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Everything You Need to Know About Employee Benefits Compliance

As a business leader you work hard to take care of your employees. When it comes to employee health benefits, it’s important that you stay on top of ever-changing compliance requirements. Failing to do so can be detrimental to your business. Whether you are a growing startup, an established small business, or a scaling medium-sized corporation, in order to stay compliant, you need a systematic approach.

While these regulations are essential for assuring the fair treatment of employees, they can also be dense and intimidating if you have no prior experience navigating them. That’s why we’ve created this resource guide, to offer you a comprehensive look at employee benefits and the compliance requirements that come with them. With this resource, you can feel confident that you are taking care of your employee’s healthcare needs and while fulfilling your business’ legal obligations.

Employee Retirement Income Security Act (ERISA)

The Employee Retirement Income Security Act (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans.

ERISA – General Guidelines

ERISA imposes a variety of compliance obligations on the sponsors and administrators of group health plans. For example, it establishes strict fiduciary duty standards for individuals that operate and manage employee benefit plans and requires that plans create and follow claims and appeals procedures. ERISA applies to employee welfare benefit plans, including group health plans, unless specifically exempted such as Church and government plans. There are no exceptions for small employers.

ERISA requires plan administrators to provide the following notices/disclosures:

  • SPD – Plan administrator must automatically provide an SPD to participants within 90 days of becoming covered by the plan. An updated SPD must be provided at least every five years if changes have been made to the information contained in the SPD. Otherwise, an updated SPD must be provided at least every 10 years.
  • Summary of Material Modifications (SMM) – Plan administrator must provide an SMM automatically to participants within 210 days after the end of the plan year in which the change was adopted. If benefits or services are materially reduced, participants generally must be provided with the SMM within 60 days from adoption.
  • Plan Documents – The plan administrator must provide copies of plan documents no later than 30 days after a written request.

ERISA – Form 5500 Requirements

Form 5500 is used to ensure that employee benefit plans are operated and managed according to ERISA’s requirements. The filing requirements vary according to the type of ERISA plan. Unless an extension applies, Form 5500 must be filed by the last day of the seventh month following the end of the plan year (that is, July 31 of the following year for calendar year plans.

The Form 5500 requirement applies to plan administrators of ERISA plans unless an exception applies. Small health plans (those with fewer than 100 participants) that are fully-insured, unfunded, or a combination of fully-insured and unfunded, are exempt from the Form 5500 filing requirement.

Affordable Care Act (ACA)

The Affordable Care Act (ACA) is a federal law that provides numerous rights and protections that make health coverage fairer and easier to understand, along with subsidies to make it more affordable.

ACA – General Guidelines

The ACA makes many changes to health coverage requirements, such as extending coverage for young adults up to age 26, prohibiting rescissions of health coverage (except in cases of fraud or intentional misrepresentation), eliminating pre-existing condition exclusions, prohibiting lifetime and annual dollar limits on essential health benefits, and requiring coverage for preventive care without cost-sharing. These health coverage reforms have staggered effective dates, with many key provisions taking effect for plan years beginning on or after Jan. 1, 2014.

The ACA applies to health plans and health insurance issuers, with narrow exceptions for certain types of plans (for example, retiree medical plans) and there are no exceptions for small employers.

ACA requires plan administrators to provide the following notices/disclosures:

  • Statement of Grandfathered Status – Plan administrator or issuer was required to provide the first statement before the first plan year beginning on or after Sept. 23, 2010. The statement must continue to be provided on a periodic basis with participant materials describing plan benefits. This requirement only applies to grandfathered plans.
  • Notice of Rescission – Plan administrator or issuer must provide a notice of rescission to affected participants at least 30 days before the rescission occurs.
  • Notice of Patient Protections and Selection of Providers – Plan administrator or issuer must provide a notice of patient protections/selection of providers whenever the summary plan description (SPD) or similar description of benefits is provided to a participant. These provisions relate to the choice of a health care professional and benefits for emergency services. The first notice should have been provided no later than the first day of the plan year beginning on or after Sept. 23, 2010. This requirement does not apply to grandfathered plans.
  • Uniform Summary of Benefits and Coverage – Plan administrator or issuer must provide the uniform summary of benefits and coverage (SBC) to participants and beneficiaries at certain times, including upon application for coverage and at renewal. Plan administrators and issuers must also provide a 60-day advance notice of material changes to the summary that take place mid-plan year. Plans and issuers were required to begin providing the SBC to participants and beneficiaries who enroll or re-enroll in plan coverage during an open enrollment period beginning with the first open enrollment period that started on or after Sept. 23, 2012. For participants and beneficiaries who enroll in plan coverage other than through an open enrollment period, the SBC requirement became effective for the first plan year that started on or after Sept. 23, 2012.

