IRS Releases Guidance for Employers Offering Individual Coverage HRAs

Posted on October 28th, 2019

On September 27, the Internal Revenue Service (IRS) released proposed regulations on the application of the Affordable Care Act’s (ACA) employer shared responsibility provisions to a new type of Health Reimbursement Arrangement (HRA) available starting in 2020.  In June 2019, the Department of Labor, the Department of Health and Human Services, and the Treasury Department (the “Departments”) released a final rule concerning HRAs that can be integrated with individual market coverage or Medicare.  This new type of HRA is referred to as an Individual Coverage HRA, or ICHRA.  The rule, based on an executive order from President Trump in 2017, is intended to increase the usability of HRAs, to expand employers’ ability to offer HRAs to their employees, and to allow HRAs to be used in conjunction with non-group coverage.

The ICHRA rule is effective for plan years beginning on or after January 1, 2020.  The IRS has also proposed regulations to guide employers in determining whether their contribution to an employee’s ICHRA results in an “affordable” offer of coverage under the ACA.  Specifically, the proposed regulations will assist employers who offer ICHRAs in determining the “required employee contribution” for purposes of line 15 of Form 1095-C.  Employers may continue to use the W-2, Rate of Pay, or Federal Poverty Level safe harbors to determine whether their entry in line 15 results in an “affordable” offer of coverage.  (See Example on page 3.)

The proposed regulations are effective for periods after December 31, 2019.  Employers may continue to rely on them during any ICHRA plan year beginning within six months from the publication of any final regulations.  

Proposed Safe Harbors

The proposed regulations offer safe harbors for applicable large employers (ALEs), which are those who employed at least 50 full-time equivalent employees on average in the prior calendar year.  When an employer offers an ICHRA to a full-time employee, the “required employee contribution” to include on line 15 of Form 1095-C is the difference between the self-only amount the employer makes newly available to the employee under the individual coverage HRA for the month (the monthly HRA amount) and the employee’s monthly premium for self-only coverage under the lowest-cost silver plan offered in the Exchange for the rating area in which the employee resides (the PTC affordability plan).

Instead of using the Exchange where the employee resides, an employer may use a location-based safe harbor based on the employee’s primary worksite.  In addition, employers may use a “look back” safe harbor to determine whether the premium for the lowest-cost silver plan self-only coverage should be determined by reference to the current or prior calendar year.  Employers must apply the safe harbors on a consistent basis to all employees within a class.  Employers may use a different safe harbor for different classes of employees.

Location Based Safe Harbor

As mentioned, the “required employee contribution” to include on line 15 of an employee’s Form 1095-C is the difference between the self-only amount the employer makes newly available to the employee under the individual coverage HRA for the month (the monthly HRA amount) and the employee’s monthly premium for self-only coverage under the lowest-cost silver plan offered in the Exchange for the rating area in which the employee resides (the PTC affordability plan).

Under the location based safe harbor, an employer may use the lowest-cost silver plan for self-only coverage through the Exchange where the employee’s primary site of employment is located. The employer is not required to use an employee’s actual residence to determine affordability, unless the employee’s worksite is his or her home (due to remote or telecommute work).  The primary site of employment is the location the employer expects the employee to perform services on the first day of the plan year or the effective date (the day the employee is eligible to participate in the ICHRA).

Age-Related Issues

The proposed regulations do not establish any specific safe harbors based on age; however, as a practical matter, an employer may use the age of the oldest employee to determine the ICHRA contribution for employees in that class (i.e., take the lowest-cost silver plan based on the age of the oldest employee).  An employer may vary the amount of the ICHRA contribution based on age by no more than a 3:1 ratio between the oldest and youngest participant.  An employer making age-based contributions may use the employee’s age on the first day of the plan year or the first day the employee is eligible to participate in the ICHRA.

