Capitol Benefits Group News & Updates
Federal: 2025 Inflation-Adjusted Amounts for HSAs and HDHPs Released; ACA Out-of-Pocket Limits
On May 9, 2024, the IRS released Rev. Proc. 2024-25, announcing the 2025 health savings accounts (HSAs) and high deductible health plans (HDHPs) inflation-adjusted amounts:
Annual HSA contribution limits:
Self-coverage only: $4,300 ($150 increase from 2024)
Family coverage: $8,550 ($250 increase from 2024)
Annual catch-up contribution maximum remains unchanged at $1,000 for HSA-eligible individuals age 55 or older
Minimum annual HDHP deductible:
Self-coverage only: $1,650 ($50 increase from 2024)
Family coverage: $3,300 ($100 increase from 2024)
Maximum annual HDHP out-of-pocket expenses (deductibles, copayments, and other nonpremium amounts):
Self-coverage only: $8,300 ($250 increase from 2024)
Family coverage: $16,600 ($500 increase from 2024)
This applies to all HDHPs regardless of whether they’re for essential health benefits or not.
These amounts differ from the Affordable Care Act (ACA) maximum out-of-pocket limits for plan years beginning in 2025 (proposed by the Department of Health and Human Services in November 2024) for non-grandfathered health plans, which are:
Self-coverage only: $9,200 ($250 decrease from 2024)
Family coverage: $18,400 ($500 decrease from 2024)
Unlike the HDHP out-of-pocket maximums, the ACA out-of-pocket maximums apply to in-network essential health benefits.
Long-Term Care Insurance Updates
A study conducted by the Department of Health and Human Services in 2022 estimates 49% of men and 64% of women over age 65 will need significant long-term care. Some will receive care from family members until their needs become more significant. Medicare only provides skilled care after a hospitalization for a short period of time. Another option is insurance. Long-term care insurance (LTCI) is a benefit designed to help cover the costs for an individual who requires assistance with activities of daily living (ADLs) due to a disability, chronic illness, or cognitive impairment. ADLs include bathing, dressing, walking, toileting, getting in and out of bed (or a chair), and eating.
Types of Plans, Models, and Benefits
LTCI may be obtained through a group plan, individual insurance policies, or as a rider on a life insurance policy. The National Association of Insurance Commissioners established the Long-Term Care Insurance Model Act, codified in 26 U.S.C. § 7702B, to provide states with a framework for implementing consumer protections when purchasing qualified LTCI. Although LTCI is regulated by the states, the IRS provides special tax rules and benefits for qualified plans.
Qualified long-term care services include necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance or personal care services required by a chronically ill individual based on the plan of care prescribed by a licensed healthcare provider. Qualified LTCI contracts are treated as accident or health insurance coverage, and premiums paid by an employer are generally excluded from an employee’s income. Employee payments are made on an after-tax basis and may be subject to a tax deduction. State tax laws vary and should be reviewed. However, qualified LTCI premium payments and care services can be paid with a health savings account (HSA) limited to the IRS limitation (adjusted annually) on premiums based on the individual’s attained age. Premiums paid through an HSA that are greater than the IRS limitation would be taxable.
A chronically ill individual is an individual, as certified by a licensed healthcare provider, who requires substantial assistance with at least two ADLs for a minimum of 90 days due to the loss of functional capacity or severe cognitive impairment that threatens their health and safety unless they have substantial assistance from someone else.
LTCI policies may reimburse eligible expenses as they are incurred or on a per diem basis for services and facilities, such as adult day care, assisted living residences, or nursing homes.
Do you need more information about LTCI coverage or would you be interested in a quote for yourself or your company? Please reach out to your Capitol Benefits Group team for a personalized benefits review!
Upcoming Voting Leave Compliance Obligations
Election Day is almost here, so now is a good time to brush up on voting leave laws and ensure you’re posting any mandatory notices.
Most states require that employers provide at least a few hours off to vote, and sometimes those hours need to be paid. Often, these laws require very little advance notice from employees about their need for leave, so employers should be prepared to grant last-minute requests to leave work to vote. If you’re in a state with early voting, you may want to encourage employees to take advantage of that option—by offering the same time-off benefit—to reduce the number of absences on Election Day.