ACA – Employer Penalties and Related Reporting

Applicable large employers (those with at least 50 full-time employees, including equivalents) that do not offer health coverage will be subject to a penalty if any of their full-time employees receives a subsidy toward a health plan offered through an Exchange. The monthly penalty will be equal to the number of full-time employees (minus 30), multiplied by 1/12 of $2,000 for any applicable month. Applicable large employers that do offer coverage may be subject to penalties if the coverage is not “affordable” or does not provide “minimum value” and at least one full-time employee obtains a subsidy under an Exchange. The monthly penalty for each full-time employee who receives an Exchange credit will be 1/12 of $3,000 for any applicable month. However, the total penalty for an employer would be limited to the total number of full-time employees (minus 30), multiplied by 1/12 of $2,000 for any applicable month. A special transition rule applies to the penalty calculation for 2015 that allows employers with 100 or more full-time employees (including equivalents) to subtract 80 employees (rather than 30) from their full-time employee count.

The ACA imposes penalties on employers with at least 50 full-time (and full-time equivalent) employees if they do not offer health coverage to their employees or if they offer health coverage to their employees that is not “affordable” or does not provide “minimum value” and certain other requirements are met. Employers that are subject to the employer penalty rules are called “applicable large employers” (or ALEs).

General Notices

HIPAA Privacy and Security

The HIPAA Privacy Rule governs the use and disclosure of an individual’s Protected Health Information (PHI). The HIPAA Security Rule creates standards with respect to the protection of electronic PHI.

The HIPAA Privacy and Security Rules require the following notices/disclosures:

  • Notice of Privacy Practices – Plans and issuers must provide a Notice of Privacy Practices when a participant enrolls, upon request and within 60 days of a material revision. At least once every three years, participants must be notified about the notice’s availability.
  • Notice of Breach of Unsecured PHI – Covered entities and their business associates must provide notification following a breach of unsecured PHI without unreasonable delay and in no case later than 60 days following.


States may offer eligible low-income children and their families a premium assistance subsidy to help pay for employer-sponsored coverage. If an employer’s group health plan covers residents in a state that provides a premium subsidy, the employer must send an annual notice about the available assistance to all employees residing in the state.

CHIPRA requires the following notices/disclosures:

  • Annual Employer CHIP Notice – A model notice is available from the DOL

Medicare Part D

Employer-sponsored health plans offering prescription drug coverage to individuals who are eligible for coverage under Medicare Part D must comply with requirements on disclosure of creditable coverage and coordination of benefits

Medicare Part D requires the following notices/disclosures:

  • Disclosure Notices for Creditable or Non-Creditable Coverage – A disclosure notice must be provided to Medicare Part D eligible individuals who are covered by, or apply for, prescription drug coverage under the employer’s health plan. The purpose of the notice is to disclose the status (creditable or non-creditable) of the group health plan’s prescription drug coverage. It must be provided at certain times, including before the Medicare Part D Annual Coordinated Election Period (October 15 through December 7 of each year).
  • Disclosure to CMS – On an annual basis (within 60 days after the beginning of the plan year) and upon any change that affects the plan’s creditable coverage status, employers must disclose to the Centers for Medicare and Medicaid Services (CMS) whether the plan’s coverage is creditable.

Michelle’s Law

Michelle’s law ensures that dependent students who take a medically necessary leave of absence do not lose health insurance coverage. (Note: The health care reform law expanded coverage requirements for dependents by requiring plans to provide coverage up to age 26, regardless of student status.)

Plan administrators and issuers must include a Notice of Michelle’s Law with any notice regarding a requirement for certification of student status.