Look-Back Month Safe Harbor

An employer may also utilize the look-back month safe harbor when selecting the lowest-cost silver plan.  If the ICHRA operates on a calendar year basis, the employer may use the premium for self-only coverage under the lowest-cost silver plan from January of the prior calendar year.  If the ICHRA operates on a non-calendar basis, the employer may use the monthly premium amount from January of the current calendar year. The difference in the look-back month is attributed to when the Exchange opens and when rates are submitted. The IRS understands that employers generally determine their plans and contributions ahead of time, and wants to ensure employers have the opportunity to make such 

determinations.  If the employer chooses to use the look-back month safe harbor, the employer must use the employee’s current applicable location and current age, regardless of whether the lowest-cost silver plan is determined based on the current or prior year.

Example:  Location and Look-Back Month Safe Harbor with Calendar Year ICHRA

For 2020, an employer offers all full-time employees and their dependents a calendar year ICHRA with $250 per month available regardless of family size.  All employees have their primary site of employment in City A.  An employee is 40 years old on January 1, 2020 and makes $15/hour.  The applicable monthly premium for the lowest-cost silver plan for a 40-year old offered through the Exchange in City A for January 2019 is $400.  The employer uses the Rate of Pay safe harbor for hourly employees.

In this example, the employee’s “required contribution” for each month of 2020 is the $150 difference between the lowest-cost silver plan ($400) and the employer’s monthly contribution ($250).  Therefore, $150 is the amount reported in Line 15 of Form 1095-C. 

Conclusion: ICHRA Contribution Results in an Affordable Offer

The employer has offered affordable coverage to this employee in 2020 because the required contribution ($150) is less than the Rate of Pay safe harbor for this employee (9.78% × $15 × 130 = $196).

Other Considerations

1094-C/1095-C Reporting

Applicable large employers are still required to perform the required employer mandate reporting (Forms 1094-C and 1095-C). The IRS indicated that reporting exceptions applicable to traditional HRAs integrated with fully insured group health plans will not apply.  The IRS also indicated that additional guidance will be released before the calendar year 2020 reporting is due. If an employer offers affordable coverage under an ICHRA, it is presumed it meets minimum value and will be viewed as an offer of employer-sponsored group health plan coverage.

How to Find the Data

As a way to make determining affordability less burdensome, the proposed regulations state that for plans on the federal Exchange, the Department of Health and Human Services (HHS) has provided a platform for employers to view the lowest-cost silver plans in applicable locations. For plans offered through a state Exchange, the IRS stated that HHS will work with the states to implement a similar platform.  If the employer uses the platform to determine affordability, it may rely on the information posted. 

Section 105(h) Nondiscrimination    

An ICHRA, as a self-funded plan, is required to satisfy Section 105(h) non-discrimination testing; however, an ICHRA that only reimburses insurance premiums and not medical expenses is not subject to Section 105(h). Although different classes are allowed, the ICHRA cannot discriminate in favor of highly compensated individuals. The proposed regulations provide that an ICHRA that satisfies the 3:1 age variation exception will not be discriminatory under Section 105(h) solely due to the variation based on age.  Without the exception, Section 105(h) prohibits the maximum limit attributable to employer contributions to an HRA from being modified by reason of a participant’s age.  The proposed regulations also provide that if the maximum dollar amount under an ICHRA varies for participants within a class of employees, or varies between classes of employees, then with respect to that variance, the ICHRA does not violate Section 105(h) so long as the maximum dollar amount only varies as permitted under the ICHRA rules.

Allowing Pre-Tax Contributions to Individual Market Coverage

The proposed regulations address the extent to which an employer can allow an employee to make pre-tax contributions towards his/her individual plan. The proposed regulations do not permit employees to take the salary reduction to purchase qualified health plans through the Exchange, which is expressly prohibited by the ACA. If an employee purchases an individual health plan off-Exchange (such as going directly to a carrier), an employer may allow employees to pay pre-tax for the portion of the premium not covered by the ICHRA.  If an employer wants to allow pre-tax contributions, it must determine whether the individual coverage was purchased on-Exchange or off-Exchange, in order to determine if the deductions can be taken pre-tax.

What Employers Should Expect Next

Employers who are contemplating offering an ICHRA should consult with qualified ERISA counsel.  There are additional requirements and guidelines an employer will need to meet in order to comply with all the requirements applicable to these new arrangements. The Departments also anticipate the release of additional guidance in the future.  


