Brian Gilmore

Hi Peter, it's not really an opt-out that could be an underwriting issue--or at least I've never seen it. But any form of cost-sharing vehicle paired with the plan (e.g., a cost-sharing HRA for deductible/copay/coinsurance) would be subject to an underwriting review in many agreements. Every once in a blue moon I'll see a carrier or stop-loss push back on that. So I agree it would be a good idea to get their prior approval.

I would recommend against that approach. This would be what I refer to as a "taxable HRA". That's basically an oxymoron, but I don't know what else to call it. Any employer reimbursement of medical expenses with an ongoing administrative scheme is a group health plan. Other than for purposes of determining whether the §105(h) rules apply, it doesn't matter whether those reimbursements take advantage of the otherwise available §105 exclusion from income. That means this arrangement still needs to deal with: ERISA ACA COBRA HIPAA HSA (eligibility issues) So I would recommend you create an HRA to address this since a) it's already a group health plan, and therefore b) might as well get the tax advantage. If it's employees moving to a spouse's plan, this is what generally is referred to as a Spousal Incentive HRA (SIHRA). Here's an overview of the SIHRA compliance considerations: https://www.newfront.com/blog/ten-spousal-incentive-hra-compliance-considerations Outside of that, here's my more general take: https://www.newfront.com/blog/addressing-employee-health-plan-exception-requests-part-vi Solution #2: Avoid Creating a Group Health Plan The employer can always provide additional taxable cash compensation to employees that is not conditioned in any way on the employee’s actual medical expenses incurred. For example, the employer can provide an employee experiencing unexpected medical expenses with a standard raise/bonus/stipend that is taxable and subject to withholding and payroll taxes. These payments cannot be a direct or indirect reimbursement of any medical expenses incurred (taxable or non-taxable). In other words, the employer could not determine the amount of the payment based on the actual medical expenses incurred by the employee, nor could the employer condition the additional payment on the employee’s submission of medical receipts. Any such form of reimbursement would trigger a group health plan and the issues outlined above. Note: Employers often question why they cannot simply reimburse medical benefits on a taxable basis to avoid application of the group health plan legal restrictions. However, reimbursement of medical expenses on a taxable basis would still be a group health plan subject to all the group health plan laws described above (with the exception of the §105(h) nondiscrimination testing requirements), and therefore it is also not a viable solution. That taxable reimbursement approach would no longer be an HRA because it would not be designed as a tax-advantaged vehicle under IRC §105 and §106, although some refer to the approach as a “taxable HRA” because it would still be a (non-tax advantaged) defined contribution group health plan arrangement. ... Relevant Cites: ERISA §733(a): (a) Group health plan.
For purposes of this part— 
 (1) In general. The term “group health plan” means an employee welfare benefit plan to the extent that the plan provides medical care (as defined in paragraph (2) and including items and services paid for as medical care) to employees or their dependents (as defined under the terms of the plan) directly or through insurance, reimbursement, or otherwise. Such term shall not include any qualified small employer health reimbursement arrangement (as defined in section 9831(d)(2) of the Internal Revenue Code of 1986).
 Slide summary: 2024 Newfront Fringe Benefits for Employers Guide

If the employee's general purpose health FSA reimbursed only the employee's expenses, it would not be disqualifying coverage for the spouse. It would only be disqualifying coverage for the employee. But I don't think I've actually seen a real-world health FSA with that plan design. In this case, we're talking about the FedFlex Plan, which (like just about all other health FSAs) does reimburse spouse's expenses: https://www.opm.gov/healthcare-insurance/flexible-spending-accounts/reference-materials/fedflex.pdf

Hi there, congrats on the marriage. Yes, you are correct that both you and your spouse would be blocked from HSA eligibility if your spouse enrolls in a general purpose FSA through her workplace. This is because the health FSA would reimburse both your spouse's and your medical expenses pre-deductible. However, if your spouse is merely eligible for a general purpose health FSA, but doesn't actually enroll, that will not affect the HSA eligibility of either you or your spouse. If that is the case can i contribute up to the HSA max of 8550 instead? I've already completed my enrollment with self-only coverage and she is not associated to any of my insurance(s). If your spouse enrolls in the general purpose health FSA, neither of you can contribute to a HSA because you both would have disqualifying coverage. If #1 is not possible. Can she enroll in a Limited Expense Health Care FSA? Definitely. Limited purpose FSAs are not disqualifying coverage because they reimburse only dental/vision/preventive expenses (i.e., they do not reimburse pre-deductible, non-preventive medical expenses). Regardless of the above answers am i allowed to use HSA funds for my personal expenses with contributions I've made before getting married? Definitely. HSA eligibility is relevant only to the ability to make and receive HSA contributions. Tax-free distributions for medical expenses are available for the HSA holder, spouse, and qualifying children regardless of whether the HSA holder or those dependents are currently HSA-eligible.

