From fostering a workplace culture centered on supporting the physical, emotional, career and financial wellbeing of employees, to ensuring that benefit programs comply with local, state and federal requirements, effectively protecting the wellbeing of your employees connects directly to protecting the wellbeing of your organization overall.
Compliance Connections delivers 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.
This edition provides reminders and tips for annual enrollment.
1. Clearly describe available benefits
It goes without saying that annual enrollment materials should be easy enough for the average employee to understand. Employee benefits is a complicated area, and although employees may have a general understanding of their benefits, they may not fully appreciate the nuances of their benefit options. It's important that plan sponsors describe the available benefits clearly and use plain language, including definitions of relevant employee benefit terms. Additionally, employers might consider including side-by-side comparisons of plan options and easy-to-understand examples, highlighting the features and financial implications of each available option. Offering Q&A sessions and benefits meetings is another way to assist employees in making informed decisions. What steps have you taken to clearly communicate benefit options and enrollment information to your employees?
2. Leverage annual enrollment as an opportunity to conduct an eligibility audit
An eligibility audit is a voluntary compliance review comparing a plan's eligibility requirements to the population of employees and dependents actually enrolled in the plan. This task is important because the Employee Retirement Income Security Act (ERISA) requires plan fiduciaries to administer their plans according to their written plan documents. Allowing ineligible employees and dependents to participate in an ERISA plan is a breach of the plan document rule. Failure to remove these individuals can result in substantial penalties under ERISA, including personal liability for losses caused to the plan and other equitable or remedial relief a court may deem appropriate to the participant or beneficiary. Communicating with participants in the leadup to the eligibility audit is important for a successful audit. Employers should clearly communicate the purpose of the audit, the current eligibility provisions according to plan terms, which documents will be acceptable for evidence of eligibility, any required affidavits, the deadlines to provide documents and the result of the failure to provide the necessary documents. The timing of an eligibility audit is up to the plan sponsor, but annual enrollment is a logical time to perform the audit. Have you considered conducting an eligibility audit during annual enrollment?
3. Ensure benefit rules and plan terms align with those insurers use
Employers should coordinate with their insurers on their cafeteria plan rules and underlying benefit plan rules for ease of administration and to avoid unintentionally self-insuring coverage. For example, the cafeteria plan rules provide that cafeteria plan elections may not be changed mid-year, except in certain circumstances. Plans aren't required to allow all (or, in fact, any) of these permitted election change events, but if they do, they should document it in their plan documents. Plan sponsors should ensure the election change events they permit under their plans match those permitted by the plan's insurer. Additionally, insurance contracts contain time limits on enrollments. Generally, a period of 30 or 31 days is provided — 60 days for certain HIPAA special enrollments related to Medicaid or Children's Health Insurance Program (CHIP) — although longer periods may be required under certain state insurance regulations. Employees or dependents not enrolled within these timeframes may not be eligible under the insurance contract until a future date or may be subject to additional rules (such as evidence of insurability/good health for life insurance). Plan sponsors may want to negotiate one common timeframe for all insured plans for ease of administration and communication. These two examples show how coordinating with insurers is key. Plan sponsors should consider using the time leading up to annual enrollment to reach out to insurers to communicate about benefit rules and plan terms. What plan terms do you need to coordinate with insurers?
4. Clearly communicate about written waivers of HIPAA special enrollment rights, if applicable
Under the Health Insurance Portability and Accountability Act (HIPAA), plans must permit employees to enroll in underlying health coverage during the year based on specified events, including marriage, birth or adoption of a child, and loss of other health coverage. However, an employer may limit special enrollment rights due to the loss of other coverage to individuals who actually were enrolled in another plan at the time of the coverage waiver. To enforce this provision, the plan must obtain a written statement from an employee who is waiving coverage, stating the other coverage is the reason for the coverage waiver. The employer must also advise the employee in writing that the HIPAA special enrollment right based on loss of other coverage will only be available if the employee provides the written statement. If the employer uses and communicates this requirement, and the employee doesn't provide the necessary written statement, the plan doesn't need to offer a HIPAA special enrollment if the other coverage is lost. If your plan requires written waiver of HIPAA special enrollment rights, how have you ensured clear communication with employees in obtaining the waivers?
5. Provide required notices
Plan sponsors must provide a number of notices at or before annual enrollment, including Marketplace information, a patient protections notice, a Consolidated Omnibus Budget Reconciliation Act (COBRA) Initial (General) notice, HIPAA special enrollment notices, a Summary of Benefits and Coverage, and others. Additionally, employers must provide several other notices annually, but can provide them separately from annual enrollment. However, most employers include these notices as part of their annual enrollment materials. These notices include the Women's Health and Cancer Rights Act notice, Medicare Part D Certificates of Creditable (or Non-creditable) Prescription Drug coverage for individuals who are Medicare eligible and Health Reimbursement Arrangement waiver rights (if applicable). Incorporating all required notices into open enrollment materials can simplify compliance and ensure plan participants receive these important communications. How have you prepared to meet annual notice requirements?
This is a preview edition of Compliance Connections, a publication produced by Gallagher's Compliance Consulting practice. For five more action steps, contact your Gallagher representative.
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. 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 requirements 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.