All posts tagged UBA

On April 18, 2017, the Department of Health and Human Services’ (HHS) Centers for Medicare & Medicaid Services (CMS) published its final rule regarding Patient Protection and Affordable Care Act (ACA) market stabilization.

The rule amends standards relating to special enrollment periods, guaranteed availability, and the timing of the annual open enrollment period in the individual market for the 2018 plan year, standards related to network adequacy and essential community providers for qualified health plans, and the rules around actuarial value requirements.

The proposed changes primarily affect the individual market. However, to the extent that employers have fully-insured plans, some of the proposed changes will affect those employers’ plans because the changes affect standards that apply to issuers.

The regulations are effective on June 17, 2017.

Among other things impacting group plans, the rule provided clarifications to the scope of the guaranteed availability policy regarding unpaid premiums. The guaranteed availability provisions require health insurance issuers offering non-grandfathered coverage in the individual or group market to offer coverage to and accept every individual and employer that applies for such coverage unless an exception applies. Individuals and employers must usually pay the first month’s premium to activate coverage.

CMS previously interpreted the guaranteed availability provisions so that a consumer would be allowed to purchase coverage under a different product without having to pay past due premiums. Further, if an individual tried to renew coverage in the same product with the same issuer, then the issuer could apply the enrollee’s upcoming premium payments to prior non-payments.

Under the final rule and as permitted by state law, an issuer may apply the initial premium payment to any past-due premium amounts owed to that issuer. If the issuer is part of a controlled group, the issuer may apply the initial premium payment to any past-due premium amounts owed to any other issuer that is a member of that controlled group, for coverage in the 12-month period preceding the effective date of the new coverage.

Practically speaking, when an individual or employer makes payment in the amount required to trigger coverage and the issuer lawfully credits all or part of that amount to past-due premiums, the issuer will determine that the consumer made insufficient initial payment for new coverage.

This policy applies both inside and outside of the Exchanges in the individual, small group, and large group markets, and during applicable open enrollment or special enrollment periods.

This policy does not permit a different issuer (other than one in the same controlled group as the issuer to which past-due premiums are owed) to condition new coverage on payment of past-due premiums or permit any issuer to condition new coverage on payment of past-due premiums by any individual other than the person contractually responsible for the payment of premiums.

Issuers adopting this premium payment policy, as well as any issuers that do not adopt the policy but are within an adopting issuer’s controlled group, must clearly describe the consequences of non-payment on future enrollment in all paper and electronic forms of their enrollment application materials and any notice that is provided regarding premium non-payment.

By Daniella Capilla
Originally Posted By www.ubabenefits.com

One might describe the series of events leading to the death of the American Health Care Act (Congress’s bill to repeal and replace the Affordable Care Act) as something like a ballistic missile exploding at launch. The Patient Protection and Affordable Care Act (ACA) repeal debate began nearly a decade ago with former President Barack Obama’s first day in office and reemerged as a serious topic during the 2016 presidential election. Even following the retraction of the House bill, repeal of the ACA remains a possibility as the politicians consider alternatives to the recent bill. The possibility of pending legislation has caused some clients to question the need to complete their obligation for ACA reporting on a timely basis this year. The legislative process has produced a great deal of uncertainty which is one thing employers do not like, especially during the busy year end.

While the “repeal and replace” activity is continuing, it is imperative that employers and their brokers put their noses to the grindstone to fulfill all required reporting requirements. To accomplish this, employers will need brokers that can effectively guide them through this tumultuous season. We recommend that employers ask their brokers about their strategies for

  • Implementing the employer shared responsibility reporting
  • Sending all necessary forms to the employer’s employees
  • Submitting the employer’s reporting to the IRS
  • Closing out the employer’s 2016 filing season

Employers should also inquire about any additional support that the broker provides. They should provide many of the services that we at Health Cost Manager provide to our clients: They should apprise their clients of the latest legislative updates through regular email communication and informational webinars. Brokers should also bring in experts in the field that have interacted with key stakeholders in Washington. And most important, they should remain available during this uncertain period to answer any questions or concerns from clients.

