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2014 Year-End Employee Benefit Plan Food for Thought

As the year winds down, it’s important to take stock of plan amendment and notice deadlines, as well as planning for 2015. To guide you through the process, we’ve put together a list that includes all of our Employee Benefit […]


Fraser Trebilcock Employee Benefits Attorney Health Care Law HIPAAAs the year winds down, it’s important to take stock of plan amendment and notice deadlines, as well as planning for 2015. To guide you through the process, we’ve put together a list that includes all of our Employee Benefit Client Alerts from 2014 as well as other food for thought.

Consider Cafeteria Plan Amendments:

      1. Ensure that the $2,500 cap on salary reductions for Health Flexible Spending Accounts (FSAs) is documented in the FSA/cafeteria plan documents by December 31, 2014 (went into effect in 2013, required in plan documents by December 31, 2014).
      2. If your plan permits a health FSA carryover amount (not to exceed $500) for either 2013 or 2014, ensure that it is documented in the FSA/cafeteria plan documents by December 31, 2014.
      3. Consider increasing Health FSA salary reductions for cost of living to $2550 for 2015
        • For FSA Increase, HSA Limits, and Two New Mid-Year Cafeteria Plan Changes (November 14, 2014), CLICK HERE
      4. If a non-calendar year plan permitted to allow participants to revoke/change employer group major medical coverage to enroll in Exchange coverage effective January 1, 2014, ensure that this is documented in the cafeteria plan documents by December 31, 2014.
      5. Consider implementing two new mid-year election rights: (i) for reduction in hours without loss of eligibility or (ii) for certain circumstances allowing enrollment in the Exchange.
        • For FSA Increase, HSA Limits, and Two New Mid-Year Cafeteria Plan Changes (November 14, 2014), CLICK HERE
      6. Consider modifications to the definition of “spouse” pursuant to federal law changes and possible same-sex spouse coverage.
      7. Ensure any cash out program in lieu of medical coverage provision is not limited to high risk participants. In addition to discrimination issues under HIPAA and cafeteria plan rules, employers will run afoul of ACA market reforms if they offer employees with high claims risk a choice between group health plan enrollment or cash. For more information, CLICK HERE.

Ensure Proper Plan Documentation is in Order:

      1. Cafeteria Plan documents
      2. ERISA “Wrap” Plan documents
      3. Be mindful that SPDs must be updated every five (5) years if amendments have occurred.
      4. Remember to conduct applicable nondiscrimination testing.

Ensure Other ACA Compliance is in Order:

      1. 90 Day Excessive Waiting Period Compliance
      2. Cost Sharing (deductible limits for small plans repealed)
        • For information on limitations on cost-sharing and reference-based pricing, CLICK HERE for FAQs About Implementation of the Affordable Care Act (Part XXI).
        • For Updated COBRA Notices & Various Other Matters Addressed in Recent DOL FAQs (May 9, 2014), CLICK HERE.
      3. Be mindful of increases to PCORI Fees.
        • For policy years and plan years ending on or after October 1, 2014, and before October 1, 2015, the adjusted applicable dollar amount is $2.08. For policy years and plan years ending on or after October 1, 2015, and before October 1, 2019, the adjusted applicable dollar amount will be published in guidance of general applicability published in the Internal Revenue Bulletin. For more information, CLICK HERE.
        • For PCORI Fees Due by July 31, 2014 for Plan Sponsors of Certain Applicable Self-Funded Health Plans (July 2, 2014), CLICK HERE.
      4. Report and Pay Transitional Reinsurance Fees.
        • For Transitional Reinsurance Fee – Deadline to Submit Initial Enrollment Count Extended Until December 5 (October 29, 2014), CLICK HERE.
      5. Annual/Lifetime Limits
      6. Pre-exising Condition Exclusion prohibitions for most plans
      7. Clinical Trial requirements for most plans
      8. Preventive care updated matters
        • For Updated COBRA Notices & Various Other Matters Addressed in Recent DOL FAQs (May 9, 2014), CLICK HERE.
      9. SBCs (MEC/MV) updates
        • For Updated COBRA Notices & Various Other Matters Addressed in Recent DOL FAQs (May 9, 2014), CLICK HERE.
      10. COBRA notice changes
        • For Updated COBRA Notices & Various Other Matters Addressed in Recent DOL FAQs (May 9, 2014), CLICK HERE.

