1. The growing popularity of Health Savings Accounts (HSAs) with both employees and employers

Available to participants in conjunction with high-deductible health plans, HSAs are tax-exempt accounts for the specific purpose of funding qualified medical expenses.

Since HSAs were established in 2003, their popularity in connection with employer-sponsored plans has grown rapidly. In large part, this is due to the current trend of escalating medical costs –- current estimates of retiree medical expenses suggest at least $275,000 for a couple retiring at 65 –- a trend that does not show signs of changing course.

The value of retiree medical benefits and vehicles for reducing the impact of those costs is at an all-time high. HSAs address this concern and provide a valuable employee retention incentive due to the preferential tax treatment for both current and future medical expenses.

The key attribute about HSAs is that they offer employees the potential for triple tax savings. This can serve as an incentive for employees who hesitate to elect this relatively new consumer-driven model of health insurance coverage.

When offered through their employer, employees may make pre-tax salary deferral contributions to their HSA; accumulate tax-free earnings on those contributions; and take advantage of tax-free distributions to pay for qualified medical expenses.

Further, HSAs allow employers to contribute to their employees’ HSAs, thus avoiding payroll taxes such as Social Security and Medicare, Federal Unemployment Tax and Federal Insurance Contributions Act (FICA).

Finally, once an HSA account owner reaches age 65, distributions from their HSA may be taken for non-medical expenses and taxed as ordinary income without being subject to a tax penalty, similar to distributions from a traditional IRA.

2. The fate of the Affordable Care Act

As most sponsors of group health plans know, the Affordable Care Act (ACA) faces an uncertain future.

In this regard, employers should keep in mind that Congress’s actions are not likely to directly impact employers’ 2018 plan year or the plan design choices that employers have made.

For this reason, employers that continue to operate as if the ACA will remain in effect in 2018 will best-positioned to deal with what comes next.

The summary of benefits and coverage (SBC) is an example of a requirement introduced by the ACA. The SBC summarizes group health plan coverage for employees, describing important plan features such as deductibles, co-pays, co-insurance and covered services.

SBCs are intended to permit employees to understand and make informed choices about available coverage options.

While the insurer or other third party typically provides the SBC to an employer for distribution with open enrollment materials, employers are ultimately responsible for the SBC’s content and distribution. Failing to provide SBCs to employees participants carries a steep penalty.

For the first time since 2012 (when employers were first required to provide the SBC), the content and format requirements for SBCs have been revised, effective for open enrollment occurring on or after April 1, 2017. For calendar year plans, the upcoming 2018 open enrollment is the first for which the new SBC requirements are in effect.

3. Regulation of wellness programs

Employer-sponsored wellness programs are regulated by an assortment of Federal agencies, which can make these popular programs challenging to run.

Applicable regulations include those under the Affordable Care Act; the Health Insurance Portability and Accountability Act (HIPAA); the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).

Ongoing lawsuits challenging the validity of these regulations add another layer of difficulty to employers’ compliance efforts. Recent court cases, however, should signify to employers that regulations are here to stay, at least for now.

4. Mental health benefits

As open enrollment approaches, employers sponsoring group health plans should work with their service providers to review plan designs and to ensure that the benefits they offer to their employees and their disclosures satisfy the Mental Health Parity and Addiction Equity Act.

Based on data reported by the Departments of Health and Human Services, Labor, and Treasury, enforcement efforts regarding these rules have increased in recent years.

Additionally, the Department of Labor (DOL) is in the process of working out the nuts and bolts of required disclosures, recently releasing a draft model form disclosure to assist plan participants in requesting information from their health plans and the insurers about their mental health coverage. DOL is seeking public comments prior to finalizing the draft model form.

Finally, in addition to increased enforcement activity, litigation by private parties regarding mental health benefits has gone up.

As we enter the fall, employers considering how to reflect these issues and changes in their benefits programs for 2018 should consult with counsel regarding their suitability as well as the finer points of implementation.

Allison Wielobob is counsel with the Employee Benefits practice group at Eversheds Sutherland LLP in Washington D.C.

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4 compliance issues for employers during this year&rsquo;s enrollment window

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4 compliance issues for employers during this year’s enrollment window