We know employers would prefer not to have to comply with these reporting obligations – many have directly told us so. We understand this requires additional work on their part to gather information for the reporting and increased compliance responsibility. Knowing how stressful the reporting season can be for employers, brokers should go out of their way to help their clients feel confident that they can steer through the reporting process smoothly. The broker’s role should be to take as much of the burden off the employer’s shoulders as possible to enable them to reach compliance in the most expedient manner possible. Sometimes this involves stepping in to solve data or other technical issues, or answering a compliance-related question that helps the client make important decisions. It’s all part of helping employers navigate through the ACA’s strong headwinds during these uncertain times.

Audit-proof your company with UBA’s latest white paper: Don’t Roll the Dice on Department of Labor Audits. This free resource offers valuable information about how to prepare for an audit, the best way to acclimate staff to the audit process, and the most important elements of complying with requests.

The IRS updated its longstanding Q&A guidance on codes that employers should use when completing Forms 1094-C and 1095-C. For information on the IRS’ updated guidance, including COBRA reporting information that had been left pending in earlier versions of the IRS guidance for the past year, view UBA’s ACA Advisor, “IRS Q&A About Employer Information Reporting on Form 1094-C and Form 1095-C”.

By Michael Weiskirch
www.ubabenefits.com

Many employers understand the value of having an Employee Assistance Program (EAP) since the heart and soul of organizations are employees. Employees who are physically and mentally healthy, highly productive, engaged in their work, and loyal to their employer contribute positively to their employer’s bottom line. Fortunately, most employees are positive contributors, yet even the best of employees can occasionally have issues or circumstances arise that may inadvertently impact their jobs in a negative way. Having an EAP in place that can address these issues early may mitigate any negative impact to the workplace. This is a win-win for both employees and employers.

A key component of EAP services lies in “catching things early” by assisting employees and helping them address and resolve issues before they impact the workplace. Most employees will use EAP services on a voluntary, self-referred basis that is completely confidential. Some employers may wonder if services are even being used by employees because it won’t be all that apparent, but most EAPs provide a utilization or usage report that will show the number of people served, and possibly the types of reasons services were requested.

If employee issues do begin to appear in the workplace—related to performance, attendance, behavior, or safety—it is important for managers, supervisors, and human resources to also have access to EAP services. They may wish to consult with an employee assistance professional that can provide guidance and direction leading to problem identification and resolution. These issues have the potential to become very costly for the organization—and again, the earlier they can be addressed, the greater chance of success for both employee and employer, with minimal negative impact to the company’s bottom line.

The key to getting the most out of an EAP is to make it easily accessible to employees, safe to use, and visible enough they remember to use it. It is important that employees understand using the EAP is confidential and their identity will not be disclosed to anyone in their organization. Promoting the EAP services with materials such as flyers, posters, or website information with EAP contact information will also increase the likelihood of employees accessing services.

By Nancy Cannon
Originally published by www.ubabenefits.com

Entities such as employers with group health plans that provide prescription drug coverage to individuals that are eligible for Medicare Part D have two major disclosure requirements that they must meet at least annually:

  • Provide annual written notice to all Medicare eligible individuals (employees, spouses, dependents, retirees, COBRA participants, etc.) who are covered under the prescription drug plan.
  • Disclose to the Centers for Medicare and Medicaid Services (CMS) whether the coverage is “creditable prescription drug coverage.”

Because there is often ambiguity regarding who in a covered population is Medicare eligible, it is best practice for employers to provide the notice to all plan participants.

CMS provides guidance for disclosure of creditable coverage for both individuals and employers.

Who Must Disclose?