About the Author.  This alert was prepared for Alera Group by Marathas Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act. Contact Peter Marathas or Stacy Barrow at or

The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients.  This is not legal advice.  No client-lawyer relationship between you and our lawyers is or may be created by your use of this information.  Rather, the content is intended as a general overview of the subject matter covered.  This agency and Marathas Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein.  Those reading this alert are encouraged to seek direct counsel on legal questions.

© 2019 Marathas Barrow Weatherhead Lent LLP.  All Rights Reserved.

Getting the Best Outcome from a Workers’ Comp Incident

Posted on October 22nd, 2019

The definition of what is the best outcome has become more expansive in recent years.

First, let’s define what we mean by best outcome. It’s where the injured employee’s discomfort is minimized, recovery is maximized, and the well-being of both the firm and employee suffer as little as possible. In the past, the employer’s focus has often been primarily on minimizing cost and settling the claim as quickly and economically as possible.

But in recent years the focus has shifted in a more holistic direction toward the well-being of the employee. In addition to creating a more positive work environment, the employer benefits from reduced litigation costs and a more productive workforce because employees return to being productive members of the firm sooner.

The first step in the process is making sure injured employees get help immediately with a quick evaluation of the injury.  They also need answers to their questions, and most importantly, compassion. An empathetic representative of the employer, such as a registered nurse, should set the tone by making sure that not only does the injury get promptly attended to but also help the employee manage the paperwork and gain access to additional resources that may be necessary to ensure the employee’s full recovery. It’s important to be prepared to answer questions about job security, how the injured employee will get paid, how long they can expect recovery to take and so on in a caring, compassionate way.

Some of the other people with resources, capabilities and responsibilities who may be important in making the claims outcome more positive for everyone include:

Nurse Case Managers

•   To monitor and guide occupational injury care

•   To provide guidelines for managing effective treatment utilization.

•   To act as a patient advocate

•   To provide a non-threatening, friendly, professional relationship with the injured employee. Such support can identify and deal with any personal concerns and help reduce the risk of litigation. It can also help minimize any barriers to returning the injured employee to work, such as childcare issues or financial worries. These are all concerns that may impact the outcome.

Vocational Specialists

•   To provide return to work strategies that fit the injured worker’s individual claim circumstances.

•   To help employees who have restrictions in their ability to perform work by setting up modified duty for them.

•   To intervene when providers are not following sound guidelines related to returning to work.

Surgery Nurse Services

•   To help injured employees facing surgery be better prepared physically and mentally, including instilling in them the confidence to achieve a faster recovery. This innovative approach is designed to focus specifically on the needs of patients dealing with surgery, which has historically been a significant driver of high-cost claims.

Physician Advisors

•   To ensure that the appropriate treatments are provided based on the injury

•   To support other key decisions regarding treatments, procedures, and other facets of injury management that can significantly impact a claim.

•   To enhance the utilization review process,

•   To provide medical and pharmaceutical expertise to ensure clients and their injured employees continue on the right path to achieve the best possible outcomes.

Prescription Drug Management Advisors

•   To help control the use of narcotics, opioids and other appropriate drugs prescribed to treat work-related injuries. This role, regardless of who performs it, is especially important because of the growing concern over misuse of pain medications.

Many if not all of these people and the functions they perform may be critical in getting the best outcome in a workers’ comp incident. But it all starts with an empathetic listener to set the stage with the injured worker in a way that is comforting, positive and reflects the goodwill of the employer.

Please contact us if you have questions about how to improve your workers’ compensation incidents claims handling. 

Travel Insurance for Peace of Mind

Posted on October 22nd, 2019

The last thing you want to think about when planning your dream vacation is canceling your trip. Still, it pays to plan ahead and travel insurance can be one of the most important items you take.

Travel insurance generally covers trip cancellations, medical emergencies, travel delays and lost luggage. Medical and medical evacuation benefits are built into most travel insurance policies. It also can pay for the costs of getting you home if the hospital determines it’s necessary.