Under the Newborns’ and Mothers’ Health Protection Act (NMHPA), group health plans may not restrict mothers’ and newborns’ benefits for hospital stays to less than 48 hours following a vaginal delivery and 96 hours following a delivery by cesarean section.

The plan’s SPD must include a statement describing the NMHPA’s protections for mothers and newborns.


The Women’s Health and Cancer Rights Act (WHCRA) requires health plans that provide medical and surgical benefits for a mastectomy to also cover: (1) all stages of reconstruction of the breast on which a mastectomy has been performed; (2) surgery and reconstruction of the other breast to produce a symmetrical appearance; and (3) prostheses and physical complications of mastectomy, including lymphedemas.

Plans must provide a notice describing rights under WHCRA upon enrollment and on an annual basis after enrollment.

Your Benefits Compliance Checklist:

  • ERISA – General Guidelines
  • ERISA – Form 5500 Requirements
  • ACA – General Guidelines
  • ACA – Employer Penalties and Related Reporting
  • HIPAA Privacy and Security
  • Medicare Part D
  • Michelle’s Law
  • Newborns’ and Mothers’ Health Protection Act (NMHPA)
  • Women’s Health and Cancer Rights Act (WHCRA)


There’s a lot to know when it comes to employee benefits compliance. At Launchways, we understand and are here to help as your benefits experts. We have the expertise to ensure that your benefits compliance needs are taken care of, so you can have the peace of mind your business is always in compliance.  No matter the size of your business, if you offer your employees any form of health insurance benefits, you must feel confident that you are compliant in your offerings. Talk to a Launchways team member today about our benefits administration solution.

Interested in more information on benefits compliance?

Get The Complete Benefits Compliance Overview!

This guide includes:

  • How to determine your plan year
  • Full calendar-style checklist of every compliance deadline your business must meet
  • In-depth details on how to fulfill each compliance requirement


How to Conduct a Remote Termination

One of the many new challenges that employers are facing during the COVID-19 pandemic is conducting terminations. Traditionally, terminations happen in-person, in a private office with HR and any other relevant departments represented. Now that many employees are working remotely, however, this process has become very different for many employers.

Employers should have an effective process in place to conduct remote terminations. Doing so can help employers be better prepared for these challenging discussions, and it can reduce business risk significantly. In this post, we’ll provide useful guidance that employers can follow to conduct remote terminations including:

  • Having a clear remote termination process in place
  • Preparing for a remote termination
  • Conducting a remote termination

Having a Clear Remote Termination Process in Place

If you haven’t yet established a remote termination process, now is the perfect time to do so. With an uncertain future about what the workplace will look like, most employers should assume that they will have to perform numerous remote terminations moving forward. By being prepared to repeat this process, it will become more comfortable and employers can mitigate the risks associated with terminations.

Employers should determine which virtual platform will be the standard for conducting remote terminations within their organization. Whether you choose to use Zoom, Microsoft Teams, WebEx, or any other platform, just be sure to familiarize yourself with the functionality and use it consistently. Also, be sure that it is a private meeting that requires a password to enter. Another hiccup you’ll want to avoid is having an unsuspecting employee accidentally enter the termination meeting and therefor violate the privacy of the person being terminated.

You must also determine whom should be present on that virtual call, and what topics will be discussed. Typically, it’s best-practice not to delve into detail around the cause of termination, and instead focus on equipment return protocols and severance (if applicable).

Ultimately, employers must determine what actions to take in preparation for the termination, during the meeting itself, and after letting the employee go. 

Preparing for a Remote Termination

There are several things you’ll want to consider as you prepare for a remote termination:

First, make sure all relevant parties receive an invitation (most likely a digital link) to the meeting as early on as possible. As mentioned in the previous section, be sure that the meeting password is provided to only those that should be attending. Make sure you account for any time zone differences and necessary ADA accommodations.

Second, make sure you review your company’s policies before the meeting. Be prepared to cite any relevant policies to defend your decision to terminate the employee. You most likely have termination-specific policies written for your organization that you’ll also need to follow (such as an at-will employment policy). Make sure that anyone who will be participating in the termination meeting has reviewed the relevant policies as well.

