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 settings 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.
As brokers, we help our clients navigate the complex world of health insurance to find the right policies. We also want to make sure you stay compliant by connecting you with the right resources and administrators.
Employers who had 20 or more employees for 50% of the prior calendar year are 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 two 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.
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.
Here are some examples of Third Party Administrators that help with COBRA.
The services of some COBRA administrators differ from others, which is why it is important to shop administrators for the services you need. There are also different costs associated with different COBRA administrators, so it is important to find the right fit for your budget.
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 outline eligible enrollees, initial enrollment deadlines, and open enrollment information.
Contrary to popular belief, insurance companies are not required to provide these on behalf of their employer clients and rarely do.
A Section 125 plan, also known as a Cafeteria Plan, is a document that allows employers 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.
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*Health Benefits Associates does not manage employer compliance and this webpage is not a complete guide to all requirements needed. It is the employer's responsibility to maintain compliance and this page should not be considered legal advice.