It’s Not Too Late – Act Now, Before Annual Enrollment

Some year-end changes, you and your employees might want to consider.

An internet search can easily identify many suggested year-end tax tips.[i]

This article offers an employee benefits version of year-end actions – changes a plan sponsor and/or a participant might consider. Always, always consult with benefits and tax counsel before making any decisions or taking any action.

Annual Enrollment Process

Recognize that this year’s annual enrollment is likely to be unique. Be here now. Pay attention. Plan sponsors should consider conducting a full positive enrollment in 2020 for 2021 – committing sufficient resources including individual contact with every associate (recognizing that in-person meetings are not anticipated, and that many, perhaps most employers do not expect to make significant changes in coverage options). (Re)consider every available option.

Plan Sponsor Actions to Consider

Add a Health Savings Account (HSA) -capable coverage option effective December 1, 2020 (or if it is too late, reconsider in time for December 1, 2021). That option is available whether or not you already offer an HSA-capable coverage option. You will want to consider using a 13-month deductible (for the period December 1, 2020 – December 31, 2021) of say, $1,520 (single) and $3,040 (non-single)[ii]. Employees could make a mid-year change in coverage and contribute the HSA maximum for 2020 AND 2021 – Single tier: $3,550 (2020), $3,600 (2021); Non-Single tier: $7,100 (2020), $7,200 (2021); as well as the per person catch-up for those age 55+ as of December 31st : $1,000 (2020 and 2021). For everyone who enrolls in HSA-capable coverage, consider a $1 employer contribution on the first day of HSA-capable coverage – to open the HSA account and to start the HSA claims clock running. That is, eligible expenses include all items incurred on or after the date the HSA is opened, even if contributions don’t occur until after the expense is incurred. Careful administration is necessary for individuals currently enrolled in a general Health Flexible Spending Account (Health FSA). See Sidebars #1 and #2 – illustrating the value of HSA-capable coverage and savings.


[i] For example, see Intuit/Turbo Tax, Accessed 11/11/20 at: See also: AICPA, Financial Planning Tips from AICPA to Act on Before Year-End, 11/17/20. Suggestions include: Prepay real estate taxes, accelerate gifts to charity, pay home business expenses, self-employed to open retirement plan, payments to cover insufficient withholding, pandemic distributions with three year tax averaging/opportunity to repay, Roth IRA Conversion, maximize HSA contributions, leverage capital losses, ensure you contribute enough to maximize the employer match in your 401(k), maximize Roth contributions, review beneficiary designations, gift today to reduce future estate taxes, revisit risk tolerance. Accessed 11/17/20 at:

[ii] IRS, Notice 2004-50, Q&A24, Accessed 11/11/20 at:

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