More and more orga­ni­za­tions are pres­sured to have their employ­ee ben­e­fit plans ful­ly com­pli­ant with all employ­ee ben­e­fit laws (Afford­able Care Act (ACA), ERISA, COBRA, HIPAA, etc.) or face fines, penal­ties, and 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 show no signs of let­ting up.

In this arti­cle, we cov­er crit­i­cal areas of con­sid­er­a­tion in keep­ing your health and wel­fare ben­e­fit plans ful­ly com­pli­ant. We do not cov­er com­pli­ance for retirement/pension plans or required ben­e­fit plans such as social secu­ri­ty tax­es, unem­ploy­ment, work­ers com­pen­sa­tion or disability.

Plan Admin­is­tra­tors
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.

Fidu­cia­ry Bond
If the plan administrator’s duty or activ­i­ty cre­ates a risk in which funds or prop­er­ty could be lost due to fraud, they may be required to main­tain a fidu­cia­ry bond. If they have phys­i­cal con­tact with cash or checks, includ­ing access to a safe deposit box, pow­er of cus­tody or pow­er to trans­fer prop­er­ty, they may need a fidu­cia­ry bond.

Employ­ers with insured plans usu­al­ly are not sub­ject to the bond­ing require­ments for those plans. No bond­ing is required when pre­mi­ums or oth­er pay­ments made to pur­chase ben­e­fits, includ­ing health ben­e­fits, are paid direct­ly from the employer’s gen­er­al assets to an insur­ance carrier.

Dis­clo­sure and Noti­fi­ca­tion Requirements
There are numer­ous noti­fi­ca­tions that are required, based on ben­e­fits offered and the num­ber of employ­ees. Below is a sum­ma­ry of the var­i­ous noti­fi­ca­tion requirements.

Sum­ma­ry of Ben­e­fits & Cov­er­age (SBC)
Plan admin­is­tra­tor or issuer must pro­vide a uni­form sum­ma­ry of ben­e­fits and cov­er­age to par­tic­i­pants and ben­e­fi­cia­ries in med­ical insur­ance 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 must begin pro­vid­ing the sum­ma­ry to par­tic­i­pants and ben­e­fi­cia­ries who enroll or re-enroll in plans. The SBC is typ­i­cal­ly cre­at­ed by insur­ance providers or third par­ty admin­is­tra­tors and dis­trib­uted by the employer.

Notice of Patent Pro­tec­tions and Selec­tion of Providers. (All who offer med­ical insurance)
Plan admin­is­tra­tors or issuers must pro­vide a notice of patient pro­tec­tions and 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.

Grand­fa­thered Plan Disclosure/Notice (Only grand­fa­thered plans)
Orga­ni­za­tions who offer a grand­fa­thered plan are required to pro­vide par­tic­i­pants with a spe­cial grand­fa­ther notice peri­od­i­cal­ly with mate­ri­als describ­ing plan ben­e­fits. These types of plans seem to be phas­ing out, with few­er and few­er employ­ers offer­ing grand­fa­thered plans.

Men­tal Health Par­i­ty and Addic­tion Equi­ty Act (MHPAEA) Notice (50+ employees)
The MHPAEA applies to group health plans offer­ing men­tal health and sub­stance use dis­or­der ben­e­fits who have 50 or more employ­ees. The MHPAEA impos­es par­i­ty require­ments on group health plans that pro­vide ben­e­fits for men­tal health or sub­stance use dis­or­der ben­e­fits. For exam­ple, plans must offer the same access to care and patient costs for men­tal health and sub­stance use dis­or­der ben­e­fits as those that apply to gen­er­al med­ical or sur­gi­cal benefits.

