Compliance May 12, 2021

2022 HSA Contribution Limits Announced

An individual with self-only coverage under a high-deductible health plan can contribute up to $3,650, $50 more than in 2021.

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The IRS has published Revenue Procedure (Rev. Proc.) 2021-25, setting the 2022 inflation-adjusted amounts for contributions to health savings accounts (HSAs), as determined under Section 223 of the Internal Revenue Code (IRC).

For calendar year 2022, the annual limitation on deductions for an individual with self-only coverage under a high-deductible health plan (HDHP) is $3,650, up $50 from this year’s limit. The annual limitation on deductions for an individual with family coverage under an HDHP is $7,300, an increase of $100 from the 2021 limit.

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The new Rev. Proc. defines an HDHP for calendar year 2022 as a health plan with an annual deductible that is not less than $1,400 for self-only coverage or $2,800 for family coverage, and for which annual out-of-pocket expenses (deductibles, co-payments and other amounts, but not premiums) do not exceed $7,050 for self-only coverage or $14,100 for family coverage.

HSAs can only be offered in connection with an HDHP, but lawmakers and advocacy groups are making efforts to change this.

HSAs have been touted as an optimal vehicle for employees to accumulate savings to cover health care costs in retirement, but not many employees are using the accounts that way. A survey released last year from Further, a national health savings administrator, found 65% of consumers report leveraging their HSA as a spending resource, with 23% stating they use their account equally for saving and spending.

PLANSPONSOR recently conducted a survey of employers and found that among those who offer HSAs, none position them exclusively as a strategy to save for health care expenses in retirement. Nearly half (48%) position them as mainly a short-term savings tool that doubles as a retirement savings strategy, and one-third (32%) reported that they market their HSAs to employees as equal parts retirement savings strategy and short-term health savings tool.

There are different needs competing for employees’ savings, but employers that want to promote HSAs as retirement savings vehicles have several ways to do so.

Employers that want to offer HSAs to their employees can find information about providers in PLANSPONSOR’s 2021 Health Savings Account Survey.

Compliance May 11, 2021

College Savings App Hits Ascensus With Federal Antitrust Claims

UNest Holdings claims Ascensus pushed the company out of the college savings market in an effort to create a monopoly.

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Ascensus LLC is facing federal antitrust litigation in Rhode Island after a company that created a college savings app accused the firm of organizing a monopolistic campaign to push it out of the market.

Filed in the U.S. District Court for the District of Rhode Island, the lawsuit says Ascensus participated in a “longstanding, unlawful, deceptive and anticompetitive” campaign against UNest Holdings, which developed an app for parents of all income levels to invest and save for children’s education.

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UNest says Ascensus launched a campaign that would, “undermine UNest’s business model, muscle UNest out of the industry and ultimately monopolize the market.” UNest also argues that Ascensus is a dominant provider of management services to 529 plans and other college savings plans, and that it leveraged that market power to exclude UNest from the CollegeBound 529 plan administered by the Rhode Island Office of the General Treasurer, otherwise known as the RI program.

The lawsuit notes that UNest had first filed suit in Rhode Island state court in November 2019 to prevent Ascensus from terminating UNest’s access to its clients’ accounts in the RI program. UNest had filed suit against both Ascensus and the distributor for the RI program.

While the three entities were able to reach a settlement in the state court action, UNest says Ascensus was unwilling to comply with the settlement’s terms, alleging that Ascensus attempted to block UNest from transferring its clients’ accounts out of the RI program and into the 529 College Savings Plan in New York.

UNest then filed suit in the District of Rhode Island in December 2019 to prevent Ascensus from terminating UNest’s access to its clients’ accounts in the RI program while UNest worked to find a new 529 plan for those accounts. UNest also accused Ascensus of pushing it out of the market to develop its own app to compete with UNest, which Ascensus denied.

However, UNest said in court documents that this denial was false, pointing to the fact that Ascensus debuted its READYSAVE 529 mobile app this February. Along with unveiling a 529 college savings app, UNest says Ascensus’ key account management features, along with its look and feel, were “materially similar” to the UNest app.

As a result, UNest says it was terminated from other states’ 529 plans, can no longer market 529 plan investments to its clients and was forced to change its business model to offering accounts now known as Uniform Transfers to Minors Act (UTMA) accounts. The company says this change “disrupted its growth trajectory, undercut its efforts to raise capital funds based on a fair valuation of the UNest App and caused UNest to lose clients, all resulting in significant financial losses and damages to UNest.”

UNest is seeking damages with interest under Sections 1 and 2 of the Sherman Act, along with Section 6-36-5 of the Rhode Island Antitrust Act. The company is also requesting awards for litigation costs and fees.  

In an email response to PLANADVISER, an Ascensus spokesperson said, “We believe the claims are without merit and we intend to vigorously defend against them.” 

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