Deductible carryover from prior plan permissable?

[Mary C]

We are introducing our high deductible health plan and employer sponsored HSA effective 7/1/07 to a group of newly acquired companies. 7/1 is our usual annual enrollment date and we are bringing the new companies on board with our benefits on that date. Company A just went through annual enrollment 2/1/07 and Company B's annual enrollment is effective 3/1/07. My question is - for the employees in Company A and B who elect the HDHP as of 7/1, can we rollover any deductible they may have satisfied in the prior plan to the HDHP because of the short plan year on their prior plans?

[Jacmo]

To the extent carried over deductibles reduce the new deductible below the legal minimum required--I would think not.

[Mary C]

Actually I have found an answer in the IRS guidance. A deductible carryover is permitted if the plan's deductible is increased proportionately over the IRS minimum. For example, the IRS minimum single deductible is currently $1,500. If the deductible carry-over period is 3 months, then the plan's deductible for 2007 must be at least 1 &3/12 of $1,500 or $1,875. Since our plan deductible is more than that, we can use a 3 month expense carryover.

[Jacmo]

Then my reply would still apply. But..........where did you get $1500 as being the IRS minimum single deductible?

[Mary C]

Then my reply would still apply. But..........where did you get $1500 as being the IRS minimum single deductible?

Nowhere. Was just using it as a nice round number for calculation purposes.

[Jacmo]

My mistake. But you stated "the IRS minimum single deductible is currently $1500". You might want to print off a copy of Gary Lesser's chart (at the top of this forum). The IRS minimum deductible for a qualified High Deductible Health Plan is currently $1100 for self-only coverage and $2200 for family coverage.