Large Employers: Be Prepared for Pay or Play Effective January 1, 2015.

      1. Consider transition relief for workforce of 50-99 full-time equivalents.
      2. Consider transition relief for non-calendar year plans.
      3. Establish a system for identifying full-time employees and ensure all common law employees are accounted for.
      4. Consider monthly versus look-back measurement methods.
        • Recent guidance outlining allowable circumstances of changing between differing measurement periods (i.e., different look-back periods or between look-back and monthly), as well as how to calculate hours in such circumstances, can be found by CLICKING HERE.
      5. Adopt plan amendments to adjust for eligibility modifications.
      6. Ensure dependent coverage extends through end of the month in which a child turns age 26.
      7. Ensure the group medical plan is offered to all full-time employees (30 hours as determined under the chosen measurement method).
      8. Ensure the offered coverage provides minimum value.
        • See recent guidance stating that health plans which exclude coverage for key benefits, such as physician services and inpatient hospitalization, do not provide minimum value. For Notice 2014-69, CLICK HERE.
      9. Ensure the offered coverage is affordable (consider flex credits and cash out amounts, wellness programs, and HRA contributions in affordability configurations).
        • For Deadline Approaching for Employer Compliance with Pay or Play: Cash Outs and Affordability (New Guidance – December 11, 2014), CLICK HERE.
      10. Consider all common law employees (even those not on your payroll) within the controlled group.

Ensure All Required Notices are Provided to Employees (including but not limited to WHCRA, CHIPRA, NMHPA, Special Enrollment, Exchange Notices, SBCs, NPPs, Grandfathered or Patient Protection Disclosures).

      1. Remember to provide the Exchange Notice to new hires within 14 days of their hire date.
      2. For October 15: Medicare Part D Notice of Creditable (or Non-Creditable) Coverage (September 13, 2014), CLICK HERE.

Keep a Close Watch on Wellness Program Design Issues.

      1. The EEOC has been filing lawsuits arguing that wellness programs which impose penalties for non-participation are not voluntary and thus violate the ADA, unless they are job-related or consistent with business necessity. Honeywell’s wellness program, which was recently targeted, imposes penalties (in the form of surcharges and lost HSA contributions) if employees decline to participate in biometric screenings. Such designs are extremely common. While the EEOC likely targeted Honeywell’s program because of the size of its penalties (up to $4,000 annually, according to the EEOC), the petition seems to take issue with penalties of any size. Additionally, in its recent suit against Honeywell, the EEOC alleges that Honeywell’s program violates GINA by offering an inducement to its employees to acquire genetic information. It argues that the testing seeks to obtain medical information relating to medical conditions of the employees’ spouses, and that this constitutes “family medical history” of the employee (which is considered genetic information under GINA). Honeywell has essentially declined to address the above arguments and instead has taken the position that its wellness programs are specifically sanctioned by the ACA and HIPAA, and that they are in strict compliance with the requirements of both laws. The EEOC has also announced that it will issue proposed regulations relating to this topic early next year. For more information, CLICK HERE.

Consider Whether Your Dental, Vision, Long-Term Care, and/or Employee Assistance Plans Are Excepted Benefits.

      1. The IRS, DOL, and HHS issued final regulations regarding the excepted benefit status of self-insured dental, vision, long-term care (LTC) coverage and employee assistance programs (EAPs). Determining excepted benefit status is important as such benefits avoid application of numerous federal group health plan mandates, including HIPAA special enrollments and many of the PHSA mandates under the Affordable Care Act. The final regulations can be found by CLICKING HERE.

