Compliance for Insurance Plans

Offering benefits to your employees is more than just protecting their health and wellbeing. One of the major reasons why businesses cover employees is to attract and retain highly skilled labor. When setting up a group health plan, it is important to stay compliant with federal and state laws while finding the right coverage for everyone’s health needs.

*Any statement made on this page is not legal advice. For official rules and regulations, please go to the IRS or DOL websites.

COBRA

Employers who had 20 or more employees for 50% of the prior calendar year are very likely to be subject to COBRA.

COBRA has many ongoing requirements and notifications that need to be distributed. Employees need to be notified of their rights as well as the opportunity to enroll in COBRA coverage when eligible.

Many of these notifications can be handled by COBRA administrators. There are three parts that employers should focus on to remain compliant:

1. Employees and their dependents should be notified of their COBRA rights within 90 days of their coverage start date. This notification can be included as part of the onboarding process. When distributing this notification, it is important to document it for your records. COBRA administrators can send, document and archive these notifications as employees are added to the plans.

2. When employees and/or dependents are terminated from the plan, they need to receive a COBRA offer. The offer needs to include the specific benefits and appropriate rates for the plans that the employee elected prior to the qualifying life event.

3. Collecting COBRA premiums & managing eligibility – After a COBRA beneficiary elects coverage, they will have a specific timeframe to provide payment for the continuing coverages they choose. COBRA administrators handle premium collections from terminated employees, along with the notifications that are required after an election.

After a COBRA beneficiary elects coverage, they will have a specific timeframe to provide payment for the continuing coverages they choose. COBRA administrators handle premium collections from terminated employees, along with the notifications that are required after an election.

COBRA also requires that employers provide COBRA beneficiaries with the same opportunity to change plans during open enrollment. Again, COBRA administrators can help with these situations.

ERISA

ERISA is the Employment Retirement Income Security Act of 1974.

This law sets minimum standards for most group health insurance plans, including the content and distribution of plan documents and summary plan descriptions.  Plan documents are usually kept on hand by the employer and are to be available for employees at their request.  Summary Plan Descriptions provide employees with detail on a few different eligibility rules. These documents designate and define eligible enrollees, enrollment deadlines, waiting periods, and open enrollment information.

In the past, insurance companies provided many of these documents to employers. However, contrary to popular belief, insurance companies are not required to provide these on behalf of their employer clients and rarely do.

Section 125

A Section 125 plan, also known as a Cafeteria Plan or POP plan, is a document that the IRS requires employers to keep on file in order to to pre-tax employee contributions to select benefit plans. This document is required by the IRS to stay compliant with pre-tax health plan payments and contributions. It also is set up to pre-tax health savings account contributions and flexible spending account contributions for medical and/or child care expenses.

There are ongoing requirements with Section 125, so it is important to update your documentation and stay compliant as the years go on.

Our office suggests using Core Documents for this service. You will have a one-time fee to set up a binder with all the information you will need to be compliant with this particular section.

Association Health Plans

Association plans are an alternative option to standard small group plans for businesses in Nevada seeking health insurance.

These plans are a great way for your business to save on the cost for health insurance. However, an association plan will come with other rules and requirements that may not be required for a standard small group ACA policy. The main requirement you will have to follow is your business is required to offer COBRA regardless of it’s size.

Typically, businesses in Nevada are only required to offer COBRA if you have 20 or more full time employees or full time equivalents. Since an association plan is considered a large group policy, due to the fact that all businesses enrolled under the association are treated as one large employer for the purposes of health insurance, you will be required to offer COBRA regardless of the size of your business.

Offering COBRA is a requirement for you, the business, to adhere to and not doing so violates your agreement with the health plan and the association. The good news is many associations offer no cost COBRA services to it’s members. If you have an association health plan and you are not currently offering COBRA, please coordinate with your health plan or our office for assistance to get COBRA services in place.

Family and Medical Leave Act

The FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave. This applies to businesses that employ 50 or more employees in 20 or more workweeks in either the current calendar year or previous calendar year. Eligible employees are entitled to:

  • Twelve workweeks of leave in a 12-month period for:
    • the birth of a child and to care for the newborn child within one year of birth;
    • the placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement;
    • to care for the employee’s spouse, child, or parent who has a serious health condition;
    • a serious health condition that makes the employee unable to perform the essential functions of his or her job;
    • any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty;” or
  • Twenty-six work weeks of leave during a single 12-month period to care for a covered servicemember with a serious injury or illness if the eligible employee is the servicemember’s spouse, son, daughter, parent, or next of kin (military caregiver leave).

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