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. Health and welfare benefit plans are subject to a number of laws requiring that certain information be reported to the government (called reporting) and that certain information be provided to plan participants (called disclosure). The volume and timing of these requirements can keep employers scrambling. Follow the action steps below to help you proactively plan a path toward better reporting and disclosure compliance.
- Include. Specify. State. One of the most common documents an organization should have, regardless of whether that organization is a private employer, a church, or a public entity, is a cafeteria plan document. Cafeteria plans are governed by Section 125 of the Internal Revenue Code. While Section 125 does not have specific disclosure or reporting requirements, many of the underlying benefits offered through a cafeteria plan do have disclosure requirements. For example, employers often include their health flexible spending account (“health FSA”) benefits in their cafeteria plan documents. If the underlying benefit is subject to ERISA, then the plan document must include specific information, such as an Employee Retirement Income Security Act (“ERISA”) statement of rights, required COBRA disclosures, funding for the health FSA, and claims procedures, among other disclosures. What disclosure requirements should be included in your cafeteria plan document?
- Act. Disclose. Report. Employers subject to ERISA must be familiar with both reporting and disclosure requirements, such as Forms 5500, summary plan descriptions (“SPDs”), summaries of material modification (“SMMs”), summaries of material reduction (“SMRs”), and summary annual reports (“SARs”). However, the SPD is one of the most critical disclosure elements under ERISA. ERISA and its accompanying regulations specify that the SPD must include information such as: the name of the plan and the number assigned to the plan; the type of welfare plan; contact information for the plan sponsor and plan administrator; a description of eligibility requirements for participation and any conditions that must be satisfied to receive benefits; the rules about how the plan may be amended or terminated; and the procedures for filing claims and making appeals. In addition to the specific ERISA requirements, other federal mandates affect the content of the SPD. Some of these are COBRA, the Health Insurance Portability and Accountability Act (“HIPAA”), and the Mental Health Parity and Addiction Equity Act (“MHPAEA”). Furthermore, employers must be familiar with timing requirements such as when an SPD must be provided to a covered participant, when an SMM must be provided in contrast to an SMR, and how long a plan has to respond to a request for a plan document. What additional action(s) should your plan be taking to fulfill its ERISA reporting and disclosure requirements?
- Deny. Deliver. Notify. A written (or electronic) notice of an adverse benefit determination must be provided for all initial claim denials for all health plans. Prior to PPACA, such rules only applied to plans subject to ERISA; after PPACA, claims and appeals requirements apply to all health plans, regardless of whether their plan sponsors are subject to ERISA. The adverse benefit determination notice must meet specific content requirements, including statements related to specific reasons for the denial, references to specific plan provisions, and more. Also, the notice must be provided within the time periods required under the claims regulations (e.g., as soon as possible, taking into account the medical exigencies, but not later than 72 hours after receipt of the claim by the plan). If timely notice is not provided, the individual may be deemed to have exhausted his or her administrative remedies, thus allowing the individual to bring an immediate lawsuit. Typically, plan sponsors rely upon third-party administrators or insurance carriers to both make the benefit determinations and provide appropriate notices. However, plan sponsors can also be held accountable for adverse benefit notice determination failures. What steps has your organization undertaken to ensure that your third-party vendor is correctly (and promptly) meeting adverse benefit determination requirements?
- Determine. Qualify. Proceed. Federal law requires that health plans comply with certain administrative requirements for Qualified Medical Child Support Orders (“QMCSOs”). Private employers – both for profit and nonprofit – are required to comply with QMCSOs and National Medical Support Notices (“NMSNs”). Employers, including nonfederal governmental and church employers, are also required to comply with NMSN requirements. Those requirements include written procedures that address how to determine whether a medical child support order is qualified and what steps to take upon receipt of a medical child support order. Each group health plan must establish reasonable procedures to determine whether medical child support orders are QMCSOs and to administer the provision of benefits under those orders. The procedures must: (1) be in writing; (2) provide that each person specified in a medical child support order as eligible to receive benefits under the plan will be notified of such procedures (at the address included in the order) promptly upon the plan’s receipt of the order; and (3) permit an alternate recipient to designate a representative for receipt of copies of notices that are sent to the alternate recipient with respect to a medical child support order. What processes should be added to your QMCSO procedures to ensure that your written procedures are reasonable?
- Respond. Exempt. Oversee. MHPAEA disclosure requirements can often be overlooked, but they are nonetheless important. For example, upon request, a health plan must provide beneficiaries with the criteria for medically necessary determinations with respect to mental health/substance use disorder benefits under MHPAEA. MHPAEA also requires health plans to provide notice of the reason for any denial of reimbursement or payment for services with respect to mental health/substance use disorder benefits. Additionally, a group health plan claiming MHPAEA’s increased cost exemption must furnish a notice to participants, beneficiaries, the Employee Benefits Security Administration (“EBSA”), and state regulators of the plan’s exemption from the parity requirements. What MHPAEA disclosure requirements could your plan be overlooking?
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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.