These disclosure requirements apply regardless of whether the plan is large or small, is self-funded or fully insured, or whether the group health plan pays primary or secondary to Medicare. Entities that provide prescription drug coverage through a group health plan must provide the disclosures. Group health plans include:

  • Group health plans under ERISA, including health reimbursement arrangements (HRAs), dental and vision plans, certain cancer policies, and employee assistance plans (EAPs) if they provide medical care
  • Group health plans sponsored for employees or retirees by a multiple employer welfare arrangement (MEWA)
  • Qualified prescription drug plans

Health flexible spending accounts (FSAs), Archer medical savings accounts, and health savings accounts (HSAs) do not have disclosure requirements. In contrast, the high deductible health plan (HDHP) offered in conjunction with the HSA would have disclosure requirements.

There are no exceptions for church plans or government plans.

By Danielle Capilla
Originally published by www.ubabenefits.com

There is no denying our industry is changing rapidly, and it’s not about to slow down. Combined with disruptive advances in technology and evolving consumer expectations, we’re seeing consumer-driven health care emerge. Take, for example, the fact that employees now spend more than nine hours a day on digital devices.

There’s no doubt that all this screen time takes a toll.

  • Device screens expose users to blue light. It’s the light of the day and helps us wake up and regulate our sleep/wake cycle.
  • Research suggests blue light may lead to eye strain and fatigue. Digital eye strain is the physical eye discomfort felt by many individuals after two or more hours in front of a digital screen.
  • In fact, digital eye strain has surpassed carpal tunnel syndrome and tendonitis as the leading computer-related workplace injury in America1.

Employees are demanding visibility into health care costs and transparency in the options available so they can take control of their own health. Consumers are more knowledgeable and sensitive to cost, and as a result becoming very selective about their care.

 

Technology Exposure Spends more than nine hours
a day on digital devices
Millennials 2 in 5
Gen-Xers 1 in 3
Baby Boomers 1 in 4

 

Lack of preventive care

Preventive screenings are a crucial piece of overall health and wellness. In fact, the largest investment companies make to detect illnesses and manage medical costs is in their health plan. But if employees don’t take advantage of preventive care, this investment will not pay off. Only one out of 10 employees get the preventive screenings you’d expect during an annual medical visit2.

It’s a big lost opportunity for organizations that are looking for a low-cost, high-engagement option to drive employee wellness.

How a vision plan can help

The good news is that the right vision plan can help your employees build a bigger safety net to catch chronic conditions early. It all starts with education on the importance of an eye exam.

Eye exams are preventive screenings that most people seek out as a noninvasive, inexpensive way to check in on their health; it’s a win-win for employers and employees.

  • A comprehensive eye exam can reveal health conditions even if the person being examined doesn’t have symptoms.
  • The eyes are the only unobtrusive place in a person’s body with a clear view of their blood vessels.
  • And, an eye exam provides an opportunity to learn about the many options available to take control of their health and how to protect their vision.

By screening for conditions like diabetes, high blood pressure, and high cholesterol during eye exams, optometrists are often the ones to detect early signs of these conditions and put the patient on a quicker path to managing the condition. In a study conducted in partnership with Human Capital Management Services (HCMS), VSP doctors were the first to detect signs of3:

  • Diabetes – 34 percent of the time
  • Hypertension – 39 percent of the time
  • High cholesterol – 62 percent of the time

To learn more about the changing landscape of employee benefits, watch the UBA WisdomWorkplace webinar How Telehealth and Technology is Changing the Landscape of Employee Benefits. VSP Global offers world-class products and services to eye care professionals, employers, and more than 80 million members.

By Pat McClelland
Originally published by www.ubabenefits.com

Under the Patient Protection and Affordable Care Act (ACA), individuals are required to have health insurance while applicable large employers (ALEs) are required to offer health benefits to their full-time employees.

In order for the Internal Revenue Service (IRS) to verify that (1) individuals have the required minimum essential coverage, (2) individuals who request premium tax credits are entitled to them, and (3) ALEs are meeting their shared responsibility (play or pay) obligations, employers with 50 or more full-time or full-time equivalent employees and insurers will be required to report on the health coverage they offer. Similarly, insurers and employers with less than 50 full time employees but that have a self-funded plan also have reporting obligations. All of this reporting is done on IRS Forms 1094-B, 1095-B, 1094-C and 1095-C.

