Compliance Connections delivers monthly, actionable guidance designed to help you manage and optimize the connections between the compliance of your benefits and human resources programs to overall organizational wellbeing. Below, we share important considerations and action items relating to annual enrollment.
- Clearly explain benefits options. Employee benefits is a complicated area full of acronyms and less than simple concepts and language. Employees may have a general understanding of their benefits, but may not fully appreciate the grab bag of acronyms like HRAs, HSAs, HDHPs and FSAs (not to mention general purpose FSAs versus limited purpose FSAs) and their individual nuances. Explaining these benefits in plain language to help employees become familiar with their options so they can make informed decisions is a key aspect of annual enrollment. For example, many employers offer a high deductible health plan (HDHP) as an option. While an HDHP is a good option for some individuals, it's not necessarily right for all. When this is not the only available option, employees need to be educated on benefits and risks associated with choosing an HDHP. Employers might consider offering side-by-side comparisons of plan options and easy to understand examples highlighting the features and financial implications of each available benefit option. How do you plan to communicate the details of your benefits offerings to your employees so they can make informed choices?
- Update your preventive services offerings. The Patient Protection and Affordable Care Act (ACA) requires non-grandfathered health plans to cover certain preventive services without cost sharing. This means that a plan cannot charge a copayment, coinsurance or a deductible for such services. As part of these requirements, plans must cover evidence-informed preventive care and screenings supported by the Health and Human Services' Health Resources and Services Administration (HRSA), the United States Preventive Services Task Force (USPSTF), and the Advisory Committee on Immunizations. Generally, plans must begin covering newly recommended services one year after a guideline is issued. This requires consistent monitoring of changing guidelines. For example, HRSA recently approved a new guideline on obesity prevention for midlife women and updated five existing preventive services guidelines: breastfeeding services and supplies, contraception, counseling for sexually transmitted infections, screening for HIV, and well-women preventive visits. Employers subject to the preventive services requirements should speak with their insurers or TPAs to ensure the plan is designed to comply with these new HRSA guidelines What is your process for ensuring preventive service coverage is consistent with current requirements?
- Ensure you are offering coverage to eligible employees (and only eligible employees). The ACA requires applicable large employers (generally those with 50 or more full time, or full-time equivalent, employees) to offer health coverage meeting specific requirements to their full time employees in order to avoid an ACA penalty. To determine who those full-time employees are, employers may use either the look-back method or the monthly measurement method. In either case, employers should make sure their plan documents and insurance contracts (including any stop loss contracts) include accurate language describing who is eligible for health coverage. Further, employers who use the look-back method for determining eligibility should ensure the language specifies the initial and standard measurement, stability and administrative periods. Additionally, employers must be careful when making the determination of which employees are (and are not) eligible based on the look-back method. If an employee who satisfies the definition of full-time employee under the employer's look-back method is not offered coverage, the employer risks a penalty under the ACA. However, employers must be careful not to offer coverage to employees who do not satisfy the employer's eligibility definition because, while covering such employees will not trigger a penalty, it may result in unintentional self-insurance. An employer who makes a mistake and enrolls an employee who does not satisfy the eligibility definition may find it difficult or undesirable to withdraw the offer once the mistake is discovered. How are you ensuring you are offering coverage to all eligible employees (but only those employees who are eligible?)
- Review cafeteria plan change in election rules and clearly explain them to employees. Employers should periodically consider updating plan design for recent developments and for needs of the employer and employees. Reviewing and sometimes modifying cafeteria plan election change rules should be part of the design process that precedes annual enrollment. Under the rules for cafeteria plans, employees may not make a mid-year change in their elections except upon the occurrence of specific events (such as a change in marital status, the birth of a child or a spouse's termination of employment) and, even then, only if the plan expressly permits a change upon those events and the change must be consistent with the event. Its important employees understand these rules when they are making their elections during annual enrollment, as misunderstandings can cause problems. For example, if your plan permits a mid-year change when there is a significant change in the cost or coverage under another plan, annual enrollment is a good time to explain to employees what the plan considers to be a "significant" change. Otherwise, you may find that your employees have a very different idea of what constitutes a "significant" change. Additionally, if you are changing insurers for the upcoming plan year, this is a good time to confirm that your cafeteria plan and your new insurers are using the same change in election rules and that there is consistency between the documentation of those rules in your cafeteria plan document and insurance contracts (including any stop loss contracts). What processes do you have in place for reviewing, updating and communicating plan design, including cafeteria plan e lection change rules?
- Prepare your annual notices. It goes without saying that communication with employees is a fundamental aspect of annual enrollment. A number of laws require specific disclosures, some of which must be provided upon initial enrollment, some annually (typically at annual enrollment), and some of which are not required to be provided at annual enrollment, but may be. Required notices include the Women's Health and Cancer Rights Act notice, the COBRA Initial (General) notice, HIPAA special enrollment rights notice, and Medicare Part D Certificates of Creditable (or Non-creditable) prescription drug coverage for individuals who are Medicare eligible. Other notices may also be required, depending on the terms of the plan. For example, if the plan includes a wellness program that provides a health-contingent reward (such as a premium discount) that is conditioned on performing an activity (such as walking two miles per week) or achieving a specific standard, or health factor (such as non-smoker status or BMI less than 30), all plan materials describing the terms of the wellness program must include a statement indicating the availability of a reasonable alternative. As a best practice, many employers include all of the required notices with annual enrollment materials to avoid inadvertently missing any. How are you identifying and fulfilling your plan's notice requirements?
This is a preview edition of Compliance Connections, a monthly publication produced by Gallagher's Compliance Consulting Practice. For five more action steps, contact your Gallagher representative or visit our Compliance Resources page to subscribe and receive the full version of this publication each month.
Compliance is a series of actions, not a final destination. As a trusted advisor, Gallagher has developed this Compliance Connections series to help you pursue a path through employee benefits compliance issues as part of an overall continuing compliance plan. Plan sponsors 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 requirements listed above, or would like additional information on how Gallagher constantly monitors laws and regulations impacting employee benefits in order to support plan sponsors in their compliance efforts, please contact your Gallagher representative.