The key eligibility and compliance issues to review at open enrollment
This is the fourth article in a 10-part series on successful open enrollment. Earlier pieces can be found here.
Determining benefits eligibility has never been easier — thanks in part to the structural changes that came about because of the Affordable Care Act — but that doesn’t mean there aren’t challenges with compliance as companies move through open enrollment season for the 2017 plan year.
Open enrollment has gone much more smoothly since the ACA put parameters around who is eligible and when, including specifics about look-back periods and hours worked, says Michael Tracy, managing principal at OMNI Human Resource Management, a human resources consulting firm that helps companies with compliance, employee relations, organizational issues and executive counseling.
Under the ACA, a full-time employee, who is eligible for healthcare benefits, is one who works an average of 30 hours per week. Companies have to track hours worked to make sure everyone who is eligible to receive benefits is receiving them. Employees who work full-time only seasonally, but work a part-time schedule the rest of the year, are still considered part-timers and not eligible for benefits.
“It did put some structure around what was previously fuzzy math,” he says. Particularly in service industries that are seasonal, some employees would work 46 hours a week during busy seasons and only 26 hours a week during slow times, so it was very interpretive when it came to who was covered by benefits and who was not.
Still, Tracy recommends that HR and benefit executives brush up on ACA rules so they are clear about who is and isn’t eligible. With a new president taking over in January, he says that the hours worked requirement could go back to 40 hours a week from the current 30 hours a week, which is something to keep in mind for next year.
He also cautions employers to beware of partially self-funded products that are being offered by insurance carriers as a lower-cost benefit option.
“What they fail to recognize is if you are a smaller employer, under 50 employees, it triggers ACA reporting requirements that people aren’t ready for,” Tracy says. Most people believe that small employers are exempt from ACA reporting, but in the case of self-funded plans, companies need to report information about the coverage and about each covered individual to the IRS.
Other top compliance issues include giving employees an easy-to-understand summary of their benefits and coverage and alerting people to out-of-pocket maximums for the following plan year. For 2017, a self-insured individual would pay a maximum of $7,150 out-of-pocket and a family would pay a maximum of $14,300.
There also are numerous required notices that employers must give out to employees during open enrollment, including information regarding the Health Insurance Portability and Accountability Act (HIPAA), which is intended to protect patient privacy, and the Children's Health Insurance Program Reauthorization Act (CHIPRA), which is intended to improve the quality of care that kids receive.
Human resource and benefit professionals are required to communicate all of these changes to employees and draw up the required notifications before open enrollment begins. They also must give employees time to go through all of the material provided before they make their decisions, Tracy says. He believes 10 days to two weeks works best.
To remain in compliance with the ACA, companies need to make sure that all of their documents and policies, including the employee handbook, are updated to reflect changes in the plan from prior years, such as what procedures are covered and which are not. There are nondiscrimination rules that also must be addressed. The law prohibits discrimination on the basis of race, sex, age, national origin or disability in certain health programs or activities.
Open enrollment is a great time to educate employees on exactly how benefit plans work, says Shannon Zajec, managing partner for Employers Select Insurance Services, a benefits agency. HR professionals should talk with employees about the 5 C’s of open enrollment: cost, coverage, changes to plans, comparison to prior year’s plans and current options.
She adds that education has always been her favorite part of open enrollment because “employees really want to understand the plan when employers take time to explain it.”
“The first step to get them there is to explain it, teaching them to assess their health and their family’s health to figure out which plan would fit best for them based on their personal health needs,” she says.
The next step is to help them determine how much money they should set aside through their FSA for health care expenses. There are other tax free benefits employees should know they can take advantage of, including health spending accounts and workplace 401(k) or other retirement plans.
To meet the educational component, Zajec tells employers to use all methods of communication to reach workers, including the Internet, printed materials and face-to-face communications. Most larger companies offer online enrollment, so it is vital to make sure all materials available online are current and accurate, she says.
Tomorrow: Helping employees analyze benefit costs.