Final instructions for both the 1094-B and 1095-B and the 1094-C and 1095-C were released in September 2015, as were the final forms for 1094-B, 1095-B, 1094-C, and 1095-C.

Form 1094-C is used in combination with Form 1095-C to determine employer shared responsibility penalties. It is often referred to as the “transmittal form” or “cover sheet.” IRS Form 1095-C will primarily be used to meet the Section 6056 reporting requirement, which relates to the employer shared responsibility/play or pay requirement. Information from Form 1095-C will also be used in determining whether an individual is eligible for a premium tax credit.

Form 1094-C contains information about the ALE, and is how an employer identifies as being part of a controlled group. It also has a section labeled “Certifications of Eligibility” and instructs employers to “select all that apply” with four boxes that can be checked. The section is often referred to as the “Line 22” question or boxes. Many employers find this section confusing and are unsure what, if any, boxes they should select. The boxes are labeled:

  1. Qualifying Offer Method
  2. Reserved
  3. Section 4980H Transition Relief
  4. 98% Offer Method

Different real world situations will lead an employer to select any combination of boxes on Line 22, including leaving all four boxes blank. Practically speaking, only employers who met the requirements of using code 1A on the 1095-C, offered coverage to virtually all employees, or qualified for transition relief in 2015 and had a non-calendar year plan will check any of the boxes on Line 22. Notably, employers who do not use the federal poverty level safe harbor for affordability will never select Box A, and corresponding with that, will never use codes 1A or 1I on Line 14 of a 1095-C form.

To fully understand each box, including plain language explanations of the form instructions, request UBA’s ACA Advisor, “IRS Reporting Tip: Form 1094-C, Line 22”.

By Danielle Capilla
Originally published by www.ubabenefits.com

Our Firm is making a big push to provide compliance assessments for our clients and using them as a marketing tool with prospects. Since the U.S. Department of Labor (DOL) began its Health Benefits Security Project in October 2012, there has been increased scrutiny. While none of our clients have been audited yet, we expect it is only a matter of time and we want to make sure they are prepared.

We knew most fully-insured groups did not have a Summary Plan Description (SPD) for their health and welfare plans, but we have been surprised by some of the other things that were missing. Here are the top five compliance surprises we found.