Yeah I think that would be a problem in the sense that it would expose the employer to B Penalty liability, but the question this is whether that's really a "problem". The B Penalty would be $371.67/month (2024), which is lower than the $400 contribution anyway. So the employer comes out ahead in that a) some employees in this type of leave situation probably won't trigger the B Penalty, and b) for those who do, the company pays less than the cost of the health plan to be affordable. Your follow-up question is a good one that I'm not aware of any clear answer. I think if they were trying to avoid the B Penalty (again, not a major concern anyway) they would probably need to continue the $400 contribution. But I take your point that they weren't in the plan option that's designed to meet the affordability safe harbor in the first place, so there's an argument no contribution should be required.

This is an interesting one I've had come up too in various forms. Basically the overriding issue is a conflict between the plan's definition of full-time eligible and the ACA's definition (via the look-back measurement method) of full-time. The options I always offer here are: Treat the employees on non-protected leave as full-time eligible (not just full-time ACA) for any stability period in which the employee is considered full-time, thereby continuing active coverage. This might not be possible if there are carrier/stop-loss limitations. Continue the current practice of terminating active coverage for employees in a stability period as full-time but on non-protected leave, and expose the employer to potential B penalties for that employee because the COBRA offer is not affordable under any of the ACA safe harbors. The potential B penalty liability is often less than (or comparable to) the employer contribution anyway. Continue the current practice of terminating active coverage for employees in a stability period as full-time but on non-protected leave, and subsidize COBRA by providing the amount needed to meet the applicable affordability safe harbor.

Work with your personal tax adviser for the details, but in general that would mean your spouse's HSA contribution limit would be 2/12 of $4,150 + 2/12 of $1,000. I'm getting $858 as the result. Any amount contributed in excess of that would need to be pulled out as a corrective distribution by 4/15/25. By my math, that's an excess contribution of $642 (plus earnings) that she'll need to take as a corrective distribution. Your HSA custodian and personal tax adviser should be able to help with the details.

Yes, common mistake. HSA eligibility is determined as of the first day of each calendar month. Your wife therefore would presumably have had two months of HSA eligibility (Jan and Feb) before your health FSA enrollment caused her to have disqualifying coverage. That means any of her contribution amounts in excess of 2/12 the $8,300 statutory limit ($1,383) are excess contributions that need to be distributed by the tax filing deadline to avoid the 6% excise tax. Some more details that may be helpful: https://www.newfront.com/blog/the-hsa-proportional-contribution-limit https://www.newfront.com/blog/correcting-excess-hsa-contributions Slide summary: 2024 Newfront Go All the Way with HSA Guide

Interesting, I see your point now. The IRS appears to do the same thing here: https://www.irs.gov/affordable-care-act/employers/determining-if-an-employer-is-an-applicable-large-employer That one is a mystery to me. It doesn't make sense that the ALE status FTE determination would be based at 120 if the full-time definition for the same purpose wasn't also based on the same 120 threshold. On top of the basic confusion/complexity of the dual thresholds for the same determination, you would also have a weird situation for 120-130 hour employees where they would seem to be counted as a non-full-time employee but greater than 1 FTE. The ABA IRS response you quoted is the way I have always understood it to work.

