Published on : January 15, 2014
Planning for ERISA Health and Welfare Benefit Plan Operations in 2014 SFM
Now is the time for employers and plan sponsors to ask themselves questions about compliance issues to address in 2014. The calendar provided in this article will help you create your own schedule of activities so that you do not miss important deadlines. As you evaluate the various tasks, you can confirm suitable deadlines with your vendors for getting them done. As you make your plans, in addition to the calendar deadlines, there a number of key issues for you to consider as we head into 2014.
Are my group health plans HIPAA-compliant?
In 2013, we saw the issuance of the final omnibus regulations under HIPAA. These rules not only require group health plans and other covered entities to update their HIPAA privacy and security policies and procedures, privacy notices and business associate agreements, but they also trigger new training obligations.With increased scrutiny by the Department of Health and Human Services(HHS) and increased sanctions for noncompliance, it is important for plans to review all aspects of HIPAA privacy and security compliance.
Am I ready if the DOL comes calling?
The Department of Labor(DOL) has demonstrated increased scrutiny of welfare benefit plans as of late. DOL compliance audits investigate plans for compliance with the HIPAA portability rules, the Affordable Care Act, COBRA and other federal laws affecting welfare benefit plans. These DOL audits require sponsors to produce, on short notice, documentation to demonstrate compliance with these various laws, including summary plan descriptions, copies of required notices provided to employees, as well as contracts with insurers and third party administrators. Employers should collect and review all welfare benefit program plan documents and employee communications to ensure compliance with the various applicable laws and to guarantee that documentation is readily available in the event of an audit.
How am I addressing the impact of the Windsor decision?
The Supreme Court’s decision this year in Windsor v. United States declaring Section 3 of DOMA to be unconstitutional likely has influenced the design and administration of your employee benefit programs. The Court’s decision does not require employers to offer benefits to same-sex spouses, but whether spousal coverage has to extend to same-sex spouses may be dictated by the terms of the plan or insurance policy. It is important that you review the definition of “spouse” in each of your benefit programs to ensure that it includes the individuals you intend to cover and amend them if necessary.
Because benefits provided to same-sex spouses and domestic partners are different under federal tax law, if your plan covers both groups, you should establish a method for differentiating between them. In addition, if your plan extended coverage to an employee’s same-sex spouse before the Windsor decision and imputed income on the value of that coverage, the employee’s wages reported on his or her W-2 for 2013 should not include the imputed amounts. You should also consider whether you want to recover payroll taxes paid with respect to that coverage for 2013 and for prior open years.
Is my cafeteria plan document up-to-date?
Cafeteria plans must be in accordance with the terms of its plan document. If you have recently added a high-deductible health plan option and let employees contribute to a health savings account through salary reduction, you need to amend your cafeteria plan document to permit these pre-tax contributions and describe how to administer them. Additionally, you need to amend the plan document provisions governing health flexible spending arrangements to reduce the maximum annual salary reduction contribution to $2,500 and to authorize carryovers, if you have chosen to permit them. Also, review the document to confirm that eligibility and other provisions accurately describe current practices.
Have I made sure my plans are not discriminatory?
Cafeteria plans, medical plans (including health FSAs), dependent care assistance plans, group term life plans and other benefit programs cannot discriminate in favor of highly compensated or “key” employees. To be nondiscriminatory, the plans must satisfy certain nondiscrimination tests with respect to eligibility, benefits and, in some cases, utilization. Plans that exclude large groups of employees (e.g., exclude part-time employees or limit benefits to employees at certain locations) or that have different waiting periods for different employee groups are particularly at risk for failing the tests.In addition, many dependent care FSAs will potentially fail the 55 percentaverage benefits utilization test.Because highly compensated and key employees will suffer adverse tax consequences if a plan is discriminatory and because failures cannot be corrected after the end of the plan year, it is crucial that you run the nondiscrimination tests during the plan year and take corrective action before the end of the plan year if necessary.
Will my plans comply with the final mental health parity regulations?
Final regulations under the Mental Health Parity and Addiction Equity Act go into effect for plan years beginning on and after July 1, 2014. Although the final regulations do not make major changes to the interim regulations issued in 2010, you should revisit your plan design to ensure compliance. Of particular importance is to review your plans’ non-quantitative treatment limitations (NQTLs) to confirm that they are not more restrictive for mental health/substance use disorder benefits than they are for medical/surgical benefits. NQTLs are limitations that are not expressed numerically but otherwise limit the scope or duration of benefits such as medical necessity definitions and criteria, utilization management practices such as preauthorization requirements, formulary design and provider network management. The final regulations eliminatea commonly used exception from the parity analysis for clinically approved standards of care. If your plan relied on this exception, it will need modification. The final regulations also make clear that intermediate services, such as residential treatment programs and intensive outpatient care, are subject to the same parity requirements as other medical/surgical and mental health and substance use disorder benefits.In the past, some plans treated these types of services as outside of the parity requirements. If you have contracted with a behavioral health management organization to administer your mental health and substance use disorder benefits, you may need to consult with them to confirm that the parity requirements are satisfied.
What should I be doing to get ready for 2015?
An employer subject to the Affordable Care Act’s shared responsibility rules may be subject to a penalty for each month during the year that it fails to offer affordable coverage providing minimum value to its full-time employees and their dependent children. Proposed regulations issued in December 2012 permit an employer to use a measurement period for identifying full-time employees in advance; the employee’s status as full-time or part-time, as determined during the measurement periodis then used to determine his or her status during a corresponding stability period. Although the shared responsibility-reporting requirement and associated penalties were delayed until 2015, you may need to take action now if you want to use the measurement/stability period approach in 2015. If you have a calendar year plan and want to use a 12-month stability period that corresponds with your 2015 plan year, your measurement period for identifying full-time employees should have already begun (particularly if you want the measurement period to end before open enrollment).
Planning ahead to identify tasks and set compliance goals for the coming year is an important first step for assuring smooth operations during the year. In addition to the significant items noted above, plan sponsors may want to perform an annual “checkup” (i.e., an audit of operational practices and fiduciary responsibilities) to address plan compliance and design considerations. Plan sponsors may conduct their own self-audit or contract with an independent party. Regardless of who performs the audit, identifying problems and initiating corrections in advance of any official agency audit is certainly the preferred course of action.
Calendar of health and welfare benefit plan compliance tasks
*Date does not vary regardless of plan year
About the Author
Leslye Laderman, JD, LLM is a Principal in the Knowledge Resource Center of Buck Consultants, A Xerox Company. Leslye serves as a national resource on issues affecting health and welfare benefits and helps clients comply with requirements arising under the ACA, ERISA, COBRA, the Internal Revenue Code and other laws.
Kimberley Mitchell, JD, is a Director in the Knowledge Resource Center of Buck Consultants, A Xerox Company. Kim keeps clients and consultants current on legal and regulatory issues relating to health and welfare benefits and assists clients with compliance under the ACA, HIPAA, COBRA and other federal laws.