Healthcare regulations are constantly evolving, and a mid-year check-in is a great opportunity to identify and resolve issues early, before year-end reporting, increased audit risk, or employee dissatisfaction. Taking the time now to review your benefit accounts isn’t just about checking a box; it’s a proactive strategy to ensure compliance, support employees, and strengthen your overall benefits program.

Below, we walk through the most common types of healthcare-related savings accounts, what to watch for, and how to ensure you're aligned with the latest 2025 requirements.

Flexible Spending Accounts (FSA)

Health Flexible Spending Accounts (FSAs) are a common pre-tax savings option. FSAs allow employees to contribute pre-tax income to cover qualified medical expenses. For 2025, the contribution limit for a health FSA increased to $3,300, with a maximum rollover of $660. If your plan allows this maximum, your plan documents must be updated accordingly.

While FSAs are typically subject to the “use-or-lose” rule, employers may choose to offer either a grace period or a limited rollover. It’s important to communicate this clearly to employees so they understand their deadlines and don’t risk losing out on unused funds.

There are two types of FSA accounts:

• General Health FSAs are available to cover all qualified medical, dental, and vision expenses. However, they cannot be paired with a Health Savings Account (HSA).
• Limited-Purpose FSAs can be paired with Health Savings Accounts (HSAs) but are restricted to dental and vision expenses reimbursements (but some post deductible expenses might also be reimbursable).

If your organization offers both an FSA and an HSA account, confirm that your enrollment systems are configured to manage eligibility accurately. This is a common area where administrative errors can lead to compliance issues.

Also, remember that FSAs do not allow mid-year election changes unless an employee experiences a qualifying life event (QLE), such as marriage, childbirth, or loss of coverage.

Dependent Care Flexible Spending Accounts (DCFSA)

Dependent Care FSAs serve a different but equally important purpose: helping employees manage the cost of child or elder care. These accounts are governed by separate IRS rules and require attention to provider documentation and annual contribution limits.

• For 2025, the contribution limits remain at $5,000 per household or $2,500 per spouse if filing separately. (This limit will be raised to $7,500 next year under the OBBBA).
• No rollover is allowed, although a grace period may be offered.
• All care providers must have a valid Tax ID number to be eligible for reimbursement.

It’s important to confirm that your plan documents reflect these limits and that your payroll system tracks contributions accurately throughout the year.

Health Savings Accounts (HSA)

Health Savings Accounts (HSAs) are an increasingly popular option due to their triple tax advantages. Eligibility is limited to employees who are enrolled in a high-deductible health plan (HDHP), not on Medicare, and not claimed as a dependent on another individual's tax return.

For 2025, the IRS contribution limits are:

• $4,300 for individuals enrolled in single coverage
• $8,550 for individuals enrolled with dependents'
• $1,000 “catch-up” contribution for individuals aged 55 or older

One significant change this year is the expiration of the CARES Act’s telehealth safe harbor. As of Jan. 1, 2025, HDHPs must again apply deductibles to telehealth services to maintain HSA eligibility. (This will be changed permanently by the OBBBA which will permit telehealth payment below the deductible) Be sure your plan documents and employee communications reflect this change.

Additionally, participants aged 65 and older should be encouraged to consult with a tax advisor about withdrawals, as non-qualified expenses may be treated differently under IRS rules.

Health Reimbursement Arrangements (HRA)

HRAs differ from FSAs and HSAs in that they are entirely owned and funded by the employer and offer reimbursement for qualified medical expenses. These plans are often used to offset deductibles or provide a fixed allowance for healthcare costs.

Integrated HRAs must meet the Affordable Care Act (ACA) affordability standards, so mid-year is a good time to check that your plan's documentation is aligned with current medical offerings. Keeping accurate records also supports year-end ACA reporting and helps avoid unintentional compliance gaps.

Individual Coverage HRAs (ICHRA)

Individual Coverage HRAs offer employers flexibility by allowing reimbursement of premiums for employees who purchase individual market coverage. However, they come with more complex compliance obligations.

To remain compliant:

• ICHRAs must follow nondiscrimination rules and be offered to all employees within a designated class (e.g., full-time, part-time, salaried, hourly).
• Employers must give employees the option to opt out of the ICHRA annually.
• Annual notices must be distributed by Oct. 3, 2025, for calendar year plans starting in January.

As regulatory scrutiny surrounding the ICHRA continues to increase, early planning and effective employee communication are important.

Why a Quick Review Matters

A quick review offers an opportunity to correct minor issues before they become significant problems. It also ensures your benefits systems and employee communications are aligned with current regulations.

A mid-year check-in allows you to:

• Confirm IRS contribution limits and update plan documents
• Align enrollment systems and payroll tracking with benefit rules
• Strengthen employee understanding of account rules and deadlines
• Reduce audit risk and improve year-end readiness

If you’re unsure whether your current plans are fully compliant or would like assistance reviewing your documentation, now is the time to reach out to your benefits advisor. With the proper support, we can help you finish the year strong, compliant, prepared, and confident in your benefits program.

This update is not intended to be exhaustive, nor should any discussion or opinion be construed as legal advice. Readers should contact legal counsel for legal advice. All rights reserved.