  1. COBRA Initial Notice. The initial notice is a core piece of compliance with the Consolidated Omnibus Budget and Reconciliation Act (COBRA) and we have been very surprised by how many clients are not distributing this notice. Our clients using a third-party administrator (TPA), or self-administering COBRA, are doing a good job of sending out the required letters after qualifying events. However, we have found that many clients are not distributing the required COBRA initial notice to new enrollees. The DOL has recently updated the COBRA model notices with expiration dates of December 31, 2019. We are trying to get our clients to update their notices and, if they haven’t consistently distributed the initial notice to all participants, to send it out to everyone now and document how it was sent and to whom.
  2. Prescription Drug Plan Reporting to CMS. To comply with the Medicare Prescription Drug Improvement and Modernization Act, passed in 2003, employer groups offering prescription benefits to Medicare-eligible individuals need to take two actions each year. The first is an annual report on the Centers for Medicare & Medicaid Services (CMS) website regarding whether the prescription drug plan offered by the group is creditable or non-creditable. The second is distributing a notice annually to Medicare-eligible plan members prior to the October 15 beginning of Medicare open enrollment, disclosing whether the prescription coverage is creditable or non-creditable. We have found that the vast majority (but not 100 percent) of our clients are complying with the second requirement by annually distributing notices to employees. Many clients are not complying with the first requirement and do not go to the CMS website annually to update their information. The annual notice on the CMS website must be made within:
  • 60 days after the beginning of the plan year,
  • 30 days after the termination of the prescription drug plan, or
  • 30 days after any change in the creditability status of the prescription drug plan.
  1. ACA Notice of Exchange Rights. The Patient Protection and Affordable Care Act (ACA) required that, starting in September 2013, all employers subject to the Fair Labor Standards Act (FLSA) distribute written notices to all employees regarding the state exchanges, eligibility for coverage through the employer, and whether the coverage was qualifying coverage. This notice was to be given to all employees at that time and to all new hires within 14 days of their date of hire. We have found many groups have not included this notice in the information they routinely give to new hires. The DOL has acknowledged that there are no penalties for not distributing the notice, but since it is so easy to comply, why take the chance in case of an audit?
  2. USERRA Notices. The Uniformed Services Employment and Reemployment Rights Act (USERRA) protects the job rights of individuals who voluntarily or involuntarily leave employment for military service or service in the National Disaster Medical System. USERRA also prohibits employers from discriminating against past and present members of the uniformed services. Employers are required to provide a notice of the rights, benefits and obligations under USERRA. Many employers meet the obligation by posting the DOL’s “Your Rights Under USERRA” poster, or including text in their employee handbook. However, even though USERRA has been around since 1994, we are finding many employers are not providing this information.
  3. Section 79. Internal Revenue Code Section 79 provides regulations for the taxation of employer-provided life insurance. This code has been around since 1964, and while there have been some changes, the basics have been in place for many years. Despite the length of time it has been in place, we have found a number of groups that are not calculating the imputed income. In essence, if an employer provides more than $50,000 in life insurance, then the employee should be paying tax on the excess coverage based on the IRS’s age rated table 2-2. With many employers outsourcing their payroll or using software programs for payroll, calculating the imputed income usually only takes a couple of mouse clicks. However, we have been surprised by how many employers are not complying with this part of the Internal Revenue Code, and are therefore putting their employees’ beneficiaries at risk.

There have been other surprises through this process, but these are a few of the more striking examples. The feedback we received from our compliance assessments has been overwhelmingly positive. Groups don’t always like to change their processes, but they do appreciate knowing what needs to be done.

Audit-proof your company with UBA’s latest white paper: Don’t Roll the Dice on Department of Labor Audits. This free resource offers valuable information about how to prepare for an audit, the best way to acclimate staff to the audit process, and the most important elements of complying with requests.

By Bob Bentley, Manager
Originally published by www.ubabenefits.com

Last fall I had the pleasure of hosting a UBA WisdomWorkplace webinar called “Success in Voluntary through Strategic Benefits Communication.” I discussed recent Sun Life survey data regarding employee engagement and understanding of the value of voluntary benefits.

In the world of voluntary insurance carriers, success in voluntary benefits can be measured in various ways. A key metric is employee participation. For carriers, this is important because the greater the employee participation in a voluntary product, the better the spread of risk, which leads to appropriate margins and sustainable pricing.

But in the world of HR, this has not been a key metric. While good participation can reflect employee acceptance (and low participation might raise the question about whether the product is worth the time it takes to administer payroll deductions and facilitate billing), employee engagement has become more important.

This concept of knowing what you’re participating in makes me think about a good friend of mine who, a few years ago, reached out to me in a panic. He works for a large corporation with employees spread across the country. His employer was dropping all medical plan PPO options for the coming year and switching to a high- and higher-deductible option. He was sent an e-mail that provided few details but explained the action was due to high health care costs. There was no indication that more information was forthcoming, and the communication as a whole was insufficient because he couldn’t find answers to the questions he needed, the most important being, “what does this mean to me and my family?” I explained recent trends and how a high-deductible health plan (HDHP) with a health savings account (HSA) could be advantageous to him, but as we all know, not everyone is knowledgeable about their benefits or has friends in the business to explain their options.

When employees aren’t engaged in good benefits decision making, they can misunderstand or underuse their plans. Our recent survey showed that while employees are becoming more aware of changes in their medical plans, 54 percent still don’t know their out-of-pocket maximum, and 33 percent don’t know their deductible.