Here's why it's confusing-- To determine ALE status, the threshold is 120 hours of service for full-time or full-time equivalent status. To determine whether an employee of an ALE is full-time for purposes of §4980H ACA employer mandate penalty liability, the 30 hours/week monthly equivalency threshold is 130 hours of service (under the monthly measurement method or look-back measurement method). It's not really worth trying to understand the why--but those are clearly the rules. So use 120 when determining ALE status. Once they're an ALE, you forget about 120 and only use 130. Here's the cites-- Treas. Reg. §54.4980H-2: (c) Full-time equivalent employees (FTEs) —(1) In general. In determining whether an employer is an applicable large employer, the number of FTEs it employed during the preceding calendar year is taken into account. All employees (including seasonal workers) who were not employed on average at least 30 hours of service per week for a calendar month in the preceding calendar year are included in calculating the employer's FTEs for that calendar month. (2) Calculating the number of FTEs. The number of FTEs for each calendar month in the preceding calendar year is determined by calculating the aggregate number of hours of service for that calendar month for employees who were not full-time employees (but not more than 120 hours of service for any employee) and dividing that number by 120. In determining the number of FTEs for each calendar month, fractions are taken into account; an employer may round the number of FTEs for each calendar month to the nearest one hundredth. Treas. Reg. §54.4980H-1(a): (21) Full-time employee —(i) In general. The term full-time employee means, with respect to a calendar month, an employee who is employed an average of at least 30 hours of service per week with an employer. For rules on the determination of whether an employee is a full-time employee, including a description of the look-back measurement method and the monthly measurement method, see § 54.4980H-3. The look-back measurement method for identifying full-time employees is available only for purposes of determining and computing liability under section 4980H and not for the purpose of determining status as an applicable large employer under § 54.4980H-2. (ii) Monthly equivalency. Except as otherwise provided in paragraph (a)(21)(iii) of this section, 130 hours of service in a calendar month is treated as the monthly equivalent of at least 30 hours of service per week, and this 130 hours of service monthly equivalency applies for both the look-back measurement method and the monthly measurement method for determining full-time employee status. Here's an overview on how to perform the calculation: 2024 Newfront ACA Employer Mandate & ACA Reporting Guide

I have also encountered this argument, and I agree with your take. What they've done is created what I refer to as a "taxable HRA". That's basically an oxymoron, but I don't know what else to call it. The one piece of the other adviser's argument I agree with is they avoid the §105(h) issues here by making the arrangement taxable. I just disagree with everything else. Any employer reimbursement of medical expenses with an ongoing administrative scheme is a group health plan. Other than for purposes of determining whether the §105(h) rules apply, it doesn't matter whether those reimbursements take advantage of the otherwise available §105 exclusion from income. That means this arrangement still needs to deal with: ERISA ACA COBRA HIPAA HSA (eligibility issues) So I'm on your side on this one. In my opinion, they've received some poor advice on this one. Definitely more mountain than molehill until they strip out the medical components. Here's my take: https://www.newfront.com/blog/addressing-employee-health-plan-exception-requests-part-vi Solution #2: Avoid Creating a Group Health Plan Employers may have a strong desire to preserve the informal “one-off” exception-based approach to a specific employee request to address a medical expense outside the group heath plan. The employer can always provide additional taxable cash compensation to employees that is not conditioned in any way on the employee’s actual medical expenses incurred. For example, the employer can provide an employee experiencing unexpected medical expenses with a standard raise/bonus/stipend that is taxable and subject to withholding and payroll taxes. These payments cannot be a direct or indirect reimbursement of any medical expenses incurred (taxable or non-taxable). In other words, the employer could not determine the amount of the payment based on the actual medical expenses incurred by the employee, nor could the employer condition the additional payment on the employee’s submission of medical receipts. Any such form of reimbursement would trigger a group health plan and the issues outlined above. Note: Employers often question why they cannot simply reimburse medical benefits on a taxable basis to avoid application of the group health plan legal restrictions. However, reimbursement of medical expenses on a taxable basis would still be a group health plan subject to all the group health plan laws described above (with the exception of the §105(h) nondiscrimination testing requirements), and therefore it is also not a viable solution. That taxable reimbursement approach would no longer be an HRA because it would not be designed as a tax-advantaged vehicle under IRC §105 and §106, although some refer to the approach as a “taxable HRA” because it would still be a (non-tax advantaged) defined contribution group health plan arrangement. ... Relevant Cites: ERISA §733(a): (a) Group health plan.
For purposes of this part— 
 (1) In general. The term “group health plan” means an employee welfare benefit plan to the extent that the plan provides medical care (as defined in paragraph (2) and including items and services paid for as medical care) to employees or their dependents (as defined under the terms of the plan) directly or through insurance, reimbursement, or otherwise. Such term shall not include any qualified small employer health reimbursement arrangement (as defined in section 9831(d)(2) of the Internal Revenue Code of 1986).
 Slide summary: 2024 Newfront Fringe Benefits for Employers Guide