Health Care Reform – Employ­ee Notice of Exchange (All employers)
The Employ­ee Notice of Exchange require­ment applies to all employ­ers who are sub­ject to the Fair Labor Stan­dards Act (FLSA). Employ­ers are required to pro­vide all new hires and cur­rent employ­ees with a writ­ten notice about the health care reform law’s health insur­ance exchanges (Exchanges). This notice is designed to inform employ­ees about the exis­tence of the Exchange and give a descrip­tion of the ser­vices pro­vid­ed by the Exchange. It explains how employ­ees may be eli­gi­ble for a pre­mi­um tax cred­it or a cost-shar­ing reduc­tion if the employ­er’s plan does not meet cer­tain require­ments. It informs employ­ees that if they pur­chase cov­er­age through the Exchange, they may lose any employ­er con­tri­bu­tion toward the cost of employ­er-pro­vid­ed cov­er­age, and that all or a por­tion of this employ­er con­tri­bu­tion may be exclud­able for fed­er­al income tax pur­pos­es. Final­ly, the notice includes con­tact infor­ma­tion for the Exchange and an expla­na­tion of appeal rights. Pro­vide this notice to all employ­ees regard­less of whether or not they are on the med­ical insur­ance plan at least one time.

COBRA Notices (20+ employees)
Under the Con­sol­i­dat­ed Omnibus Bud­get Rec­on­cil­i­a­tion Act (COBRA), group health plans spon­sored by an employ­er with at least 20 employ­ees must pro­vide var­i­ous notices to par­tic­i­pants. Orga­ni­za­tions must pro­vide each cov­ered employ­ee and cov­ered spouse and depen­dents (if any) with writ­ten notice of their indi­vid­ual COBRA con­tin­u­a­tion cov­er­age rights under the plan. These notices must be pro­vid­ed with­in 90-days of begin­ning cov­er­age and writ­ten in plain lan­guage so that the aver­age par­tic­i­pant can understand.

Send an Ini­tial COBRA notice inform­ing par­tic­i­pants of COBRA rights and the need for them to noti­fy the employ­er any­time a spe­cial a qual­i­fy­ing event occurs for which you may not know oth­er­wise such as divorce, or child turn­ing 26 year’s old.

Send a COBRA Elec­tion Notice or Qual­i­fy­ing Event Notice with­in 14-days of a qual­i­fy­ing event such as ter­mi­na­tion of employment.

Oth­er COBRA notices may apply if par­tic­i­pants are no longer eli­gi­ble, are late on a pay­ment or the employ­er is ter­mi­nat­ing the med­ical plan.

Note: Employ­ers with less than 20 employ­ees may be sub­ject to state con­tin­u­a­tion require­ments. Con­tact your state insur­ance com­mis­sion or state labor depart­ment for more information.

Qual­i­fied Med­ical Child Sup­port Order Receipt and Deter­mi­na­tion Letters
(All who offer med­ical coverage)
Group health plans are required to estab­lish writ­ten pro­ce­dures for deter­min­ing the qual­i­fi­ca­tion of a Med­ical Child Sup­port Order. The employ­er respond to an order is required with­in 20 busi­ness days of the date of the Notice.

HIPAA Cer­tifi­cate of Cred­itable Coverage
(Any employ­er offer­ing med­ical coverage)
A par­tic­i­pant or ben­e­fi­cia­ry is enti­tled to demon­strate pri­or cred­itable cov­er­age under an ear­li­er plan, to reduce the amount of time for which a cur­rent health plan can impose exclu­sions based on a pre­ex­ist­ing con­di­tion. The par­tic­i­pant or ben­e­fi­cia­ry may obtain a cer­tifi­cate of cred­itable cov­er­age from the plan spon­sor or insur­er that pro­vid­ed ben­e­fits previously.

HIPAA Pri­va­cy Poli­cies and Practices
(Any plan with pro­tect­ed health infor­ma­tion (PHI))
Health Plans are required to estab­lish writ­ten pri­va­cy poli­cies and pro­ce­dures regard­ing pro­tect­ed health infor­ma­tion (PHI). Poli­cies should include: 1) Per­mit­ted uses and dis­clo­sures, 2) Autho­riza­tion require­ment for oth­er uses and dis­clo­sures, 3) Des­ig­na­tion of pri­va­cy offi­cial, and pri­va­cy con­tact, 4) Sanc­tions for vio­la­tions, 5) Pri­va­cy safe­guards, 6) Com­plaints pro­ce­dure, 7) Pro­hi­bi­tion of retal­i­a­tion and waiv­er of rights, 8) Doc­u­men­ta­tion and record reten­tion, and 9) Busi­ness Asso­ciates agree­ments. HIPAA notice must be pro­vid­ed to par­tic­i­pants at time of enroll­ment and with­in 60-days of a mate­r­i­al change.

