The Affordable Care Act has placed compliance front and center for employers of all sizes. Employers must be cognitive of the numerous employee benefit laws that they must comply with such as; ACA, ERISA, COBRA, HIPAA, etc. Failure to comply may result in fines, penalties, loss of tax favorable status or even criminal charges. The Employee Benefits Security Administration (EBSA), a division of the Department of Labor (DOL), has been conducting extensive ERISA audits on pension and welfare benefit plans and shows no signs of letting up.
All plan administrators and individuals managing benefits must follow judiciary requirements, looking out for the best interests of participants while managing plans to comply with all requirements and must follow these fiduciary requirements:
- Making sure participants receive promised benefits;
- Establish and maintain plans in a fair and financially sound manner;
- Manage plans for the exclusive benefit of participants and beneficiaries;
- Carry out their duties in a prudent manner and refrain from conflict of interest;
- Fund benefits in accordance with the law and plan rules;
- Report and disclose information on the operations and financial condition of plans to the government and participants; and
- Provide documents required in the conduct of investigations to ensure compliance with the law.
There are numerous employee notifications that should be distributed to employees based on benefits offered and the number of employees. Here is a partial list of the various notification requirements.
- Summary of Benefits & Coverage (SBC) (All who offer medical insurance)
- Notice of Patent Protections and Selection of Providers. (All who offer medical insurance)
- Grandfathered Plan Disclosure/Notice (Only grandfathered plans)
- Mental Health Parity and Addiction Equity Act (MHPAEA) Notice (50+ employees)
- Health Care Reform – Employee Notice of Exchange (All employers)
- COBRA Notices (20+ employees)
- Qualified Medical Child Support Order Receipt and Determination Letters (All who offer medical coverage)
- HIPAA Certificate of Creditable Coverage (Any employer offering medical coverage)
- HIPAA Privacy Policies and Practices (Any plan with protected health information (PHI))
- HIPAA Security Policies and Practices
- Notice of Special Enrollment Rights (All medical plans)
- Medicare Part D Notice of Creditable Coverage (All who offer plans with prescription drugs)
- Women’s Health Act Notice (All offering these benefits)
- Newborns’ and Mothers’ Health Protection Act (All who offer maternity)
- Children’s Health Insurance Program (CHIP) Reauthorization Act Notice (All who offer medical insurance in a state where CHIP is offered)
- Summary Plan Description (SPD) (All who offer ERISA covered plans)
- Summary of Material Reduction Notice (All ERISA benefit plans)
- Summary of Material Modification (All ERISA benefit plans)
BENEFIT ADMINISTRATION FOR ALE’s
There are a number of recommended benefit administration practices that may help organizations comply with the various laws, while maximizing benefits received by participants.
Plan Year and Open Enrollment
Organizations should define a plan year, and then hold open enrollments prior to each plan year, reviewing coverage and provider options. Participants are allowed an opportunity to enroll or make changes to their plans during open enrollments.
ALE Medical Insurance Coverage Offers
Most ALEs will elect to offer coverage to at least 95% of eligible employees that meets Minimum Essential Coverage (MEC), Minimum Value (MV) at affordable rates to avoid penalties. A plan meets MV if it covers at least 60% of the total allowed cost of benefits that are expected to be incurred under the plan. It is affordable if the medical insurance rates charged for the employee-only, MV coverage does not exceed 9.56% of the employee’s W-2 wages, federal poverty level or rate of pay safe harbors.
It is a good practice to collect either an application or waiver of coverage from all employees offered coverage. Keep these on file demonstrating they were offered coverage.
Establish a set measurement period where you will monitor work hours for new variable hour employees (part-time, temporary and seasonal) of 30 days to 12 months or you may elect to use the monthly measurement method. Those who average 30-hours or more during the measurement period would be eligible to participate in the medical plan. Have all measurement periods begin as of the first of the month following dates of hire, making it so you only have to review eligibility twelve times per year. If desired, you can have a separate measurement period for on-going employees, those who are past one standard measurement period.
Define an administrative period of 30 to 90-days, which is your allowed time between the measurement period and the insurance effective date to calculate eligibility, provide enrollment materials to eligible employees and perform other administrative functions. The combination of your selected measurement period for newly hired employees and administrative period may not exceed 13 months.
Individuals who qualify for medical insurance coverage after completing the measurement period are eligible to remain on medical coverage, regardless of changes to their average work hours, for a period of time equal to your defined measurement period or 6 months, whichever is greater.
ACA Reporting Data Because of the need to meet ACA reporting requirements, ALE’s need to establish tracking systems to monitor the following data used to complete documents 1095-C and 1094-C:
- Employee names
- Employee SS#
- Employee address
- Employee telephone number
- The month coverage was offered to each employee and each month thereafter for which the employee was eligible for coverage
- Number of employees (full-time and full-time equivalent)
- Employee’s cost of the lowest cost monthly premium for self-only
- Name, SS# OR DOB if no SS# is attainable for spouse and dependents for ALL self-funded plans (ALE and small employers)
Following these procedures will make compliance manageable for most employers.