HSA / HRA Enrollments - Important Things to Note
EN is an enrollment-based (not payroll-based) system and was designed to handle HSA / HRA (and cafeteria) benefits on a calendar year basis. Typically, users run into trouble when these plans are setup on an off-cycle plan year. Below is a list of things to keep in mind when you run into issues with EE and ER HSA / HRA contributions.
- We calculate IRS max contribution limits at the time of enrollment according to the number of pay dates left in the current CALENDAR - not plan - year. When an HSA / HRA plan is setup on an off-cycle plan year, the system isn't going to apply the max limits according to the number of pay dates in that off-cycle plan year. These enrollments may need to be modified to ensure that ees aren't contributing per pay amounts that will max them out after the first few pay dates. Since we don't manage this in our system, it's the responsibility of the group and/or payroll to audit and adjust ee contributions accordingly.
- Here is the basic math breakdown:
Annual IRS limit (Calendar Year 1/1 - 12/31)
– YTD Employer Contributions
– YTD EE Contributions (1/1 - current plan year end date)
– Projected Remaining Year Employer Contributions
= Remaining Employee Annual Contribution
Note: Individual ee contributions can be managed via the Adjust HSA option under the life events tool.
Example: A new ee enrolls in single medical and elects to contribute to the HSA plan effective 12/1/15 with only 2 pay dates remaining in the 2015 calendar year, the system WILL allow the ee to contribute $1,675 per pay. 1675 * 2 = $3,350.
- We currently don’t support pro-rated ER contribution schedules outside of per pay/monthly – e.g. quarterly, 2x year, etc.
- Changes made to a company’s payroll calendar or HSA / HRA plan design will not apply to existing enrollments already processed – even after a plan recalc. To reset and apply changes, you must go into the ee enrollment flow and decline the current enrollment – then go back and re-elect and save. This is why it’s extremely important to double check company and plan setups before going live with your clients!
- The enrollment editor tool doesn't support HSA / HRA enrollments (even though they display on-screen under the enrollment editor) - so overriding effective dates and contribution amounts won't actually update the ee's record. This means ER contribution amounts are calculated according to the plan design and there's no way to override this amount for individual ees.
- Our system was designed to handle medical and HSA / HRA plans that are on the same plan year. Since we calculate IRS max limits on a calendar year basis, it is best practice to setup medical and HSA / HRA plans on the SAME CALENDAR year.
- Per IRS guidelines, HSA enrollment effective start dates and contributions must begin on the first day of the month. This logic was built into our system, so all HSA enrollments will begin on the first of the month, regardless of the plan eligibility rules.
Troubleshooting Incorrect HSA Contribution Amounts
Issue: The system is allowing ees to contribute over the IRS max limit.
It’s not. As mentioned above, we calculate IRS max limits according to the number of pay dates left in the current calendar year – not plan year.
Issue: ER contribution is incorrect (wrong amount, not pro-rating, etc.) should be pro-rated but it's not.
- ER contributions should be pro-rated and Pro-rate Employer Contribution isn’t checked off in the plan setup. (plan’s Enrollment tab > Contingencies) Alternatively, this setting IS checked off but ER contributions shouldn't be pro-rated.
- The plan is setup to pro-rate ER contributions but the plan's Funding Calendar isn’t setup and/or complete. Note: All months must have a Funding Date. (plan’s Enrollment tab > Calendar)
- You made changes to the payroll calendar / plan design after ees enrolled. To correct, go into ee’s enrollment flow to decline current coverage and save page – then go back and re-elect to reset.
- Your payroll calendar isn’t setup correctly or you're not considering the ee's effective start date. Check the number of pays remaining in the plan year against ee’s effective start date.
Note: changes made to HSA plan designs (pro-rate, ER contributions, etc.) require a resave (or decline, save & re-elect) of the HSA page in the enrollment flow in order to reset and apply changes to previous enrollments.
Issue: The system is calculating pay periods incorrectly for new hires.
As state above, per IRS guidelines, new hire enrollment start dates and contributions must begin on the first of a month. If a new ee is hired mid-month, contributions begin on the first of the following and any pay periods between DOH and the end of the month aren't considered.