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Inflation-Adjusted ERISA Penalties – DOL

The Department of Labor recently released their inflation-adjusted penalties for ERISA, the Family Medical Leave Act, and the Genetic Information Nondiscrimination Act. The chart below shows some of the more common penalties assessed from DOL audits.   Failure to provide a summary of benefits and coverage$1,105 per employee Failure to inform employees of CHIP coverage opportunities$112 per employee per day Failure to comply with FMLA notice requirements$166 per employee per day Failure to comply with certain GINA requirements$112 per employee per day Failure to provide an SPD or plan documents$110 per employee per day Failure to provide documents to the DOL upon request$149 per day, not to exceed $1,496 per request Failure to file an annual 5500 form$2,097 per day The new ERISA penalties serve as important reminders to employers who sponsor benefit plans.  Many employers either think they are too small to be audited (not true), or that the medical carriers adhere to all the rules and furnish employees with what is required (not true).  It is for this reason that we have taken on the responsibility to protect our clients by providing them with the proper notices and instructions to maintain...

Blue Shield and Sutter Health sign 3 year contract

Sutter Health and Blue Shield of California have come to an agreement on a three year renewal of their provider contact through Dec. 31st, 2019.  The contract is for all coverage – Individual, Group, Medi-Cal, and Medicare.  Keep in mind that not all providers or facilities are available to all plans, so please double check with www.sutterhealth.org and www.blueshieldca.com for in-network specifics.  Sutter Health participates in Blue Shield’s PPO plan through Covered CA, but please check for specifics on each respective...

Eliminating Dependent Coverage? COBRA Rules, and the Employer Shared Responsibility Provision

With healthcare premiums continuously increasing year over year, many employers are searching for options to help reduce their benefit costs. A seemingly quick fix would be to eliminate dependent coverage, but you may want to consider eliminating dependent contribution rather than not offering coverage at all. First and foremost, the circumstances are different for Small Groups in comparison to Applicable Large Employers. If you are considered an ALE, with 51 or more full time equivalent employees, then you are required to offer dependent coverage by law, or you may face an employer shared responsibility penalty. Please note that the definition for Small Group plans has been expanded to include up to 100 employees, so it is possible to be an Applicable Large Employer and still offer Small Group plans (51-100 employee size). Per the Affordable Care Act, and the ‘pay or play’ provision, the definition of ‘dependent’ only applies to children under the age of 26. Spouses are not considered dependents, nor are step children or foster children. There are two types of penalties you may face if you do not offer proper coverage as an ALE. If you DO NOT offer minimum essential coverage to at least 95% of your full time equivalent employees and their dependents then you may face a penalty if at least one of your employees obtains premium assistance from the public marketplace (Covered CA). If just one of your employees receives premium assistance, then you are liable for a $2,000 penalty for each employee, after the first 30 employees. [Total employees – 30, multiplied by $2,000] If you DO offer minimum essential coverage...

Wrap SPD Requirements – Are you ERISA Compliant?

The Employee Retirement Income Security Act (ERISA) oversees group benefit plans, and with the onset of the Affordable Care Act, the ERISA Summary Plan Description (SPD) requirements are in the spotlight.  More often than not, a plan administrator assumes that a Certificate of Insurance qualifies as an SPD, and that either the insurance company or their broker is responsible for preparing and delivering SPD’s.  In this instance, the employer (plan administrator) is solely responsible for ERISA compliance. An employer must have a written SPD, which serves as the main vehicle for communicating plan rights and obligations to participants and beneficiaries.  An SPD that includes the plan’s terms and conditions, such as a Certificate of Coverage, and includes (or ‘wraps’) it with the specific ERISA disclosure language is considered a ‘Wrap SPD.’  One step further would be to produce a mega-wrap document which would encompass all benefit lines into one document, which is HIPAA compliant as long as none of the benefits are self-funded. ERISA requires that a SPD be distributed to enrolled participants within 90 days of coverage, or 120 days of a new plan being established.  If an SPD has not changed, an employer is required to furnish another copy to all participants every five years. Click Here to see a Sample Wrap SPD Document. An example of some of the information required in an SPD: Plan name Employer’s name and address Employer’s EIN Plan Administrator’s name, address, and phone number Type of plan and description of benefits Effective and End Dates of the plan Eligibility terms How refunds are allocated to plan participants Claims procedures ERISA legal...