Employees are, however, concerned about their financial risks, and most do not have emergency savings or a cash flow to handle unexpected medical expenses. Moreover, research from the Federal Reserve shows that some people actually choose to forgo needed medical care simply because they cannot afford it.1

While these data point out employee challenges, our research does provide some encouraging feedback that shows how we might be able to help employees become knowledgeable about their benefits choices.

For example, though employees understand the benefits gap, 62 percent of those surveyed say they need additional coverage. We also learned that 70 percent were not familiar with the term “voluntary benefits,” but once they understood what voluntary products are, 63 percent agreed that these benefits are helpful in filling the gaps in health care coverage, even if they have to pay for these benefits themselves.

The real kicker is that 87 percent say more customized benefits choices that fit their specific lifestyles would help them make the right health plan choices.

This is where strategic benefits communication can play a vital role. In addition to ensuring that employees really understand the value of all of their benefits, including true total compensation, a well-planned communication effort engages employees by empowering them with information so they are confident in their open enrollment decisions.

How will you know whether you have been a successful communicator? In subsequent posts, we will talk about gathering employee feedback.

Over the next few months, this blog series will examine the ways HR benefits professionals can achieve success—not just in offering voluntary products to employees, but more important, in their overall benefits communications.

By Kevin D. Seeker
Originally published by www.ubabenefits.com

Last fall, President Barack Obama signed the Protecting Affordable Coverage for Employees Act (PACE), which preserved the historical definition of small employer to mean an employer that employs 1 to 50 employees. Prior to this newly signed legislation, the Patient Protection and Affordable Care Act (ACA) was set to expand the definition of a small employer to include companies with 51 to 100 employees (mid-size segment) beginning January 1, 2016.

If not for PACE, the mid-size segment would have become subject to the ACA provisions that impact small employers. Included in these provisions is a mandate that requires coverage for essential health benefits (not to be confused with minimum essential coverage, which the ACA requires of applicable large employers) and a requirement that small group plans provide coverage levels that equate to specific actuarial values. The original intent of expanding the definition of small group plans was to lower premium costs and to increase mandated benefits to a larger portion of the population.

The lower cost theory was based on the premise that broadening the risk pool of covered individuals within the small group market would spread the costs over a larger population, thereby reducing premiums to all. However, after further scrutiny and comments, there was concern that the expanded definition would actually increase premium costs to the mid-size segment because they would now be subject to community rating insurance standards. This shift to small group plans might also encourage mid-size groups to leave the fully-insured market by self-insuring – a move that could actually negate the intended benefits of the expanded definition.

Another issue with the ACA’s expanded definition of small group plans was that it would have resulted in a double standard for the mid-size segment. Not only would they be subject to the small group coverage requirements, but they would also be subject to the large employer mandate because they would meet the ACA’s definition of an applicable large employer.

Note: Although this bill preserves the traditional definition of a small employer, it does allow states to expand the definition to include organizations with 51 to 100 employees, if so desired.

By Vicki Randall
Originally published by www.ubabenefits.com

Cafeteria plans, or plans governed by IRS Code Section 125, allow employers to help employees pay for expenses such as health insurance with pre-tax dollars. Employees are given a choice between a taxable benefit (cash) and two or more specified pre-tax qualified benefits, for example, health insurance. Employees are given the opportunity to select the benefits they want, just like an individual standing in the cafeteria line at lunch.

Only certain benefits can be offered through a cafeteria plan:

  • Coverage under an accident or health plan (which can include traditional health insurance, health maintenance organizations (HMOs), self-insured medical reimbursement plans, dental, vision, and more);
  • Dependent care assistance benefits or DCAPs
  • Group term life insurance
  • Paid time off, which allows employees the opportunity to buy or sell paid time off days
  • 401(k) contributions
  • Adoption assistance benefits
  • Health savings accounts or HSAs under IRS Code Section 223

Some employers want to offer other benefits through a cafeteria plan, but this is prohibited. Benefits that you cannot offer through a cafeteria plan include scholarships, group term life insurance for non-employees, transportation and other fringe benefits, long-term care, and health reimbursement arrangements (unless very specific rules are met by providing one in conjunction with a high deductible health plan). Benefits that defer compensation are also prohibited under cafeteria plan rules.