The final thing you should consider before conducting a remote termination is proactively involving IT. In the past when an employee would be terminated from the office, it was much easier to revoke their access to sensitive software, networks, or data. However, when you don’t have access to the physical hardware that the employee uses, this process can be more difficult. Work proactively with your IT department so that you can quickly and adequately revoke the terminated employee’s access to any sensitive data.

Conducting a Remote Termination

Now let’s talk about the recommended steps you should take during the termination meeting:

  1. Introduce everyone who is present in the meeting and their role within the organization and the conversation (for example, the employee’s manager and an HR representative in observance).
  2. Inform the employee of the purpose of the meeting. Let them know they are being terminated. Depending on the circumstances and the advice of your legal counsel, you may or may not want to let them know the reasons why. Typically, it’s best not to provide in-depth details around the cause for termination. Either way, be prepared to cite specific company policies regarding the decision.
  3. Address benefits, severance, and vacation pay. Specifically, let the terminated employee know what will happen regarding their health insurance, 401(K), other retirement accounts, health savings accounts, flexible spending accounts, cobra eligibility, vacation payouts, and severance payouts.
  4. Ensure the employee is aware of any necessary follow up tasks. This might include returning company owned software or hardware, passing on proprietary information to team members, deactivating accounts, retrieving any of their personal property that may still be at the office, etc. It could also include passing on information about current projects to whoever will be taking them over. One strategy that could be considered is to send overnight, prepaid, self-addressed packages and mail for the employee to return equipment and documents and provide any required signatures. However, be mindful that these packages and documents do not arrive at the employee’s home before their termination.

Key Takeaways

Remote terminations are most likely the new reality for many employers. Establishing standard processes for conducting these terminations is crucial for mitigating the risks involved and making the process more comfortable and manageable for employers.

Here are some key takeaways that employers should consider before conducting their first remote termination:

  • Establish a clear remote termination process that will be followed every time. This includes predetermining which virtual meeting platform will be used and ensuring that all relevant parties are invited to the meeting. They should also be provided with the meeting password. Your company will likely need to take other specific steps to establish remote termination processes depending on your specific policies (such as equipment return).
  • Prepare for the termination meeting by studying up an all relevant policies, considering ADA accommodations, and proactively working with IT before the meeting.
  • Follow key steps during the termination meeting, such as, 1) Introducing all who are present; 2) Informing the employee of the purpose of the meeting; 3) Address benefits, severance, and vacation pay; and 4) Ensuring the employee is aware of any necessary follow up tasks

OSHA Clarifies COVID-19 Infection Reporting Requirements for Employers

As temperatures begin to drop with the arrival of the fall season, certain areas of the U.S. are beginning to see a rise in confirmed COVID-19 cases. With infection rates trending back upward, it’s important for employers to understand what their responsibilities are to the Occupational Safety and Health Administration (OSHA) in terms of reporting requirements specific to COVID-19 cases affecting their employees.

In addition to a published list of answers to COVID-19 frequently asked questions, OSHA has provided further clarity on when employers must report employee illness or fatality as a result of COVID-19.

In this post, we’ll cover:

  • How to determine whether a COVID-19 infection is work-related
  • When employers are required to report cases related to COVID-19

Determining Work-Related Illness

Under OSHA’s recordkeeping requirements, COVID-19 is considered a recordable illness that requires employers to keep records of their employees’ confirmed infections. Employers are only responsible for recording an employee infection if:

  1. The employee has tested positive for SARS-CoV-2, the virus that causes COVID-19
  2. The case is work-related, meaning that an infected individual was exposed to the virus in their work environment
  3. The case involves at least one of the following criteria: death, days away from work, restricted work or transfer to another job, medical treatment beyond first aid, or loss of consciousness

Given the highly infectious nature of the virus and its ubiquitous spread across the globe, determining the source of an employee’s infection can often be difficult. If an employee tests positive for COVID-19, employers are not expected to undertake extensive measures to determine the exact point of viral exposure. In most cases, it is enough for employers to ask their infected employee how they believe they contracted the virus by discussing their activities within and outside of work, along with a review of their employee’s work environment for potential SARS-CoV-2 exposure.

All available evidence pointing a viral contraction within the workplace should be taken into account. Such evidence could include a cluster of confirmed cases within a group of employees that frequently work closely together, a confirmed case after recent exposure to another infected employee or customer, or an employee’s frequent exposure to the general public. Cases are less likely to be work related if an infected employee has had recent close contact with an infected person that is not a coworker.