HIPAA Secu­ri­ty Poli­cies and Practices
Plans that store, receive or trans­mit PHI are required to estab­lish writ­ten poli­cies and pro­ce­dures regard­ing the main­tain­ing and trans­mis­sion of PHI. Busi­ness Asso­ciates agree­ments may need to be amend­ed. Ful­ly insured plans are excluded.

Notice of Spe­cial Enroll­ment Rights (All med­ical plans)
Admin­is­tra­tors are to noti­fy eli­gi­ble par­tic­i­pants of spe­cial enroll­ment rights when offered the oppor­tu­ni­ty to enroll in group health insur­ance, includ­ing a descrip­tion of spe­cial enroll­ment events and enroll­ment pro­ce­dures (e.g. birth, adop­tion, mar­riage, etc.).

Medicare Part D Notice of Cred­itable Cov­er­age (All who offer plans with pre­scrip­tion drugs)
The Medicare Part D require­ments apply to group health plan spon­sors that pro­vide pre­scrip­tion drug cov­er­age to indi­vid­u­als who are eli­gi­ble for Medicare Part D cov­er­age. Medicare Part D requires 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. 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). Because of the dif­fi­cul­ty in know­ing if an employ­ee or their depen­dents qual­i­ty, it is rec­om­mend­ed to pro­vide this notice to the employ­ee and depen­dents annually.

Employ­ers must dis­close to the Cen­ters for Medicare and Med­ic­aid Ser­vices (CMS) whether the plan’s cov­er­age is cred­itable 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.

Women’s Health Act Notice (All offer­ing these benefits)
Plans that pro­vide med­ical and sur­gi­cal mas­tec­to­my ben­e­fits are required to noti­fy par­tic­i­pants that such ben­e­fits are avail­able. This notice must be pro­vid­ed to par­tic­i­pants upon enroll­ment and annually.

New­borns’ and Moth­ers’ Health Pro­tec­tion Act (All who offer maternity)
If the plan pro­vides mater­ni­ty or new­born infant cov­er­age, a state­ment that a stay for a nor­mal deliv­ery must be no less than 48 hours and 96 hours for a cesare­an sec­tion should be pro­vid­ed annually.

Children’s Health Insur­ance Pro­gram (CHIP) Reau­tho­riza­tion Act Notice (All who offer med­ical insur­ance in a state where CHIP is offered)
The CHIPRA require­ments applies to employ­ers that main­tain group health plans in states that pro­vide pre­mi­um assis­tance sub­si­dies under a Med­ic­aid plan or CHIP. This noti­fies employ­ees of poten­tial oppor­tu­ni­ties cur­rent­ly avail­able in the state in which the employ­ee resides for pre­mi­um assis­tance under Med­ic­aid and CHIP for health cov­er­age of the employ­ee or the employee’s depen­dents. Employ­ers that main­tain a group health plan in a state that pro­vides med­ical assis­tance under a state Med­ic­aid plan or CHIP must dis­trib­ute the notice to par­tic­i­pants upon enroll­ment and annually.

Sum­ma­ry Plan Descrip­tion (SPD) or SPD Wrap (All who offer ERISA cov­ered plans)
The SPD informs par­tic­i­pants and ben­e­fi­cia­ries of their rights and oblig­a­tions under the plan. It must be writ­ten in a man­ner under­stand­able to the aver­age par­tic­i­pant. This is gen­er­al­ly more than is pro­vid­ed by the insur­ance com­pa­ny and must be pro­vid­ed for all ERISA cov­ered ben­e­fits (i.e. med­ical, den­tal, vision, life, dis­abil­i­ty, HRA, FSA, POP, etc.). Gen­er­al­ly, ben­e­fits where the employ­ers share in the cost, endorse the plan or allow the plan to run through a 125 Plan pay­ing for pre­mi­ums on a pre-tax basis would be con­sid­ered cov­ered by ERISA and would require an SPD. Orga­ni­za­tions exclud­ed from this require­ment include gov­ern­ment plans, pub­lic schools and churches.