I suggest checking the plan's HIPAA Notice of Privacy Practices. It should address your options in this area. More generally, the HIPAA rules do permit the plan to send EOBs to the employee for all covered dependents. However, there are rules that allow you to request delivery at a different address if you feel the disclosure of information to the employee could endanger you. https://www.govinfo.gov/content/pkg/FR-2000-12-28/pdf/00-32678.pdf Comment: Certain commenters explained that third party administrators usually communicate with employees through Explanation of Benefit (EOB) reports on behalf of their dependents (including those who might not be minor children). Thus, the employee might be apprised of the medical encounters of his or her dependents but not of medical diagnoses unless there is an over-riding reason, such as a child suspected of drug abuse due to multiple prescriptions. The commenters urged that the current claim processing procedures be allowed to continue. Response: We agree. We interpret the definition of payment and, in particular the term ‘‘claims management,’’ to include such disclosures of protected health information. ... For example, if an individual requests that a health plan send explanations of benefits about particular services to the individual’s work rather than home address because the individual is concerned that a member of the individual’s household (e.g., the named insured) might read the explanation of benefits and become abusive towards the individual, the health plan must accommodate the request.

Yes, that's a common mistake. As noted previously in this thread, enrollment in a general purpose health FSA blocks HSA eligibility (i.e., the ability to make or receive HSA contributions) for both you and your spouse. The best approach in this hypothetical would simply be to prevent any HSA contributions from occurring in 2025 (both by notifying the spouse's employer of HSA ineligibility and revoking any employee HSA contribution election). And if you somehow couldn't stop the contributions, you would want to avoid taking distributions (other than corrective distributions). But to play along--if those HSA contributions were made, you would need to take a corrective distribution by the tax filing deadline (4/15/26) to avoid the 6% excise tax on those ineligible excess contributions. The HSA custodian (bank) should have a process in place for how to handle a corrective distribution of funds already withdrawn from the account. They might be able to simply convert the prior distributions as a corrective distribution. Or they might treat those distributions under the mistaken distribution rules, which would require you first to return your HSA funds to the account and then process the corrective distribution. More details: https://www.newfront.com/blog/correcting-mistaken-hsa-distributions https://www.newfront.com/blog/correcting-excess-hsa-contributions

Yes, this is a bit of a messy situation unfortunately. Enrollment in a general purpose health FSA blocks HSA eligibility (i.e., the ability to make or receive HSA contributions) for both you and your spouse. So going forward you will either want to decline your company's health FSA or direct your spouse not to make (or receive employer) HSA contributions. Alternatively, if offered by your employer, you could enroll in a limited purpose health FSA without affecting your spouse's HSA eligibility. As for this year and prior years, all of your spouse's HSA contributions for months in which you were covered by the general purpose health FSA are technically ineligible excess HSA contributions subject to a 6% excise tax each year until removed. You will want to work with a personal tax adviser to address those. Here's some more details for reference: https://www.newfront.com/blog/hsa-interaction-health-fsa-2 https://www.newfront.com/blog/correcting-excess-hsa-contributions Slide summary: 2024 Newfront Go All the Way with HSA Guide

This often occurs where the employee fails to timely establish the HSA with the employer’s designated custodian. It's frequently because the employee has not completed the Customer Identification Program (CIP) to satisfy requirements set forth in the USA Patriot Act. Here's a short summary on how to handle-- https://www.newfront.com/blog/employee-fails-to-establish-hsa-2 Best practice is to have a consistent policy in place to address situations for both active and terminated employees who do not take the steps required to open the HSA with the employer’s custodian. Employee HSA Contributions For employee HSA contributions, the employer must either deposit or return the employee’s salary reductions. Any reasonable administrative policy would be fine here. For example, failure to open the account within 90 days (or during the period of employment, if sooner) will result in a refund to the employee in the following payroll. That avoids the need to hold and potentially refund large amounts of employee contributions. Remember that any refund must be taxable income subject to withholding and payroll taxes. Employer HSA Contributions For employer HSA contributions, it is reasonable to have a consistent administrative policy providing that employees forfeit the employer contribution if they fail to timely open the account. For example, there will be no retro contributions beyond the last day of February of the following year. And if the account isn’t opened during the period of employment, all employer contributions are forfeited. The employer should provide employees with advance notice of the consequences of failing to timely establish the HSA. Note that although IRS guidance does not directly address these types of policies generally, there are provisions in the comparability rules providing that employers may have a policy for employees to forfeit the employer contribution if they do not establish the HSA within a set period. Although most employers are not subject to the comparability rules (in almost all cases the Section 125 nondiscrimination rules apply instead), this provision at least provides a basis for the IRS approval of this type of approach generally.