However, the availability of early voting and absentee ballots doesn’t change an employee’s right to vote on Election Day if that’s their preference. We encourage you to visit the laws pages on your dedicated Mineral HR platform to learn about the voting leave laws in the states where you operate. We also have a guide, Managing Political Conversations and Supporting Employee Voting Rights, that might be useful in the coming months.
Federal: DOL Increases Exempt Employee Minimum Salaries
On April 26, 2024, the U.S. Department of Labor (DOL) published the much-anticipated final rule that will increase the minimum salary for many exempt employees. The increase will take effect in two steps. If you’d like to review the regulations yourself, they are available here—the relevant changes start on page 130 of the downloadable PDF.
Under the new rule, exempt executive, administrative, and professional employees (often referred to collectively as “EAP” employees) must be paid at least:
$844 per week ($43,888 per year) beginning on July 1, 2024
$1,128 per week ($58,656 per year) beginning on January 1, 2025
Exceptions: Teachers and practicing doctors and lawyers are exempt from these minimum salary requirements under federal law but may be subject to different state minimums. School-specific minimums apply to academic administrative employees. Exempt computer employees can be paid on a salary or hourly basis. If salaried, they’re considered part of the EAP group and need to make the minimums listed above.
Alternatively, they can be paid at least $27.63 per hour—this hourly rate was not changed by the rule.
Employees who are exempt under the Highly Compensated Employees (HCE) exemption must be paid at least the minimums listed above on a salary basis and receive total annual compensation of at least:
$132,964 per year beginning July 1, 2024
$151,164 per year beginning January 1, 2025
As usual, if a state law requires higher minimum salaries than what is required by the federal rule, the state minimums must be followed.
The rule implements automatic updates to the minimum salary levels every three years starting July 1, 2027. We don’t know what the future minimums will be, but employers will have at least 150 days’ notice before those changes take effect.
The last time the DOL attempted a significant change to the salary minimums, the rule was challenged and ultimately blocked just weeks before taking effect. While we have no way of predicting if that will happen again, it’s very likely that this final rule will be litigated.
Employers have the following options:
Ensure that salaried exempt employees make at least the new minimum salary required for their classification.
Reclassify currently exempt employees as nonexempt and provide them with the rights and benefits that nonexempt employees are entitled to (e.g., minimum wage and overtime pay).
The FLSA Changes Decision-Making Guide to help employers determine their next steps.
Benefits Compliance Notices for Group Health Plans
Whether you’re a seasoned HR professional or you’re new to benefits administration, understanding and staying on top of employee benefits compliance is important for anyone managing benefit plans. With annual open enrollment just around the corner for many groups, it’s important to be reminded if and when notices and disclosures should be furnished to individuals eligible for enrollment. Electronic delivery is permissible as long as certain conditions are met. The Timeline of Benefit Notices for Group Health Plans and Getting Started with Employee Benefits Compliance charts have been developed to step you through the most up-to-date information available.
Please reach out to your Capitol Benefits Group team for additional information or for additional support in maintaining your company’s benefits compliance!
IRS Issues Revenue Procedure 2024-35
The IRS issued Revenue Procedure 2024-35, which significantly increases the affordability threshold for ACA employer mandate purposes to 9.02% for plan years beginning in 2025. The new 9.02% level higher than last year, and represents the largest annualized change since the enactment of the ACA. An employer-sponsored minimum essential coverage will only be considered affordable if an employee's required contribution for the lowest-cost, self-only coverage option does not exceed 9.02% of the employee's household income.
Should you need assistance in reviewing the affordability of your coverage and how it benchmarks in today's market, please don't hesitate reaching out to Capitol Benefits Group for a benefits review!
September is Prostate Cancer Awareness
September is Prostate Cancer Awareness month! Lets be sure the men in our lives are being tested, monitored, and treated when necessary! Most states and federal legislation requires private health insurers to cover tests to detect prostate cancer, including the PSA test and digital rectal exam (DRE). Some states also assure that public employee benefit health plans provide coverage for prostate cancer screening tests.
Please don't hesitate reaching out to your Capitol Benefits Group team for more information on this month's national health observation reminder.