sfgsa.org/index.aspx?page=418 or contact BeneFLEX at (800) 631-FLEX or info@beneflexhr.com.

 

Sincerely,

 

Mark Schmersahl
Vice President