I don't think that's an ACA anti-abuse rule you cited. But to the point--I'd suggest making sure the client gets a clear legal opinion as to controlled group status under Treas. Reg. §1.414(c)-5 and moving forward on that basis. What you're really looking at here is the ACA employer mandate rules. Those rules apply to ALEs, which is determined across all entities in the controlled group. You need to have clear direction on controlled group status before you can proceed, and you're only going to get that by through a formal opinion. That's not something that can be handled on a forum like this. More details: https://www.newfront.com/blog/aca-reporting-for-controlled-groups ALE Status: Employers Subject to the ACA Employer Mandate The ACA employer mandate pay or play rules apply to employers that are “Applicable Large Employers,” or “ALEs.” In general, an employer is an ALE if it (along with all members in its controlled group) employed an average of at least 50 full-time employees, including full-time equivalent employees, on business days during the preceding calendar year. ALEs are subject to both the ACA employer mandate under §4980H as well as the ACA reporting requirements under §6056 via Forms 1094-C and 1095-C. ... Regulations Treas. Reg. §54.4980H-1(a): (4) Applicable large employer. The term applicable large employer means, with respect to a calendar year, an employer that employed an average of at least 50 full-time employees (including full-time equivalent employees) on business days during the preceding calendar year. For rules relating to the determination of applicable large employer status, see §54.4980H-2. … (16) Employer. The term employer means the person that is the employer of an employee under the common-law standard. See § 31.3121(d)-1(c). For purposes of determining whether an employer is an applicable large employer, all persons treated as a single employer under section 414(b), (c), (m), or (o) are treated as a single employer. Thus, all employees of a controlled group of entities under section 414(b) or (c), an affiliated service group under section 414(m), or an entity in an arrangement described under section 414(o), are taken into account in determining whether the members of the controlled group or affiliated service group together are an applicable large employer. For purposes of determining applicable large employer status, the term employer also includes a predecessor employer (see paragraph (a)(36) of this section) and a successor employer. Slide summary: 2024 Newfront ACA Employer Mandate & ACA Reporting Guide

Subrogation/reimbursement situations are commonly negotiated by the employer plan sponsor and plaintiff counsel. This is an unusual one because the counsel is using the document production failures as leverage on the reimbursement amount, but that does not change the general positioning here. I think this is a key point from Peter above. If this is a plan where benefits are paid from the employer's general assets, I don't consider there to be a significant fiduciary issue with respect to potential reimbursement amount. Yes, and the employee funds are not held in trust, so they are just comingled with the employer's general assets. Where the plan is not funded by a trust, there is effectively no connection between the reimbursement amount and the plan. It effectively just means the employer has paid more for plan benefits than it otherwise might have. So I view this more as an employer budgetary/business decision than a fiduciary one since there is no pool of plan assets (i.e., trust) to make whole here. Here's some commentary on a similar issue re the recent J&J litigation: https://www.newfront.com/blog/j-and-j-case-practical-considerations-the-erisa-trust-rules-for-health-plans-part-1 https://www.newfront.com/blog/j-and-j-case-practical-considerations-the-erisa-trust-rules-for-health-plans-part-2