With trip cancellation coverage, you get a 100 percent refund of your trip expenses if you cancel before leaving for a reason covered by your policy:

•    Sickness or injury

•    Your death or death of a family member or traveling companion

•    Hurricane damages to your destination or flight cancellation

•    Laid off from work or required to work

•    Terrorist incident at your destination

•    Travel supplier bankruptcy

•    Called for jury duty

•    Military deployment

•  Divorce or legal separation

Trip Interruption coverage covers many of the same reasons as trip cancellation coverage. Policies with trip interruption also cover additional transportation costs if you must return early and costs for the lost portion of your trip.

Some travelers chose to upgrade to “cancel for any reason“ coverage. It offers a partial refund of expenses, usually 75 percent, for reasons not listed under trip cancellation. Adding this coverage will increase premiums about 40 percent and must be added 14 to 30 days after you book your trip.

Travel insurance also can cover travel delays when you miss a flight and helps pay for meals and hotel accommodations. Missed connection coverage pays for costs if you missed your departure for a reason covered by your policy, such as severe weather, a mechanical breakdown, or accident on your way to the airport.

To qualify, you generally should buy insurance within 15 days of booking your trip. 

Is My Personal Drone Covered?

Posted on October 14th, 2019

Drones have exploded in popularity over the last few years for hobby and recreational use. Drones can be costly to replace and expose you to liability risk.  It is important to know the guidelines for operation and where your coverage may lie in your personal insurance policies.

A drone is considered an unmanned aerial vehicle. You must register your aircraft at  if the weight of the aircraft is between .55lbs to 55 lbs. The registration number must be marked on the outside of the drone. Always carry proof of the registration.  You should know that if you intentionally violate any of these safety requirements, or if you operate in careless and reckless manner, you can be subjected to civil and criminal penalties.

While the drone itself may be covered under the personal property coverage on your homeowner’s policy, there may be coverage concerns when it comes to bodily injury or property damage. Drones accidents have widely been reported and can cause harm to a third party when there is a power failure or loss of control of the drone.  Flying your drone around people, properties and power lines all present exposure to a possible liability claim. Never use your personal drone for business purposes, this could negate coverage. Take the time to check with your insurance agent before accidents happen to ensure you have both property and liability coverage for your drone.  If your homeowner’s policy does not carry coverage you may need to purchase a separate drone/UAS/quadro copter insurance policy.

On a side note, if you don’t own a drone but your neighbor does and you find it flying over your property, shooting it out of the sky is a felony charge and not covered by your homeowner’s policy!

Recreational Drone Operation Guidelines:

  • Register your drone with the Federal Aviation Administration.
  • Stay at least 5 miles away from all airports
  • Don’t fly more than 400 ft. above the ground
  • Keep your drone within your line of sight
  • Don’t fly over people without permission
  • Don’t fly over government facilities
  • Don’t fly in national parks
  • Don’t fly over private property
  • Don’t fly over fires or crime scenes

Kellie Eschbach

Personal Lines Manager

Health Insurance Captives: Avoid The Hassle Of Yearly Shopping

Posted on October 14th, 2019

Health insurance captives offer a long term solution to shopping your health insurance every single year.

Captive health insurance programs provide the stability and flexibility that large employer’s experience, down to small and mid-size employers with 25 to 1,000 enrolled members.  They also decrease the risk of being self-insured on your own through a captive layer of funding, and since you become the insurance company, you keep any underwriting profit the carrier would normally take.

Our captives allow you to choose your own third party administrator, carrier network, and pharmacy benefit manager.  The fixed costs are typically 15%-20% of your total medical spending.  When you are fully insured, your fixed costs are 100% of your spend.  Even a typical self-insured plan includes fixed costs of approximately 40- 60%.

The retention rates are in the high 90% range with the average increase in total spend averaging less than a 2% increase year after year since 2010. Typical first year realized savings average 5% – 20% below fully insured options.

Our Alera actuaries show a typical company will have a poor claims year 1 out of every 5 years.  The four years where claims run well, companies are over paying for their insurance.  In that bad claims year, you have the protection of the captive to avoid the roller coaster of renewal increases.  Even if you receive a 20% renewal increase in a captive, it is a 20% increase in your fixed cost not your total spend if you were in fully insured or level funded plans.

We have captive options for companies with 25 – 1,000 enrolled employees.  Companies that have more than 1,000 employees can still take advantage of some tax benefits of creating a single cell captive.

Contact our benefits department to learn more.

