Issue 26

• Check your W-2 for HSA payroll contributions
• Get your 5498-SA form for contributions (if you added funds)
• Get your 1099-SA form for distributions (if you added funds)
• Report contributions and distributions via Form 8899
• Carry information from completed Form 8889 to Form 1040

*The above information is for informational purposes only and is not legal or tax advice. UPMC Health Plan and UPMC Benefit Management Services do not provide legal or tax advice. For legal or tax advice, please contact your attorney or tax adviser.

End-of-year tips for your employee’s HSAs

1. Make sure your W-2 form shows HSA payroll contributions.

Provided by your employer, your W-2 shows the wages you earned and any taxes withheld. It also shows pretax contributions made to your account by you and your employer through payroll deductions. (Remember, only contributions made through payroll will show up on your W-2. If you made any contributions outside of your payroll deductions, sometimes referred to as ad hoc contributions, they won’t be reflected and will need to be included when filing your taxes.)

2. Make sure you have access to your HSA tax forms.

A 1099-SA is the HSA tax form that reports distributions from your account. You'll need this form when filing your taxes.

On the other hand, a 5498-SA reports contributions. It’s a little different from your W-2 because it will show any contributions, not just those made through payroll deductions. This form is not a requirement when filing taxes.

The recipient instructions provided with each of these forms walk you through which boxes reflect which information as well as basic instructions on how to use the forms.

Employees can find the tax forms related to their HSA under the “Message Center” tab of their online account. These will be made available in Q1 of 2023.

3. Prepare to report distributions and contributions using Form 8889.

Form 8889 is used to report any distributions from and contributions to your health savings account. Think of this form as the place where the numbers from Forms 1099-SA and 5498-SA or W-2 come together. Any distribution amounts reflected on your Form 1099-SA need to be reported on this form, where you’ll also indicate which distributions were eligible for medical expenses. And any contributions made to your HSA should also be listed on this form. You’ll then carry that information over as deduction information on your Form 1040 (or the main tax form you fill out and file for your tax return).

4. Make any additional contributions.

Looking to make additional contributions to your HSA? The good news is that if you haven’t filed for the tax year yet and haven’t maxed out your annual contribution, you can still make additional contributions to your HSA to count toward the prior year. Normally, it’s recommended to do it by early April to be sure there’s enough time for any changes to process in your account and allow you to still complete and meet the tax return deadline.

If your employee wishes to make a prior year contribution between Jan. 1, 2023, and April 15, 2023, that you want to be allocated to the 2022 tax year, just be sure to notify us through your UPMC Consumer Advantage portal or with the HSA contribution form that the contribution was for 2022.

5. Employer corrections.

Contribution mistakes happen! But no worries, these can be corrected. If you find that you (as the employer) have missed any 2022 payroll or employer contributions, but it is already 2023, we can help make this correction for you. Typically, employer/payroll contributions must be made within the calendar year to which they are being applied, but the IRS does allow for clerical error corrections. If this is the case, please contact us for assistance. We will have you make the necessary contributions and then manually adjust them back to the 2022 tax year so they can show correctly on the employee’s end-of-year tax documents.

End-of-year tips for flexible spending accounts

• Check with your dedicated UPMC Benefit Management Services analyst for details regarding FSA deadlines for fund usage and filing claims.
• To check your employees’ balances, you can run account balance reports on the UPMC Consumer Advantage portal.
• Remind employees of eligible expenses that can be used for remaining FSA funds.
  • This includes things such as out-of-pocket costs, copays, coinsurance, hospital visits, and prescription drugs.
  • Employees also can apply their FSA funds to dental and vision expenses, including prescription frames.
  • Finally, funds can be used for everyday items, such as bandages, sunscreen, and medications.
• The 2021 CARES Act allowed for deadline and carryover exceptions.
  • With the 2023 plan renewal, the plan rules will return to the standard setup according to your most recent setup document in place.
• Any unused employee funds (after the grace period or rollover, if applicable) are forfeited to the employer.
  • The forfeiture funds can be used toward offsetting administrative costs and annual premiums in the next FSA year, or funds must be equally distributed to employees.

Automated qualifying event notifications for Employer OnLine users

When submitting a termination of coverage via the UPMC Employer OnLine (EOL) website, in addition to the termination reason and coverage end date, you can also enter the date of the qualifying event. This will allow EOL to communicate COBRA-qualifying events to the BMS COBRA team.

This also means no double work for you!

How does EOL work?

The EOL website generates an automated spreadsheet of all COBRA-qualifying events submitted the prior business day. This spreadsheet is delivered daily to the BMS COBRA team, who will then process the corresponding required COBRA election notices.

These termination reasons will trigger a COBRA election notice to be issued to the qualified beneficiary(ies):

• Termination of employment-voluntary
• Termination of employment-involuntary
• Reduction of work hours
• Medicare
• Death
• Divorce
• Ineligible child
• Retired
• Military service

A COBRA notice will not be issued for these termination reasons (these aren’t COBRA qualifying events):

• Moved out of service area
• Term COBRA coverage
• Other insurance
• Term by employer group request

A few other helpful hints to keep in mind:

• Reporting to BMS is transmitted only when a client keys the termination directly into EOL.
• Reporting to BMS cannot come from an outside source.
  • For example, file feeds from a third party or membership termination form sent to Enrollment.
• If you have any questions, please contact your dedicated COBRA analyst. If you are unsure about who your dedicated COBRA analyst is, please email COBRA@upmc.edu.

Update on the COVID-19 public health emergency and how it affects COBRA:

The COVID-19 public health emergency has been extended through Jan. 11, 2023. This, in effect, continues the extension of certain time frames affecting a participant’s continuation of group health plan coverage under COBRA.

The following extensions are still in place, until the earlier of (a) one year from the date they were first eligible for relief or (b) 60 days after the declared end date of the COVID national emergency:

• COBRA election period:
  • Under normal circumstances, a COBRA-qualified beneficiary (QB) has 60 days to elect COBRA.
  • Under the extension, a COBRA QB will have up to a maximum period of one year to make an election of COBRA. The extension deadline will be determined on a per participant basis.
• COBRA premium payment period:
  • Under normal circumstances, a COBRA QB has 45 days after submitting their COBRA election to remit their initial premium due. Subsequent premium payments are due on the first of the month of coverage, with a 30-day grace period.
  • Under the extension, a COBRA QB will have up to a maximum period of one year to submit premium payment in full for any past due premiums. The extension deadline will be determined on a per participant basis.