If, after reviewing the evidence and discussing the case with the employee, you have determined that viral exposure is likely to have originated outside of your work environment, it is not necessary to record the instance of infection. However, it is important to note that if an employer later learns more pertinent information concerning the case, that new information should be factored into the determination of whether a case was, indeed, work related.

Reporting Requirements

While employers must record all work-related infections, you are only required to report work-related COVID-19 illnesses that result in an employee’s in-patient hospitalization or fatality. Specifically, OSHA requires employers to report hospitalizations of employees who have been admitted for in-patient treatment within 24 hours of exposure to the COVID-19 virus in their workplace. The report itself must be submitted within the 24 hour window during which the employer learned of their employee’s hospitalization. Note that hospitalization for diagnostic testing or observation is not considered in-patient treatment.

Reports of employee fatalities as a result of work-related exposure must be submitted within 8 hours of the employer learning of the fatality. Any fatality that occurs within 30 days of a work-related exposure to COVID-19 must also be reported. Exceptions to this rule include fatalities that occur on commercial or public transportation, or as a result of a motor vehicle accident on a public road.

Key Takeaways

While determining the origin of an employee’s infection, hospitalization, or death as related to COVID-19 can be difficult, OSHA’s clarifications aim to provide employers with better guidelines. As we continue to wade through the onslaught of obstacles and challenges presented to Human Resources by COVID-19, keep the following in mind:

  • Employers must record a COVID-19 case if the employee presents a positive COVID-19 test, experiences one of the criteria outlined in this post, and there is evidence to conclude that the infected employee was exposed within the workplace.
  • Employers should take reasonable steps to gather evidence and discover whether an infected employee was exposed within the workplace. Such evidence could include multiple and closely occurring positive tests of employees or an employee’s frequent exposure to the general public.
  • OSHA requires employers to report both in-patient hospitalizations for treatment of COVID-19, and fatalities that may have occurred as a result of exposure to the COVID-19 virus.

Managing Political Discussion in the Workplace

Managing civil political conversations in the workplace is always a challenge for employers and can often feel like navigating a minefield in an election year. Within an increasingly polarizing political environment, it can certainly be easy to let political discussion between employees quickly escalate into argument or conflict. While the presence of political discussion in the workplace is, and will continue to be a reality, there are several ways HR leaders can proactively encourage healthy and amicable political discussion.

In this post, we’ll cover:

  • The presence and impact of political discussion within the workplace
  • Proactively addressing the topic of political discussion with employees
  • Finding solutions to conflict resulting from hostile political discussion

Balancing employee rights’ and wellbeing amidst political discussion

Local and national politics is a common and naturally occurring topic of discussion in almost every workplace. While these conversations aren’t inherently harmful, they can present opportunities for negative interaction between employees that can adversely affect employee relationships and productivity. A 2019 poll, led by Human Resource Management, found that one-third of all employees felt their organization was not inclusive to differing political perspectives. Additionally, a 2019 survey conducted by the American Psychological Association reports that 1 in every 4 employees feels negatively affected by political discussion in the workplace. This negative impact can lead to increased feelings of stress and decreased productivity and quality of work.

As an HR leader, it’s important to ensure a comfortable and inclusive working environment for all employees, regardless of political affiliation or personally held beliefs. Banning discussion topics like politics can be an infringement on employees’ constitutional rights, and this sort of micromanaging can contribute to negative workplace culture. Instead, employers can mitigate potential conflict by acknowledging the occurrence of political conversations and propose steps to foster civil discussion.

Proactive steps for respectful discussion

While the presence of political discussion in the workplace may present challenges to peaceable employee interactions and general productivity, there are several steps that employers can take to promote respectful conversations that provide a comfortable workplace environment for everyone.

Begin by proactively addressing your expectations for your employees when engaging in political conversation. Clarify that you understand these discussions will take place, but underscore your expectation that all discussion will be done with respect and civility in order to uphold your culture of inclusion and comradery. By making your expectations clear and reinforcing your commitment to a healthy work culture, your employees will understand your intentions to be in their collective benefit.