If it's replacing the current vision plan, I think it's clear you would have to offer it through COBRA per the plan modification rule below. If it's a new vision plan option in addition to what the employee was enrolled in while active, it's a bit less clear. In that case you only have the right to continue coverage in effect at the time of the event, and you aren't considered a QB with OE rights until you reach the election period. So if the OE occurs before the COBRA election period, it's something of a gray area because the individual is not a QB at the time of OE. I would still offer the ability to change where possible, but it's not clear that's required. More details: https://www.newfront.com/blog/which-plan-options-must-be-offered-under-cobra-2 Exception #3: Plan Changes for Active Employees If the employer changes plan coverage for active employees, the same changes will also apply to COBRA qualified beneficiaries. For example, if the employer changes its active health coverage from Anthem to Cigna, all COBRA participants will also have their coverage change to the new Cigna benefit package option. ... Treas. Reg. §54.4980B-5: Q-1. What is COBRA continuation coverage? A-1. (a) If a qualifying event occurs, each qualified beneficiary (other than a qualified beneficiary for whom the qualifying event will not result in any immediate or deferred loss of coverage) must be offered an opportunity to elect to receive the group health plan coverage that is provided to similarly situated nonCOBRA beneficiaries (ordinarily, the same coverage that the qualified beneficiary had on the day before the qualifying event). See Q&A-3 of §54.4980B-3 for the definition of similarly situated nonCOBRA beneficiaries. This coverage is COBRA continuation coverage. If coverage is modified for similarly situated nonCOBRA beneficiaries, then the coverage made available to qualified beneficiaries is modified in the same way. If the continuation coverage offered differs in any way from the coverage made available to similarly situated nonCOBRA beneficiaries, the coverage offered does not constitute COBRA continuation coverage and the group health plan is not in compliance with COBRA unless other coverage that does constitute COBRA continuation coverage is also offered. Any elimination or reduction of coverage in anticipation of an event described in paragraph (b) of Q&A-1 of §54.4980B-4 is disregarded for purposes of this Q&A-1 and for purposes of any other reference in §§54.4980B-1 through 54.4980B-10 to coverage in effect immediately before (or on the day before) a qualifying event. COBRA continuation coverage must not be conditioned upon, or discriminate on the basis of lack of, evidence of insurability. Slide summary: 2024 Newfront COBRA for Employers Guide

COBRA participants have the same OE rights as actives. Nothing about OE rights changes the standard 60-day election period or 45-day period to make the first premium payment. I'll defer to you and your COBRA TPA for the specific procedures of the distribution of materials and election process for your plan. More details: https://www.newfront.com/blog/open-enrollment-rights-for-fmla-leaves-and-cobra-participants-2 Slide summary: 2024 Newfront COBRA for Employers Guide

Yes, loss of coverage caused by a reduction in hours is a COBRA qualifying event. That's also true if the reduction in hours causes the loss of coverage at the end of the applicable ACA look-back measurement method stability period. More details: https://www.newfront.com/blog/the-cobra-triggering-events It doesn't matter whether the employee is eligible for active coverage at that point. By definition they aren't be eligible for active coverage, otherwise they wouldn't have lost it and had the qualifying event. In other words, basically everyone on COBRA is no longer eligible to enroll in active coverage at open enrollment. Here's a quick overview-- https://www.newfront.com/blog/loss-of-health-plan-eligibility-caused-by-move-to-part-time-work Employees who do not average at least 30 hours of service over the full standard measurement period (i.e., generally do not reach 1,560 hours of service in the typical 12-month standard measurement period) can be removed from coverage as of the start of the new stability period (generally the start of the new plan year) because the employee will be treated as part-time for ACA purposes for the duration of that stability period. This will be a COBRA qualifying event as of the end of the plan year in which the employee loses coverage (loss of coverage caused by a reduction in hours).