California Choice HSA Options – Q4 2016

As the majority of group renewals are fast approaching, I wanted to outline the different HSA options available to CaliforniaChoice clients.  For the fourth quarter of 2016, there are twelve different HSA eligible medical policies from five different carriers. (Listed Below – Please note that not all plans are available in all 19 regions) Note that there are not any PPO HSA options available to CaliforniaChoice clients at the moment.  You may assume that Anthem’s EPO policy would be a close fit, but beware the limited network without any out-of-network coverage, aside from emergencies.   While the private exchange offers employees the flexibility to choose various plans without the need for employers to meet specific participation requirements, the only way to offer a PPO HSA currently is outside of CaliforniaChoice.  For employers that wish to concurrently offer a PPO alongside Kaiser, you must have a minimum of 5 non-Kaiser employees that wish to enroll, which make up at least 25% of eligible enrollees. While the state’s public exchange, Covered CA, has setup a mirrored network of health plans that offer the same participation flexibility as CaliforniaChoice, they are only offering six HMO HSA policies from three carriers: Kaiser, Sharp, and Western Health. As premiums continue to increase, and plans become more limited and standardized, small group shoppers are losing their flexibility within private exchanges.  We can only hope that the insurance carriers and partners will loosen the reins in 2017. Deductible – A specified amount of money that you must pay before an insurance company will contribute towards a claim. Out of Pocket Max – The most you will have to...

HSA Eligible Medical Policies

As insurance premiums continue to rise, you may find yourself exploring coverage options you may not have considered in the past.  One of which is an HSA eligible policy that has risen in popularity over the years for multiple reasons.    Health Savings Accounts are associated with high deductible health plans – a plan with an annual deductible no less than $1,300, and an annual out-of-pocket maximum not to exceed $6,550; the overall cost of an HSA eligible policy can be less than other plans, while it still provides you with the same catastrophic coverage. Health Savings Accounts allows the account holder to pay for current health care expenses and save for those in the future.  Payments towards qualified medical expenses are withdrawn tax-free, and interest earned on deposits also accrue tax deferred.  Funds roll-over each year, and the account belongs to the individual and follows the individual throughout his/her career.  An HSA eligible policy can be purchased on both the individual and group marketplace, providing full flexibility. Contributions are tax-deductible or are deducted directly from payroll pre-tax. Employers may also offer to contribute towards an HSA, and contributions are excludable from an employee’s income and are not subject to federal income tax, Social Security or Medicare taxes.  In addition, employer contributions are deductible as a business expense to the company.  Employers may choose to contribute a set amount or make ‘matching’ contributions.  The IRS sets annual limits on the amounts that may be contributed to the HSA.  If funded from both the employer and employee, it is important to ensure that the total contributions remain within the annual IRS...

Small Group Transition : 51-100 Employees

As of January 1st, 2016 the definition of small group has been expanded to include groups with 51-100 full time equivalent employees.  For groups that will be making the transition, the changes are significant and should be reviewed in detail with a small group specialist.  Since 70-80% of renewals will take effect in Q4 of 2016, it is imperative that you consider all options as soon as possible to familiarize yourself with the new ACA mandates. Rating Regions – Large group rating regions vary by each carrier. Small group consists of 19 regions that are standardized for all carriers. Rating Structure – Large group rates are composite (same rate for each member) and are generated based on the average of employee ages, tiers, genders, and zip codes. Small group rates are determined on a member level based on employer location, where employees and dependents are rated independently.  While age bands can vary by carrier, you will typically see the same rates for age 0-20, one band for each year between 21-63, and one band for age 64+.  Dependents under the age of 21 will be rated individually, up to 3 children. In addition, the ACA has imposed a 3:1 ratio for small group rates.  The rate difference between the youngest to oldest may not exceed a 3 to 1 ratio. The biggest rate increases will hit groups with good medical and SIC risk, and employees with dependents age 20+.  Conversely, young employees may experience rate decreases. Carriers release one set of rates and all groups receive the same standardized rates based on the enrollee’s age.  Rate negotiations are not...