Leading by example at all times is imperative in order to maintain civil discussions around politics. When leaders show respect and deference to all employees regardless of their real or perceived political differences, they are encouraging this same behavior in their subordinates. Leading by example in this way also makes employees feel comfortable in sharing their opinions and ideas, even if their political ideology differs from that of their leader. Additionally, when leaders set a tone of respect and nonpartisanship, employees can expect that their personal views will not be an obstacle in their workplace advancement.

As political beliefs are often intricately entwined with personal beliefs and experiences, political conversations may be stressful for employees—even if that employee is not actively participating in the discussion. Make your employees aware of available resources, such as an employee assistance program (EAP) or any workplace wellness programs that your organization may offer.

Above all, it is crucial that leaders encourage a culture of respect between all their employees. While it is unrealistic that everyone on your team will agree on every topic, maintaining a respectful attitude in all employee interactions is certainly a reasonable expectation.

Resolving conflict as a result of political differences

While some more tense employee conflict may need to involve your HR team, most hostility stemming from political differences can be smoothed out by a conversation with a team leader. In resolving conflict, remember to emphasize respect for all opinions and focus on problematic employee behaviors, not beliefs. An employee’s specific beliefs and political opinions are not relevant, but their behavior in the workplace is. Clearly and neutrally outline what kinds of behaviors are appropriate and what is unwelcome in the workplace, without directly or indirectly instructing how an employee should feel about political issues.

If you find your workplace is increasingly running into politically charged altercations, consider holding training sessions with your team. Training sessions can demonstrate respect and increase trust, even when employees don’t see eye to eye. These sessions should focus on attuning employees to understand how their actions might negatively impact their colleagues without criticizing individuals or a specific political ideology. By displaying strategies for engaging in polite and civil political discussion, employees can find acceptable ways to navigate conversations they wish to participate in or avoid.

Key Takeaways

The discussion of politics is an inherent right every American may enjoy, and it is natural to find those discussions among employees in the workplace. While political discussion may present some obstacles to HR leaders, or serve as a cause for friction between coworkers, these challenges may be mitigated by focusing on the following takeaways:

  • Understand that political discussion can be stressful for some employees, and that emphasizing a respectful environment for all will help to lessen stress and maintain or improve productivity
  • HR managers and organizational leaders can take proactive steps to encourage respectful political conversations between employees by addressing their expectations for civil discussions up front, leading by example, and making resources available
  • Conflict rooted in political disagreement may be resolved by outlining acceptable and unacceptable employee behaviors without criticizing an employee’s personal beliefs or political loyalties

If you’re interested in learning more actionable strategies on managing conversations about race, religion, and politics in the workplace, please register for our upcoming webinar:

What Employers Need to Know: Race, Religion, and Politics in the Workplace

The webinar will cover:

  • Are employees of private employers protected by the First Amendment while at work?
  • What is the Illinois – Anti-Retaliation Law and how does it impact your business?
  • What anti-discrimination and anti-harassment concerns should employers have?
  • How to structure effective workplace policies about political activity
  • Best practices for managing potentially divisive political conversations in the workplace


Medicare Part D Notices – An Overview for Employers

Employers and their group health plan sponsors will want to mark October 15, 2020 on their calendars. This is the deadline for plan sponsors to disclose to individuals who are eligible for Medicare Part D and to the Centers for Medicare and Medicaid Services (CMS) whether the health plan’s prescription drug coverage is creditable.

Although this responsibility primarily falls on group health plan sponsors, there are several important things that employers should be aware of that we’ll cover in this post:

  • What is Medicare Part D?
  • Where can resources and model notices can be found?
  • Other timing and delivery rules to be aware of

What Exactly Does “Creditable Coverage” Mean, and How Is It Related to Medicare Part D?

“Creditable Coverage” is a term that involves two simple words, but most people have a hard time understanding what exactly it means in the world of Medicare.

A notice of creditable coverage is simply an official document given to an employee from their employer (or union) that states whether their prescription drug coverage plan is equal to or better than the prescription drug coverage provided through Medicare.

This notice helps the employee make decisions related to their benefits, as remaining under their employer’s prescription drug plan might be very advantageous for them as they approach retirement. For plans that are not creditable, employees should generally move to Medicare as this will save them money from future late-enrollment penalties in the future. Medicare allows employees who choose to stay on plans that are creditable to avoid these penalties should they choose to enroll later on.