Todd Linn

Employee Benefits Manager

Federal Emphasis Programs And You- Region 3

Posted on October 14th, 2019

Each year Federal OSHA issues National Emphasis Programs (NEPs), which cover all of the Federal OSHA-mandated States in the United States.

Recent NEP’s have included focus on:

  • Trenching and Excavation (2018)
  • Combustible Dust (2008)
  • Amputation (2015)

In addition to NEP’s, each OSHA Region (there are10 across the country) also has Local Emphasis Programs (LEP’s) and/or Regional Emphasis Programs (REP’s).

Each of these are enforcement strategies designed and implemented at the regional office and/or area office levels. These programs are intended to address hazards or industries that pose a particular risk to workers in the office’s jurisdiction. The emphasis programs may be implemented by a single area office, or at the regional level (Regional Emphasis Programs) and applied to all of the area offices within the region. These LEPs will be accompanied by outreach intended to make employers in the area aware of the program as well as the hazards that the programs are designed to reduce or eliminate. This outreach may be in the form of informational mailings, training at local tradeshows, or speeches at meetings of industry groups or labor organizations.

We are located in OSHA Region 3, which includes:  PA, DE, DC, VA, WV, & MD.  The current actionable LEP’s and REP’s are listed below, with active links to the enforcement directives behind each of them.

If you or your company fall into the actionable functions or operational categories, there is a more likely chance that a compliance inspector may visit you for a “scheduled” inspection. “Scheduled”, as in they are looking more closely at your category, not “scheduled”, as in they will call ahead to let you know they are coming!

If you have any questions regarding resources or assistance with compliance, please feel free to contact the Risk Management Department here at HMK Insurance. We would truly appreciate the opportunity to see you in advance of that potential “knock on your door”.

Jade Simmers

Risk Management Director

The 6 Most Important Building Blocks Of A Cyber Policy

Posted on October 14th, 2019

Ransomware attacks occur every 14 seconds and 50% of these attacks target small businesses. By 2021 it is estimated that the total cost of all cyber crimes will exceed $6 trillion. If you think “I’m a small business that won’t happen to me” …think again. Nearly 50% of these cyber-attacks target small businesses and can have devastating effects not only on your business but your reputation with your employees, customers, suppliers and the public at large.

If you are targeted by a cyber-attack, your operations can be negatively impacted by 3rd party liability claims brought by employees, customers and suppliers, ransom payments, legal fees, business interruption, digital asset restoration and computer replacement.

As the cyber threat to business continues to grow, insurance companies have developed insurance policies that provide the financial resources to respond to and help you survive a criminal cyber-attack on your business. Policy options span from add-ons to a commercial package policy to broader stand-alone policies. Not all policies are the same and you should consult with your HMK Insurance professional to assist you in developing the plan that best protects your operations. There are a few key coverages that should be made part of this valuable insurance protection.

The 6 Most Important Building Blocks of a Cyber Policy:

  1. Network & Information Security Liability: provides protection from 3rd party claims as a result of a security failure and data breach. These claims can include a monetary judgement you are obligated to pay as a result of your failure to adequately secure your computer networks and 3rd party information stored on your computer systems.
  2. Cyber Extortion: provides funds to pay ransom demands as a result of threats to alter, damage or destroy your computer programs, software or data stored on your computer systems.
  3. Breach Response: reacting quickly and effectively to a data breach is critical. There is a significant cost to your response and this coverage will fund expenses such as attorney fees, forensic analysis and notification to affected individuals.
  4. Business Interruption: a cyber-attack has the potential to shut your operations down and your insurance policy needs to provide the financial resources you will need to remain financially sound during the breach and your recovery. This coverage will pay for you continuing operating expenses, including payroll.
  5. Digital Asset Restoration: a cyber-attack can lead to the loss of critical data needed to run your operations. Restoring this data after an attack is costly. This protection will pay for the restoration costs you incur due to alteration, destruction, damage and theft of your data.
  6. Computer Replacement: After a cyber incident you may be faced with computer hardware that cannot be repaired or restored. This expense can be significant, and your insurance policy should be set up to pay for the expense.

