June 10, 2008

Welcome to Benefits Challenge. Benefits Solved.

Here is a free, fun and intriguing way to test your knowledge. Each edition of the News & Review will include a test on topics such as FMLA, COBRA, FSA, HRA, HSA along with others various topics.

Question: An employer offers a high-deductible health plan that starts on October 1 every year. What approach should the plan take regarding the legal requirements related to the annual minimum deductible and out-of-pocket maximums, which are based on a calendar year?

Your Response: INCORRECT

THE CORRECT ANSWER IS A. The plan should apply those limits that are currently in effect on the first day of the plan year (October 1) and not change them on January 1.

Per IRS Notice 2004-50, the correct approach is to apply the limits that are currently in effect on the first day of the plan year.