Consider Proposed Rules Recently Released on  Possible Wrap-Around Programs as Excepted Benefits

      1. The proposed rules would allow group health plan sponsors, in limited circumstances, to offer wraparound coverage to employees who are purchasing individual health insurance in the private market, including through the Health Insurance Marketplace. The rule proposes two pilot programs for wraparound coverage. One pilot would allow wraparound benefits only for Multi-State Plans in the Health Insurance Marketplace and another would allow wraparound benefits for part-time workers who could otherwise qualify for a flexible savings arrangement who enroll in individual market plan.  See the proposed rule by CLICKING HERE and the News Release by CLICKING HERE.

Be Mindful of Changes to Mental Health Parity Requirements.

      1. The Department of Labor’s Employee Benefits Security Administration updated its website with the following:
        • Updated Mental Health Parity Part of the Self Compliance Tool, available by CLICKING HERE.
        • Mental Health Parity Provisions Questions and Answers in the updated Compliance Assistance Guide, available by CLICKING HERE.
        • For Updated Compliance Assistance Guide – Health Benefits Coverage Under Federal Law including updates for the Affordable Care Act and the Mental Health Parity Provisions, CLICK HERE.

Be Wary of Individual Policies.

      1. Employers cannot reimburse employees for the purchase of individual health insurance.
      2. Employers will not be compliant with the ACA market reforms if they offer employees cash to reimburse the purchase of an individual market policy – regardless of whether it is paid as taxable compensation. Clearly, employers also cannot set up reimbursement plans under Section 105 to select and reimburse individual policies. CLICK HERE for FAQs About Implementation of the Affordable Care Act (Part XXII).

Ensure Form 5500s and Summary of Annual Reports are Accounted For.

      1. Advance copies of the 2014 Form 5500 and 5500-SF, as well as the final copy of the 2014 Form M-1, have been released by the Department of Labor both HERE and HERE.
      2. For Important Instruction Changes for Form 5500 for 2013 Health and Welfare Benefit Plans (July 25, 2014), CLICK HERE.

Continue Compliance with Form W-2 Aggregate Cost of Coverage Reporting.

      1. For Upcoming Due Date for Disclosure to CMS for Medicare Part D, Form W-2 Aggregate Cost Reporting (January 22, 2014), CLICK HERE.

Ensure Compliance with HIPAA Electronic Transaction Standards. 

      1. For HIPAA HPID Deadline Delayed Until Further Notice (November 3, 2014), CLICK HERE.
      2. For HIPAA – Electronic Transaction Standards – Action Required! (April 22, 2014), CLICK HERE.

Other Alerts Posted this Year Include the Following:

      1. For Navigating the Health Insurance Marketplace for 2015 (November 18, 2014), CLICK HERE.
      2. For Affordable Care Act in 2014 – Now What? (October 31, 2014), CLICK HERE.
      3. For The Evolution of Health Care Reform: What Businesses Need to Know (May 23, 2014), CLICK HERE.
      4. For Health Care Reform: Enrollment Extension for Individuals, Guidance for Small Businesses (March 26, 2014), CLICK HERE.
      5. For Small Business Health Care Affordability Tax Credits (March 18, 2014), CLICK HERE.
      6. For Affordable Care Act: Video Presentation on Recent Changes & Deadlines (February 20, 2014), CLICK HERE.
      7. For IRS Final Regulations on Employer Shared Responsibility Released (February 11, 2014), CLICK HERE.

This list of 2014 Client Alerts is meant to serve only as a nonexhaustive reminder of past and upcoming notices and deadlines. Fraser Trebilcock will continue to monitor changes to the regulatory environment to assist you with your health care reform compliance strategies. If you have questions, would like a detailed list of compliance deadlines, or for more information, contact attorney Elizabeth Latchana at elatchana@fraserlawfirm.com or (517) 377-0826 or Samantha Kopacz at skopacz@fraserlawfirm.com or (517) 377-0868.