It’s important to understand that all insurance policies contain exclusions and limitations on coverage, so it is essential to work with your HMK Insurance professional to assess your risk and design a Cyber Insurance Policy that provides the protection you want within your budget. Additionally, HMK has resources to provide you with a Cyber Risk Assessment free of charge just ask and your HMK agent will start the process for you.

John Eltringham

Commercial Insurance Advisor

Access to Preventive Care Eased for Some HDHPs

Posted on October 14th, 2019

The Internal Revenue Service (IRS) has made it easier for people who have high-deductible health plans (HDHPs) with health savings accounts (HSAs) to get preventive care services to treat chronic diseases even if the insured hasn’t yet met the deductible.

In the past, the Treasury Department and the IRS generally did not allow any preventive care services or benefits to be used to treat an existing illness, injury or condition. Health agencies argued that many individuals with chronic conditions often failed to get treatment because of the high cost of care. As a result, the “cost” of not getting proper care often was amputation, blindness, heart attacks or strokes — all of which require considerably more extensive medical intervention and costs.

This year, in response to these concerns, President Donald Trump issued Executive Order 13877 — “Improving Price and Quality Transparency in American Healthcare to Put Patients First.” The order directs the Secretary of the Treasury to issue guidance expanding certain patients’ ability to get care for chronic conditions.

The Treasury Department and the IRS worked with the Department of Health and Human Services (HHS) and issued IRS Notice 2019-45. The notice allows certain medical care services, including prescription drugs, to be classified as preventive care for someone with certain chronic conditions. These services can be obtained by insured members who have an HDHP without a deductible or with a deductible below the applicable minimum deductible (self-only or family) for an HDHP.  

For a service to be classified as a chronic condition and needing preventive services, the service or item must be low-cost, and there must be medical evidence that the service prevents the chronic condition from getting worse or developing into a secondary condition.  

If you have any questions about how this might affect you or your employees, please contact us at

Health Savings Accounts – One Key to a More Comfortable Retirement

Posted on October 11th, 2019

Most people know that a 401(k) plan is a valuable retirement tool. It’s less well-known that a health savings account (HSA) also is a valuable retirement tool. Not only is an HSA a great way to save for medical expenses while employed, but the same savings account also can be used during retirement.

An HSA is a tax-advantaged savings account that employees can use to pay for out-of-pocket medical expenses. HSAs always are paired with qualified high-deductible health plans (HDHPs). Qualified HDHPs have low premiums but high deductibles and when HSAs are used for qualified medical expenses, HSAs have a triple tax free benefit: pre-tax contributions; tax-free growth; and tax-free withdrawals for qualified medical expenses.

If you offer an HDHP at your company, make sure your employees understand that HSAs also have some great retirement benefits. According to Fidelity Investments’ Retirement Health Care Cost survey, the cost of health care for the average couple throughout retirement is $280,000. Even with Medicare coverage, retirees should expect to pay for premiums, co-pays, some drugs and other expenses not covered by insurance. Money deposited in an HSA and saved for retirement can help cover these costs.

Here’s what your employees need to know:

Who Can Open an HSA? Any employee may open an HSA if they participate in a company HDHP and have no other health insurance; are not enrolled in Medicare; and cannot be claimed as a dependent on someone else’s tax return.

Benefits of an HSA. An employee’s account balance grows tax-free and any interest, dividends or capital gains earned are nontaxable, unless withdrawn for non-medical expenses. Also, any contributions you make to an employee’s account are not counted as part of their taxable income.

Unlike a flexible spending account (FSA), the balance can be carried over from year to year. Employees also take their HSA with them if they accept a position with another company or when they retire.

How HDHPs Work. In 2019, a qualified HDHP must have a deductible of at least $1,350 for self-only coverage and $2,700 for family coverage. Depending on the type of coverage offered, an employee’s annual out-of-pocket expenses in 2019 could run as high as $6,750 for individual coverage — or $13,500 for family coverage.

High health care expenses are one reason HSA plans are most popular with healthy individuals who can afford the risk and would receive benefits from the tax breaks. However, a low-deductible plan such as a PPO could cost individuals more than $2,000 annually in higher premiums regardless of whether they need medical attention. With an HDHP, spending more closely matches actual health care needs. In addition, HDHPs usually cover some preventive care services.