Steps to check if your medical and employee benefit broker has an insurance license

  Below I will describe how to check if your insurance broker is licensed in CA. In every state the process is very similar. As a consumer it is not your responsibility to check the creditability of your insurance broker, however I would urge you do so that you do not end up with the wrong insurance policy in the future. Step One: For CA employers, search by license number. If you would prefer you can search by the insurance broker’s name. Step two: Once you find your insurance broker’s name it is important that you verify that their license is “Active.” If their license is “Active” at least you know that your broker is current with the state continuing education and should be familiar with all of the products they are recommending. Tip: If the insurance company that your broker is recommending is not on the list of “Insurance Company Appointments” then it is likely your broker is selling you an insurance policy for that company for the first time. However, if your insurance broker works for an insurance agency then it is likely that the insurance policy will be placed under the managing broker. If you ever want to confirm who your broker is on your insurance policy, call the broker and ask to see the Master Application for any group insurance benefits (medical, dental, vision, life and disability insurance). For individual insurance plans many times there is a broker attestation or broker details section that clearly identifies who was the writing broker or broker of record for your insurance policy. If you are ever unsatisfied with your current insurance broker and...

Alternatives to Zenefits

  As many small businesses in CA and across the country look for alternate options to Zenefits it will be important to consider the benefits of the various benefit enrollment systems and brokerages available in the marketplace. There are over two hundred benefit enrollment systems available. How does an employer go through making the right decision as they consider alternate options?   Personal customer service should be number one. As many employers know, keeping employees happy is the key to company success. As HR professionals it is pertinent that you align yourself with an insurance brokerage that understands your immediate needs and is able to consistently deliver on what is most important to your company culture. Free does not translate to significant value. As an insurance broker in CA all small group medical and vision insurance rates are the same. However, dental, life and disability insurance rates are not. It is important you have a broker on your side that is getting customized quotes for you vs just selling you book rates. As you may know, all of the dental rates Zenefits is selling on their website at first glance are book rates. Those rates are about 15-25% more than the rest of the marketplace. Technology should support customer relationships, not define them. When you have a personal relationship with a broker the communication of policy information and support reaches new levels. When you have an insurance business that operates from off-site call centers, staffed by employees with no familiarity of the local insurance community it is almost impossible to bring the level of customer service to superior level....

Common Summary Plan Description (SPD) Mistakes

Subject to ERISA (Employee Retirement Income Security Act) the SPD (Summary Plan Description) is one of the most important documents that participants under a health benefit plan must receive.  The Department of Labor has increased its company audits, and more often than not employers are failing to provide their employees an SPD. Some may consider the information distributed by their insurance carrier as sufficient evidence of coverage and benefits to satisfy their SPD distribution requirement.  Unfortunately, this is not the case, and the responsibility lies solely in the lap of the plans administrator (the employer that sponsors the group plan). Every employer that sponsors a group health plan must comply with this important ERISA requirement, or they run the risk of facing a hefty fine.  Penalties of up to $110/day per participant or beneficiary for failing to provide an SPD or plan document within 30 days of receiving a request.  The penalty accrues daily from the inception of the policy, not from the date of notification to furnish. It is considered a best practice to distribute the SPD to employees and maintain proper records that each beneficiary has in fact acknowledged receipt.  This can be accomplished by employing an online administration system that can track and organize specific notices, and ensure compliance under ERISA. To learn more about how we can assist your company reduce its risk of an audit, and eliminate the risk of arbitrary penalties -please contact us via telephone or...

Bedrosian & Associates

Address: 525 Veterans Blvd., Suite 102 Redwood City, CA 94063

Phone: (650) 367-0259 Fax: (650) 367-0599

Ron Bedrosian License #0478051

Ryan Bedrosian License #0F00667

Alex Bedrosian License #0G33562