In order for CMS to have an official record of an employer’s or union’s status as creditable or non-creditable, employers must disclose that status both to their Medicare Part D eligible employees as well as the CMS. Employers should work with their group health plan sponsors to send this notice, and it must be done by October 15th.

What Resources and Model Disclosures Exist?

Fortunately, the CMS has provided two model notices that employers can use:

  1. A model notice of creditable coverage when the health plan’s prescription drug coverage IS creditable. (click here to access this model).
  2. A model notice of non-creditable coverage when the health plan’s prescription drug coverage IS NOT creditable (click here to access this model).

Technically, employers do not have to use these model notices. However, if the models are not used, the notices still must include certain information. These requirements include a disclosure about whether the plan’s coverage is creditable, explanations of what creditable coverage means, and an explanation of why employees should take their coverage decisions seriously.

Employers and their group health care sponsor should strongly consider using these models. It’s the simplest way to make the disclosures and ensure that the required language is used. Another best practice is for employers and their group health plan sponsors to provide this notice to all plan participants, even to those that might not be qualified for Medicare Part D. This way, the employer can ensure that they “cover all their bases” and that they educate employees who will have to make this decision several years in the future.

What Other Rules Should You Be Aware of?

Employers should not that the most important time of year to deliver Part D Notices is prior to the Medicare Part D annual election period, which goes from October 15th to December 7th each year. However, there are other situations in which an employer or their group health plan sponsor must give this notice to an employee:

  • Whenever a beneficiary requests the notice
  • Whenever there is a change in an employer’s health plan that changes whether the plan is creditable or non-creditable
  • Before the effective date of coverage for any Medicare-eligible individual who joins the plan

As we stated in the previous section, it’s not a bad idea to provide Part D notices at multiple times throughout the employment life cycle. Part D notices can even be included in new enrollment materials for employees.

It is important for employers to understand the rules about printed notices and electronic notices. A single printed notice may be delivered to an address, even if multiple beneficiaries of the plan live at that address. However, if it is known that a beneficiary of the plan lives at a separate address, a second printed notice must be sent to that address. Electronic notices can be compliant as well, assuming the employee has regular access to the electronic documents at their regular place of work.

From an official perspective, the Department of Labor (DOL) has three requirements for electronic delivery of Part D Notices:

  1. The plan administrator uses appropriate and reasonable means to ensure that the system for furnishing documents results in actual receipt of transmitted information.
  2. Notice is provided to each recipient, at the time the electronic document is furnished, of the significance of the document.
  3. A paper version of the document is available on request.

As we stated very early in this post, a notice must also be sent to the CMS in addition to the beneficiaries of the plan. This disclosure to the CMS must be delivered on an annual basis, and the following timeline requirements apply – the notice must be provided:

  1. Within 60 days after the beginning date of the plan year for which the entity is providing the form.
  2. Within 30 days after the termination of the prescription drug plan.
  3. Within 30 days after any change in the creditable coverage status of the prescription drug plan.

Key Takeaways

Part D Notices, or notices of “Creditable Coverage,” are simply an official document given to an employee from their employer (or union) that states whether their prescription drug coverage plan is equal to or better than the prescription drug coverage provided through Medicare. The purposes of these notices is to help beneficiaries of the plan make the best decision for their prescription health coverage moving forward.

Here are additional key takeaways related to these notices:

  • The Centers for Medicare and Medicaid Services (CMS) provide sample notices that employers should consider using.
  • Employers should work with their group health plan sponsors to ensure that these notices are delivered at the right time – which might end up being more frequently than you think.
  • The notices can be provided electronically under certain circumstances.

U.S. Department of Labor Issues Important FFCRA Regulations

The moment we have all been awaiting over the last several weeks has finally arrived. The U.S. Department of Labor (DOL) has issued important regulations that clarify and revise who can qualify for emergency paid sick leave under the Families First Coronavirus Response Act (FFCRA).

In this urgent update, we’ll cover the following:

  • What is the background behind this important announcement by the DOL
  • What specific clarifications and revisions were made
  • What this means for your business moving forward

What is the background behind this important FFCRA announcement?

