Persistent action on legislative compliance is critical to your organization. Proactive compliance goes beyond filing specific paperwork by specific deadlines. It means understanding how laws and regulations apply to your employee benefits offerings and how to minimize the costs associated with noncompliance to maximize your organization’s resources to ensure continuous operations, attracting and engaging employees, and overall organizational wellbeing.
Compliance Continuity is designed to help your organization sustain the total wellbeing and engagement of your workforce, pursue your business goals, and help you achieve better results by providing ongoing benefits and HR compliance guidance, key considerations, and action steps. While your best is finite, your better is never finished. Check out the action steps below to help you proactively plan a path toward preparing for a U.S. Department of Labor (“DOL”) Audit.
- Summarize. Supplement. Wrap. As a plan administrator, you (the employer), not your insurance carrier (or your third-party administrator), are responsible for providing summary plan descriptions (“SPDs”). There are more than 26 items that must be included in an SPD for it to be ERISA-compliant. Frequently, insurance carriers will provide certificate booklets that contain some of the necessary information, but not all. Documents from third-party administrators are sometimes incomplete. For that reason, plan administrators usually have to provide additional information in the form of an “SPD supplement” or "mini-wrap” document, which, along with the certificate booklet or other plan materials, fills in the missing information. What supplemental information is necessary to maintain an ERISA-compliant SPD?
- Mail? Email? Post? SPDs must be furnished to all participants covered by the plan. These participants include often overlooked participants, such as those covered by the Consolidated Omnibus Reconciliation Act (“COBRA”), qualified beneficiaries, retirees, and alternate recipients on the plan by virtue of Qualified Medical Child Support Orders (“QMCSOs”) or National Medical Support Notices. Employers often overlook COBRA qualified beneficiaries and children covered under QMCSOs. Furthermore, DOL regulations specifically approve of distributing SPDs by first class mail, but SPDs may only be distributed electronically if certain requirements are met. Posting the SPD on an organization’s intranet is typically not sufficient, and there are specific rules about how materials may be distributed to employees without work-related computer access. Plans must follow specific rules for electronic disclosures, and additional disclosures may be required. What process does your organization have in place to ensure you are distributing SPDs according to DOL rules?
- Inform. Allow. Enroll. Group health plans are required to allow employees, their spouses, and dependents to enroll in their plans at specified times without being treated as late entrants. These other entry dates, called special enrollments, are as follows: (a) upon the involuntary loss of eligibility for other group coverage; (b) upon the marriage of the employee; (c) upon the birth or adoption of a child; and (d) upon the loss of Medicaid or State Children’s Health Insurance Program (“SCHIP”) coverage or gaining eligibility for state premium assistance. The Health Insurance Portability and Accountability Act (“HIPAA”) requires plans to provide all employees (those who enroll and those who decline enrollment) with a notice of special enrollment at, or before the time the employee is offered the opportunity to enroll. You can include the notice of special enrollment rights on plan enrollment forms or on a separate form that is included with enrollment materials, but you should likely avoid providing the notice solely in your SPD because individuals who decline coverage will not receive SPDs. How does your plan ensure that it provides notice of the required HIPAA special enrollment rights?
- Incentivize. Disclose. Waive? HIPAA sets forth certain requirements for wellness programs where a reward is offered under a health plan based on a health factor (e.g., smoker/non-smoker premium differentials; deductible credit for achieving a certain BMI or cholesterol score; etc.). Additionally, HIPAA requires wellness program rewards be available to all similarly situated individuals. If it is unreasonably difficult for an individual to qualify for the reward due to a medical condition, or if it is medically inadvisable for an individual to satisfy the applicable health standard, the program must allow a reasonable alternative standard or a waiver of the underlying standard. Furthermore, the program must disclose (in all materials describing the terms of the program, including annual enrollment materials) the availability of a reasonable alternative standard – or the possibility of a waiver of the underlying standard, if applicable. The DOL has been inquiring about wellness program communication materials, and specifically the inclusion of the required disclosure statement. Which of your wellness program materials include the required disclosure statement regarding the availability of a reasonable alternative?
- Cover. Describe. Include. The Newborns’ and Mothers’ Health Protection Act (“NMHPA”) prohibits group health plans from restricting benefits for any hospital length of stay in connection with childbirth for the mother or newborn child, following a vaginal delivery, to less than 48 hours, or following a cesarean section, to less than 96 hours. Often the DOL requests a plan’s NMHPA notice, as well as a list or logs an administrator may keep of issued notices. In addition, NMHPA provisions describing a mother’s and newborn’s rights must be included in your plan’s SPD. A separate notice is only required where a self-funded non-federal governmental plan, such as the self-funded plan of a city, county, public school district or municipality, has opted out of the NMHPA. In such a case, the plan must provide notice to enrollees, annually and upon enrollment indicating the plan opted out. Employers should be careful to stay up to speed on the intricacies of NMHPA disclosure requirements. How does your plan ensure that it meets the NMHPA disclosure requirements?
This is a preview of Compliance Continuity. For five more considerations regarding DOL Audits, contact your Gallagher representative or click here to subscribe and receive the full version of Compliance Continuity.
Compliance is a series of actions, not a final destination. As a trusted advisor, Gallagher has developed this Compliance Continuity series to help you pursue a path through employee benefits compliance issues as part of an overall continuing compliance plan. Employers should carefully evaluate their health and welfare plans to determine if they are in compliance with both federal and state law. If you have any questions about one or more of the compliance destinations listed above, or would like additional information on how Gallagher constantly monitors laws and regulations impacting employee benefits in order to support employers in their compliance efforts, please contact your Gallagher representative.
The intent of this analysis is to provide you with general information. It does not necessarily fully address all your organization’s specific issues. It should not be construed as, nor is it intended to provide, legal advice. Questions regarding specific issues should be addressed by your organization’s general counsel or an attorney who specializes in this practice area.