Yeah the termination date on the individual policy is irrelevant here. It might not have even terminated yet. The ICHRA doesn't control the individual policy enrollment. It'll all be the same as if the employee lost traditional employer-sponsored group major medical from the employer. The employee will have 30 days from the loss of the ICHRA coverage to request enrollment in the spouse's plan. Coverage under the spouse's plan must be effective by the first of the month following the date of the election change request. Any gap between the loss of ICHRA and the enrollment in the spouse's plan can be addressed the individual policy (which can be maintained regardless of ICHRA enrollment) and potentially also by COBRA (for continued access to the ICHRA payment stream). Here's an overview-- https://www.newfront.com/blog/hipaa-special-enrollment-events-2 HIPAA Special Enrollment Events: General 30-Day Election Period Employees must have a period of at least 30 days from the date of the event to change their elections pursuant to a HIPAA Special Enrollment Event. Employers wishing to offer a longer election period should first seek approval from the insurance carrier (or stop-loss provider). ... HIPAA Special Enrollment Events: General First-of-the-Month-Following-Election Effective Date Rule The general rule is that an election to enroll in coverage pursuant to a HIPAA Special Enrollment Event must be effective no later than the first of the month following the date of the election change request. For example, assume that Jack marries Jill on January 19. Jack submits the election change request to enroll Jill on January 22. Jill’s coverage should be effective no later than February 1. Now assume that Jack marries Jill on January 19, but does not submit the election change request to enroll Jill until February 14. Jill’s coverage should be effective no later than March 1. For more details: When Mid-Year Election Changes are Effective Here's a slide summary: 2024 Newfront Section 125 Cafeteria Plans Guide

First issue is to make sure you're not inadvertently creating a potential MEWA situation. So you'll want to confirm that A and B are in the same §414 controlled group (that should sound familiar from your retirement side work). Second issue is to notify carriers/stop-loss, update the wrap docs, and coordinate with ACA reporting vendor. Here's an overview of those first two issues: https://www.newfront.com/blog/adding-a-new-ein-to-the-health-plan 2024 Newfront M&A for H&W Employee Benefits Guide Third issue is to address the class-based structure. There's a number of considerations there that may vary based on fully insured vs. self-insured. You'll have to deal with the §105(h) rules if it's self-insured. The main considerations are: Clearly Communicate Class Distinctions in Plan Materials; Confirm Class Distinctions with Insurance Carriers/Stop-Loss; and Structure the Approach to Comply with Applicable Nondiscrimination Rules. Here's a overview of the third issue: https://www.newfront.com/blog/designing-health-plans-with-different-strategies 2024 Compliance Considerations for Self-Insured Plans Guide

Yeah ICHRA requires a (mostly interesting/fun) shift in many ways thinking. One is that the ICHRA itself is the group health plan. More importantly for these purposes, it's a non-excepted group health plan subject to the HIPAA portability rules, including special enrollment rights. The underlying individual policy is not an ERISA plan and not connected to the employer in any way. With that in mind--when an employee loses eligibility for the ICHRA (from termination of employment in this case), it's a HIPAA special enrollment event for the spouse in the same manner as if the employee had lost a traditional employer-sponsored group major medical plan. That event gives the spouse the right to enroll the employee and spouse in the spouse's plan. The underlying policy is irrelevant here. More details: https://www.newfront.com/blog/hipaa-special-enrollment-events-2 Even with traditional employer-sponsored group major medical plans we have an issue of how to substantiate the loss of coverage since the end of HIPAA certificates of creditable coverage back in 2014. The most useful is usually a letter from the employer showing the period of coverage. In this case it would be the period of ICHRA coverage. More details: https://www.newfront.com/blog/documenting-prior-coverage-after-hipaa-certs-2 Here's a slide summary: 2024 Newfront HIPAA Training for Employers Guide

A distribution from the HSA is treated the same regardless of whether it's via the debit card or a standard withdrawal. So a distribution for a qualified medical expense will always be tax-free whether via debit card or a reimbursement to yourself. A non-medical distribution will be taxable and (if under age 65) subject to a 20% additional tax. Here's a quick summary: https://www.newfront.com/blog/using-an-hsa-for-non-medical-expenses Here's the recordkeeping rules-- IRS Publication 969: https://www.irs.gov/pub/irs-pdf/p969.pdf Recordkeeping. You must keep records sufficient to show that:. The distributions were exclusively to pay or reimburse qualified medical expenses, The qualified medical expenses hadn’t been previously paid or reimbursed from another source, and The medical expenses hadn’t been taken as an itemized deduction in any year. Don’t send these records with your tax return. Keep them with your tax records.

One option would be to reach out to the applicable state banking regulator: https://www.consumerfinance.gov/ask-cfpb/how-do-i-find-my-states-bank-regulator-en-1637/ Another option would be to submit a complaint to the CFPB: https://www.consumerfinance.gov/complaint/ Note that even if your debit card is deactivated, you should still be able to perform withdrawals from your HSA account to your bank account.