Cafeteria plans as a whole are not subject to ERISA, but all or some of the underlying benefits or components under the plan can be. The Patient Protection and Affordable Care Act (ACA) has also affected aspects of cafeteria plan administration.

Employees are allowed to choose the benefits they want by making elections. Only the employee can make elections, but they can make choices that cover other individuals such as spouses or dependents. Employees must be considered eligible by the plan to make elections. Elections, with an exception for new hires, must be prospective. Cafeteria plan selections are considered irrevocable and cannot be changed during the plan year, unless a permitted change in status occurs. There is an exception for mandatory two-year elections relating to dental or vision plans that meet certain requirements.

Plans may allow participants to change elections based on the following changes in status:

  • Change in marital status
  • Change in the number of dependents
  • Change in employment status
  • A dependent satisfying or ceasing to satisfy dependent eligibility requirements
  • Change in residence
  • Commencement or termination of adoption proceedings

Plans may also allow participants to change elections based on the following changes that are not a change in status but nonetheless can trigger an election change:

  • Significant cost changes
  • Significant curtailment (or reduction) of coverage
  • Addition or improvement of benefit package option
  • Change in coverage of spouse or dependent under another employer plan
  • Loss of certain other health coverage (such as government provided coverage, such as Medicaid)
  • Changes in 401(k) contributions (employees are free to change their 401(k) contributions whenever they wish, in accordance with the administrator’s change process)
  • HIPAA special enrollment rights (contains requirements for HIPAA subject plans)
  • COBRA qualifying event
  • Judgment, decrees, or orders
  • Entitlement to Medicare or Medicaid
  • Family Medical Leave Act (FMLA) leave
  • Pre-tax health savings account (HSA) contributions (employees are free to change their HSA contributions whenever they wish, in accordance with the their payroll/accounting department process)
  • Reduction of hours (new under the ACA)
  • Exchange/Marketplace enrollment (new under the ACA)

Together, the change in status events and other recognized changes are considered “permitted election change events.”

Common changes that do not constitute a permitted election change event are: a provider leaving a network (unless, based on very narrow circumstances, it resulted in a significant reduction of coverage), a legal separation (unless the separation leads to a loss of eligibility under the plan), commencement of a domestic partner relationship, or a change in financial condition.

There are some events not in the regulations that could allow an individual to make a mid-year election change, such as a mistake by the employer or employee, or needing to change elections in order to pass nondiscrimination tests. To make a change due to a mistake, there must be clear and convincing evidence that the mistake has been made. For instance, an individual might accidentally sign up for family coverage when they are single with no children, or an employer might withhold $100 dollars per pay period for a flexible spending arrangement (FSA) when the individual elected to withhold $50.

Plans are permitted to make automatic payroll election increases or decreases for insignificant amounts in the middle of the plan year, so long as automatic election language is in the plan documents. An “insignificant” amount is considered one percent or less.

Plans should consider which change in status events to allow, how to track change in status requests, and the time limit to impose on employees who wish to make an election.

Cafeteria plans are not required to allow employees to change their elections, but plans that do allow changes must follow IRS requirements. These requirements include consistency, plan document allowance, documentation, and timing of the election change. For complete details on each of these requirements—as well as numerous examples of change in status events, including scenarios involving employees or their spouses or dependents entering into domestic partnerships, ending periods of incarceration, losing or gaining TRICARE coverage, and cost changes to an employer health plan—request UBA’s ACA Advisor, “Cafeteria Plans: Qualifying Events and Changing Employee Elections”.

By Danielle Capilla
Originally published by www.ubabenefits.com