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...

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...

ACA Reporting Requirements

Applicable Large Employers (ALEs) must report information to the IRS regarding the health care coverage offered to full-time employees and full-time equivalent employees (FT/FTE). Once you’ve collected all the necessary information from your workforce, you must complete the three documents required for ACA compliance: the 1094-C, 1095-C, and the Written Statement to each employee. Form 1094-C Employer Transmittal Accounts for each of the following, per 2015 calendar month: Full-time employees Total headcount Whether Minimum Essential Coverage was offered Whether an applicable 4980H “Safe Harbor” was used Deadline for documents to be mailed: February 29, 2016 Deadline for document to be transmitted digitally: March 21, 2016 Form 1095-C Employee Statement Accounts for each of the following, per 2015 calendar month: Proof of offer of coverage (with code) Employee’s share of the lowest cost monthly premium Whether an applicable 4980H “Safe Harbor” was used Deadline for documents to be mailed: February 29, 2016 Deadline for document to be transmitted digitally: March 21, 2016 Written Statement of Each Covered Employee The employer’s name, address, and contact information The information for the employee on the return being filed Deadline for Statement Sent to Employee: January 31,...

4 Things to Know About the Affordable Care Act

The ACA is designed to reduce healthcare costs, expand coverage for the uninsured, and increase quality of care for people. The ACA can be confusing, making it difficult for many businesses to comply with the law’s requirements. In 2016, almost all businesses will be required to comply. To avoid hefty fines, here are four things to know about the requirements so you can remain compliant and penalty free in 2016: Are you an Applicable Large Employer (ALE)? If so, your business is subject to ACA requirements! To be considered an ALE, your company has to have 50+ full-time employees and full-time equivalent employees (FT/FTE). Calculating your total number of employees is difficult. That’s because the ACA classifies “full time” employment as 30 hours a week of work or more. Make sure to include both full-time employees as well as those who work the equivalent of full-time hours. Your business must offer “affordable” health insurance of “minimum value” to your employees: “Affordable” Health Insurance is less than 9.5% of annual household income. You can calculate the 9.5% from employees’ W2 wages, hourly pay rate, or the Federal Poverty Level for an individual. “Minimum Value” means employer-sponsored health plans must be designed to pay at least 60% of the total cost of medical services. You need to submit three key documents to guarantee compliance. If you’re an ALE, collected all the necessary info from your workforce, and made the necessary calculations, then it’s time to complete the three documents required for ACA compliance: the 1094-C, 1095-C, and the Written Statement to each...

Many Small Business Owners See Increase Due to The “Affordable” Care Act

It seems that just about every time we turn on the TV, get online or read a newspaper there is someone telling us how the Affordable Care Act is controlling the cost of healthcare.  Many small business owners strongly disagree as they look over their renewal for the coming year. Did you know? . . . . 90% of small business owners have received renewals showing an increase in premiums and 25% of these are facing increases in the double digits!  These increases are effecting small business owners across the country and in every industry.  Employers have been put in the tough position of having to find balance between two competing concerns: attracting and retaining talent to help build their business while at the same time, decreasing operating costs, including controlling health care expenses.  Many of these business owners now find themselves having to depend on their brokers more than ever to get creative and examine all available options in order to control benefit costs while still offering competitive benefit packages. Several years ago as the Affordable Care Act was approaching there were many in the industry that believed the broker would be a thing of the past.  As it turns out, brokers have never been more valued than they are...