In April, U.S. District Judge Paul Oetken issued a ruling that found the DOL had exceeded its authority by blocking workers from FFCRA leave when their employer didn’t have any work for them to perform.

The challenge to this aspect of the FFCRA was originally put forward by New York Attorney General Letitia James, who also challenged the DOL’s interpretation of the FFCRA’s exclusion for healthcare providers, the rule’s limits on intermittent leave, and certain documentation requirements outlined in the language of the act.

Since Judge Oetken’s ruling, many employers have been left without clear guidance when trying to implement the new, but extremely important, FFCRA.

Hopefully the DOL’s clarifying announcement will be a light in the dark for employers who are trying to juggle many aspects of the fallout from the COVID-19 pandemic.

What specific clarifications and revisions were made?

The revisions, which were specifically made to the regulations that implemented the paid sick leave and expanded family and medical leave provisions of the FFCRA, do the following:

  • Reaffirm and provide additional explanation for the requirement that employees may take FFCRA leave only if work would otherwise be available to them.
  • Reaffirm and provide additional explanation for the requirement that an employee have employer approval to take FFCRA leave intermittently.
  • Revise the definition of “healthcare provider” to include only employees who meet the definition of that term under the Family and Medical Leave Act regulations or who are employed to provide diagnostic services, preventative services, treatment services or other services that are integrated with and necessary to the provision of patient care which, if not provided, would adversely impact patient care.
  • Clarify that employees must provide required documentation supporting their need for FFCRA leave to their employers as soon as practicable.
  • Correct an inconsistency regarding when employees may be required to provide notice of a need to take expanded family and medical leave to their employers.

To ensure we communicate this information to our readers accurately, the above bullet points were taken directly from the DOL’s announcement about these important revisions, which can be read in its entirety by clicking here.

What does this mean for your business moving forward?

Friday’s announcement reaffirms the DOL’s stance that leave under the FFCRA can only be taken if the employer actually has work for the employee to do. This is important, especially for businesses who have taken a hit during this pandemic. If an employer legitimately doesn’t have any work for the employee to do, they are allowed to reject the employee’s FFCRA leave request.

The DOL also remained firm in its original interpretation of intermittent, or periodic, leave under the FFCRA. Intermittent leave, according to this now clarified rule, is only allowed when the employee gets permission from their employer.

According to Friday’s announcement, “The Department believes the employer-approval condition for intermittent leave under its FMLA regulation is appropriate in the context of FFCRA intermittent leave for qualifying reasons that do not exacerbate risk of COVID-19 contagion. It is a longstanding principle of FMLA intermittent leave that such leave should, where foreseeable, avoid ‘unduly disrupting’ the employer’s operations.”

In addition to the previous two clarifications, the DOL revised the definition of “Health Care Provider” to mean, “employees who are health care providers…and other employees who are employed to provide diagnostic services, preventive services, treatment services, or other services that are integrated with and necessary to the provision of patient care.” This clarification was necessary because Judge Oetken had found that the agency’s previous definition was too broad and potentially excessively cut off workers from using FFCRA leave.

Employers in the health care industry should understand that this revised definition of “Health Care Provider,” – and the exclusion of health care providers in the first place – was done to, “provide a safety valve to ensure that critical health and safety services would not be understaffed during the pandemic.”

These revisions will officially take effect on Wednesday, September 16th. Keep in mind that the FFCRA will remain in place at least through the end of 2020. Assuming the pandemic has not ended by 2021, expect an expansion of the FFCRA to continue into next year.

Key Takeaways

Employers’ heads might be spinning after reading this announcement. This is important news that will have significant impacts on the workforce of many businesses and industries over the next few months. Employers should now feel that they have more leverage when it comes to dealing with employee FFCRA requests.

Here are the most important takeaways from this announcement:

  • If you legitimately don’t have enough work for your employees to do (which very well might be the case if your business has been suffering during the pandemic), then you can deny employee requests for FFCRA leave under this new clarification from the DOL.
  • Employees can only take intermittent leave if they have permission from their employer.
  • Healthcare workers should understand that they might be excluded from the FFCRA.
  • Employers should be aware that these revisions take effect as of Wednesday, September 16, 2020.