Time for 2017 Benefit planning for mid-size employers

It’s never too early to start planning. Now is the time for mid-size employers (50-500 employees), to start planning for 2017. Following are a few items to consider.

1) Determine if the group is subject to the “shared responsibility” provision of the Affordable Care Act (ACA also known as Obamacare). This provision may subject an employer to additional non-deductible tax penalties.

We know that employers with 50 employees or more must offer benefits to at least 95% of their employees. These benefits must meet the Minimum Value and Affordability requirements as well as affordability standards.

This will be verified when the employer submits the required IRS reporting forms reconciling coverage offered to their employees. These are known as forms 1094-C and 1095-C. There are essentially two calculations involved either of which could result in the penalty being assessed to the employer.

The IRS website states: If an applicable large employer does not offer coverage or offers coverage to fewer than 95% of its full-time employees (and their dependents), it owes an Employer Shared Responsibility payment equal to the number of full-time employees the employer employed for the year (minus up to 30) multiplied by $2,000, as long as at least one full-time employee receives the premium tax credit.

For an employer that offers coverage to at least 95% of its full-time employees (and their dependents), but has one or more full-time employees who receive a premium tax credit, the payment is computed separately for each month. The amount of the payment for the month equals the number of full-time employees who receive a premium tax credit for that month multiplied by 1/12 of $3,000.

The amount of the payment for any calendar month is capped at the number of the employer’s full-time employees for the month (minus up to 30).

I know this sounds very complicated, but a good broker can assist in calculating potential liability.

2) Review benefits to determine that the plans meet the Essential Health Benefits and ACA nondiscrimination rules. We expect to have the final nondiscrimination rules soon.

3) Be sure that the plan meets the parity rules for mental health and substance abuse disorders.

4) Review documents to prepare for a DOL (Department of Labor) audit. The documents required depend on the group size and the list is extensive. Be sure you have a way to verify that your employees have received the documents. (We provide our clients with a platform that guarantees this in the event of an audit). Groups over 50+ employees must provide at least the following

  • *Summary plan Describtion: SPD
  • *Summary of Material Modification (if applicable)
  • *Health Insurance Exchange notice; although there is apparently no penalty if not provided
  • *HIPAA privacy notices and several Special Health Care Notices
  • *SBC: Summary of Benefits & Coverage
  • *COBRA notices regarding benefits continuation rights
  • *FMLA (Family & Medical Leave Act) notices

5) Review the new overtime rules and the impact on benefit plan eligibility

6) Evaluate any potential conflict of interest rules for compliance with the fiduciary rules. This could apply to Health Savings Accounts as well as ERISA health or welfare plans with an “investment component”.

7) Review Section 125 plan administration and provisions to be sure they comply with all current rules.

8) Budget for expected rate increases. I hear comments about how the ACA has raised premiums, but the truth is rates have been increasing steadily for the 38 years I have been in this business. The trick is to find ways to slow down the increases.

Further the employer should be prepared to provide plan documents, billing invoices and premium schedules as well as payroll records of withholdings and copy of any rebate paid pursuant to the medical loss ratio and what was done with the rebate.

Of course this is not meant to be a complete list, but it will help employers begin to prepare should they face an audit in the future.

Employee benefits management has become more than just buying an insurance policy for your employees. Compliance with the myriad of complex rules is an important defensive measure that employers must address.

Margaret R. Beck
Margaret Beck  CLU, ChFC, CEBS started her insurance practice in Redding in 1978. As an insurance broker/consultant,  she represents businesses and individuals as their advocate.  She assists in choosing proper products, compliance with complex benefit laws and claims issues once coverage is placed. All information in her column is provided to the best of her knowledge, subject to final regulation by the respective agencies. Questions to be answered in this column can be submitted to info@insuranceredding.com.  Beck's column is also published in the Redding Record Searchlight.
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