An SPD must include the fol­low­ing: plan name; employer/sponsor name; EIN; type of plan; type of admin­is­tra­tion; plan administrator’s name, address, tele­phone num­ber; name of per­son des­ig­nat­ed as agent for ser­vice of legal process; plan year; plan eli­gi­bil­i­ty require­ments; descrip­tion of ben­e­fits; infor­ma­tion regard­ing plan con­tri­bu­tions and fund­ing; infor­ma­tion regard­ing claims and pro­ce­dures; and a state­ment of ERISA rights.

A com­mon approach is to use an SPD Wrap that cre­ates one over­all SPD wrap­ping in all cov­ered ben­e­fit plans, pulling in the miss­ing insur­ance com­pa­ny infor­ma­tion. SPD Wraps may include the plan doc­u­ment and the SPD in the same doc­u­ment or they can be separate.

Sum­ma­ry of Mate­r­i­al Reduc­tion Notice
(All ERISA ben­e­fit plans)
Any mod­i­fi­ca­tion in the terms of the plan that is a “mate­r­i­al reduc­tion” in cov­ered ser­vices or ben­e­fits must be fur­nished to par­tic­i­pants no lat­er than 60-days after the date of adop­tion of the reduc­tion. A reduc­tion in cov­ered ser­vices or ben­e­fits gen­er­al­ly will include any plan mod­i­fi­ca­tion or change that:
• Elim­i­nates ben­e­fits payable under the plan;
• Reduces ben­e­fits payable under the plan;
• Increas­es pre­mi­ums, deductibles, coin­sur­ance, copay­ments or oth­er amounts to be paid by a par­tic­i­pant or beneficiary;
• Reduces the ser­vice area cov­ered by a health main­te­nance orga­ni­za­tion; or
• Estab­lish­es new con­di­tions or require­ments (e.g., preau­tho­riza­tion require­ments) to obtain­ing ser­vices or ben­e­fits under the plan.

Sum­ma­ry of Mate­r­i­al Modification
(All ERISA ben­e­fit plans)
Any mod­i­fi­ca­tion in the terms of the plan that is “mate­r­i­al” and any change in the infor­ma­tion required to be in the SPD, must be report­ed to plan par­tic­i­pants with­in 210 days after the end of the plan year in which a mod­i­fi­ca­tion or change is adopted.

Oth­er ben­e­fit laws

Genet­ic Infor­ma­tion Nondis­crim­i­na­tion Act (GINA) (All employers)
GINA pro­hibits health plans and health insur­ance issuers from dis­crim­i­nat­ing based on genet­ic infor­ma­tion. GINA gen­er­al­ly pro­hibits group health plans and health insur­ance issuers from: (1) adjust­ing group pre­mi­um or con­tri­bu­tion amounts on the basis of genet­ic infor­ma­tion; (2) request­ing or requir­ing an indi­vid­ual or an indi­vid­u­al’s fam­i­ly mem­bers to under­go a genet­ic test; and (3) col­lect­ing genet­ic infor­ma­tion, either for under­writ­ing pur­pos­es or pri­or to or in con­nec­tion with enrollment.

Fam­i­ly and Med­ical Leave Act (FMLA) (50+ size groups)
The FMLA pro­vides eli­gi­ble employ­ees with job-pro­tect­ed leave for cer­tain fam­i­ly and med­ical rea­sons or mil­i­tary exi­gency sit­u­a­tions. An employ­er must main­tain group health cov­er­age dur­ing the FMLA leave at the lev­el and under the con­di­tions that cov­er­age would have been pro­vid­ed if the employ­ee had not tak­en leave.

The FMLA requires employ­ers to pro­vide the fol­low­ing notices/disclosures:
1. Gen­er­al Notice – Cov­ered employ­ers must promi­nent­ly post a gen­er­al FMLA notice where it can be read­i­ly seen by employ­ees and appli­cants for employ­ment. If the employ­er has any FMLA-eli­gi­ble employ­ees, it must also include the gen­er­al notice in the employ­ee hand­book or oth­er writ­ten employ­ee guid­ance or dis­trib­ute a copy of the notice to each employ­ee upon hiring.
2. Eligibility/Rights and Respon­si­bil­i­ties Notice – Writ­ten guid­ance must be pro­vid­ed to an employ­ee when he or she noti­fies the employ­er of the need for FMLA leave. The employ­er must detail the spe­cif­ic expec­ta­tions and oblig­a­tions of the employ­ee, and explain the con­se­quences for fail­ing to meet these obligations.
3. Des­ig­na­tion Notice – After the employ­er has suf­fi­cient infor­ma­tion, it must pro­vide a des­ig­na­tion notice inform­ing the employ­ee whether the leave is des­ig­nat­ed as FMLA leave. Mod­el forms from the DOL are avail­able at:

Report­ing Requirements

Form 5500 (100+ participants)
Plan admin­is­tra­tors must report spec­i­fied plan infor­ma­tion to the Depart­ment of Labor each year. Fringe ben­e­fit plans and wel­fare plans with less than 100 par­tic­i­pants at the begin­ning of the plan year that are unfund­ed, ful­ly insured or a com­bi­na­tion of both are not required to file the form. Form 5500 must be sub­mit­ted to the Employ­ee Ben­e­fits Secu­ri­ty Admin­is­tra­tion (EBSA) by the last day of the 7th month fol­low­ing the end of the plan year. Applic­a­ble sched­ules (i.e., Sched­ule A, C, H or I) may need to be attached. Employ­ers using an SPD Wrap doc­u­ment would sub­mit one 5500 report for the SPD Wrap, instead of sub­mit­ting one for each ben­e­fit plan.

Sum­ma­ry Annu­al Report (SAR) (If filed 5500 report)
The SAR sum­ma­rizes the form 5500 finan­cial infor­ma­tion as a nar­ra­tive sum­ma­ry of the Form 5500, and includes a state­ment of the right to receive a copy of the plan’s annu­al report. The SAR must gen­er­al­ly be pro­vid­ed with­in nine months after the end of the plan year to par­tic­i­pants and beneficiaries.

Health Care Reform – W‑2 Report­ing (250 Employ­ee Size Groups)
The Form W‑2 report­ing oblig­a­tion applies to employ­ers spon­sor­ing group health plans who have 250 or more W‑2 forms the pri­or year.

Employ­ers must dis­close the aggre­gate cost of employ­er-spon­sored cov­er­age pro­vid­ed to employ­ees on the employ­ees’ W‑2 Forms. The pur­pose of the report­ing require­ment is to pro­vide infor­ma­tion to employ­ees regard­ing how much their health cov­er­age costs. The report­ing does not mean that the cost of the cov­er­age is tax­able to employees.

ACA Report­ing (50 + FTE or self-fund­ed plans)
Orga­ni­za­tions who are Applic­a­ble Large Employ­ers (ALEs), mean­ing they had 50 or more full-time (FT) or full-time equiv­a­lent (FTE) employ­ees dur­ing the pre­vi­ous year, are required to pro­vide any­one who was full-time for one month or more with Form 1095‑C by Jan­u­ary 31st (extend­ed to March 31, 2016 for 2015 report­ing year). ALEs are then required to sub­mit trans­mit­tal doc­u­ment 1094‑C to the IRS, along with copies of the 1095-Cs giv­en to full-time employ­ees by Feb­ru­ary 28th (extend­ed May 31, if sub­mit­ted man­u­al­ly or to June 31 if fil­ing elec­tron­i­cal­ly for 2015 report­ing year).

Orga­ni­za­tions who offer self-fund­ed plans, who have less than 50 FT or FTE are required to pro­vide FT employ­ees with Form 1095‑B, then sub­mit trans­mit­tal Form 1094‑B to the IRS on the same dates shown above for ALEs.

There are a num­ber of rec­om­mend­ed ben­e­fit admin­is­tra­tion prac­tices that help you com­ply with the var­i­ous laws, while max­i­miz­ing ben­e­fits received by participants.

Plan Year and Open Enrollment
Orga­ni­za­tions should define a plan year, 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. Though not rec­om­mend­ed, orga­ni­za­tions can have more than one open enroll­ment date for dif­fer­ent ben­e­fits. Do not allow mid-year changes to select­ed ben­e­fit plans unless they expe­ri­ence a qual­i­fy­ing event or you risk vio­lat­ing sec­tion 125 plans (Pre­mi­um Only or Flex­i­ble Spend­ing Account) tax-favor­able sta­tus of your plans, if applic­a­ble, and may vio­late agree­ments with insur­ance providers.