HSA Contributions. There are limits to how much individuals can contribute. For self coverage, the 2019 limit is $3,500 annually while the family coverage limit is $7,000. Account holders who are 55 or older at the end of the current tax year can contribute an additional $1,000 annually as a “catch-up contribution”. If you are married and both you and your spouse have separate HSA accounts, each of you is eligible for the $1,000 catch-up contribution. Contribution limits are adjusted annually for inflation.

Investing is Easy. Employees can contribute up to the maximum regardless of their income through payroll deduction or from their own funds until they reach age 65, even when they’re self-employed or not working.

While the employer chooses the administrator, the decision of where to put the money is the employee’s. Encourage your employees to shop around for high-quality, low-cost investment options. Some providers only offer low interest-bearing investments, such as money market funds, that generally are very safe: while some HSAs offer multiple mutual funds that may provide higher expected returns over time but are riskier. In addition, some HSAs require a minimum contribution before investing the contributions into mutual funds within the HSA.

Here’s an example of how saving money in an HSA and getting a good rate of return can pay off. If a 21-year-old makes the maximum allowable contribution every year to a self-only plan until age 65 and they earn an average annual return of eight percent on a plan with no fees, they will have $1.2 million by the time they retire. For those who start saving later in life, a 40-year-old who saves $100 per month and earns an average annual return of three percent could have as much as $45,000 by retirement.

Qualified Expenses. Employees can take distributions from their HSAs before or during retirement. After retirement, HSA withdrawals get taxed in a way similar to Traditional IRA withdrawals, if retirees take distributions for non-medical expenses, but income tax-free if for medical expenses before retirement. If they take distributions on qualified medical expenses, the proceeds are not taxable. If they spend the money on anything else before they turn 65, they will pay a 20 percent penalty and also will pay income tax.

Qualified payments for which tax-free HSA withdrawals can be made include:

  • Doctor office-visit co-payments
  • Health insurance deductibles
  • Dental expenses
  • Vision care (eye exams and eyeglasses)
  • Prescription drugs and insulin
  • Medicare premiums
  • A portion of the premiums for a tax-qualified long-term care insurance policy
  • Hearing aids
  • Hospital and physical therapy bills
  • Wheelchairs and walkers
  • X-rays

When an employee retires, they also can use their HSA funds to pay for expenses that will help with their long-term needs, such as in-home nursing care, retirement community fees, long-term care services and nursing home fees. Withdrawals also can be taken for the cost of meals and lodging when seeking medical care away from home and modifications to a home, such as ramps, grab bars and handrails.

For more information about HSAs, please contact us!

Alera Group Appoints Employee Benefits Practice Leader

Posted on October 9th, 2019

DEERFIELD, IL—Alera Group, a national employee benefits, property & casualty, risk management and wealth management firm, is excited to announce that Sally Prather has recently been appointed as its national Employee Benefits Practice Leader.

Prather’s responsibilities will include the continued development of the organization’s employee benefits practice, including platform expansion and resource coordination.

“Sally is an outstanding addition to Alera Group’s leadership team, and we look forward to the impact of her expertise on our employee benefits practice,” said Jim Blue, President of Alera Group. “Her years of industry experience, combined with her collaborative management style, makes her an ideal leader of our benefits team as we continue to expand organically and acquisitively.”

Prior to joining Alera Group, Prather served as Vice President, Paychex Insurance Agency. She brings more than 25 years of experience to her role with Alera Group.

“I am thrilled to lead the employee benefits division of Alera Group, and look forward to the true collaboration happening among the Alera Group firms,” said Sally Prather. “Together, we will strengthen our value proposition through unparalleled benefits resources and strategy.”

As Employee Benefits Practice Leader, Prather joins Alera Group as the latest member of an industry-leading team of professionals across the United States. For more information about Alera Group, visit


About Alera Group
Based in Deerfield, IL, Alera Group’s over 1,700 employees serve thousands of clients nationally in employee benefits, property and casualty, risk management and wealth management. Alera Group is the 15th largest independent insurance agency in the country. For more information, visit or follow Alera Group on Twitter: @AleraGroupUS.