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).
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 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