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.

Eli­gi­bil­i­ty & Wait­ing Periods
Employ­ers are to set up prac­tices that com­ply with required Afford­able Care Act (ACA) require­ments relat­ed to wait­ing peri­ods and eli­gi­bil­i­ty. The wait­ing peri­od must allow par­tic­i­pants to join a med­ical plan with­in 90-days of their date of hire. Employ­ers may elect a 30-day ori­en­ta­tion peri­od that occurs before the nor­mal wait­ing peri­od. The most com­mon wait­ing peri­ods are the first of the month fol­low­ing 30 or 60-days of employment.

Clas­si­fy employ­ees as full-time if you antic­i­pate they will on aver­age work 30-hours or more per week, and make them eli­gi­ble to join your med­ical insur­ance plan, if applic­a­ble. It is a good prac­tice to also clear­ly define job clas­si­fi­ca­tions of part-time, full-time, tem­po­rary and sea­son­al to iden­ti­fy vari­able hour employ­ees, help­ing you man­age ben­e­fit eli­gi­bil­i­ty. Mon­i­tor work hours for all employ­ees to effec­tive­ly man­age eli­gi­bil­i­ty over defined mea­sure­ment peri­ods. In addi­tion to actu­al hours per­formed, work hours include vaca­tion, sick leave, paid-time off, hol­i­day pay or time out on an injury.

Mea­sure­ment Periods
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.
Admin­is­tra­tive Periods
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.

Sta­bil­i­ty Periods
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)

125 Pre­mi­um Only Plans (POP) or Flex­i­ble Spend­ing Accounts (FSA)
Many orga­ni­za­tions offer a POP, help­ing par­tic­i­pants pay for pre­mi­ums on a pre-tax basis, and/or an FSA, to set aside funds to cov­er antic­i­pat­ed uncov­ered med­ical costs (e.g. deductibles, co-pays, etc.) or to pay for work relat­ed depen­dent care, if applicable.

It is impor­tant to main­tain up-to-date POP or FSA doc­u­ments and to com­mu­ni­cate these ser­vices along with oth­er ben­e­fits through dis­tri­b­u­tion of Sum­ma­ry Plan Descrip­tions (SPDs) or SPD Wrap doc­u­ments. There were recent updates to def­i­n­i­tion of spouse, new qual­i­fy­ing events for mar­ket­place enroll­ment for POP doc­u­ments, new health FSA max­i­mums, and $500 rollovers for FSA that must be updat­ed in these plan documents.

If offer­ing these plans, make sure to con­duct annu­al dis­crim­i­na­tion test­ing of eli­gi­bil­i­ty to par­tic­i­pate, ben­e­fits and con­tri­bu­tions, and key-employ­ee-con­cen­tra­tion to ensure plans do not vio­late dis­crim­i­na­tion test­ing requirements.

As pre­vi­ous­ly dis­cussed, make sure to have pro­ce­dures in place to pro­vide required COBRA notices, man­age COBRA pay­ments and prop­er­ly man­age cov­er­age for these par­tic­i­pants. It is good to pro­vide them with the same com­mu­ni­ca­tion and rights as employ­ee par­tic­i­pants. Even if you out­source this admin­is­tra­tion, you still want good prac­tices to ensure all par­tic­i­pant rights are allowed and you are adding and tak­ing some­one on and off cov­er­age in accor­dance with these laws. There are huge risks and penal­ties that can result for mis­han­dling COBRA.

In con­clu­sion, there are many laws you need to know, many com­mu­ni­ca­tion and notices to dis­trib­ute to par­tic­i­pants, and the need for clear, effec­tive ben­e­fit admin­is­tra­tive prac­tices to help you offer effec­tive ben­e­fits for employ­ees. It is essen­tial to have a knowl­edge­able insur­ance bro­ker to help you man­age your ben­e­fit sys­tems and nav­i­gate the many ben­e­fit laws.

By Ken Spencer, Pres­i­dent & CEO, HR Ser­vice, Inc. & ERISA Solu­tions,