The 2015 ABCs of employee benefits, part 2
December 16, 2014 1:52 AM
Ed Bray, senior vice president, compliance at Ascension Benefits and Insurance, offers up the 5th annual edition of the ABC's of employee benefits. Here, he covers N to Z.
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
Never underestimate ERISA 510.
ERISA 510 was enacted to prevent unscrupulous employers from discharging or interfering with employees' rights to benefits. With the new employer mandate provision under the Affordable Care Act, some employers have considered limiting employee hours to below 30 per week to avoid having to offer health insurance benefits. That said, any employees affected, especially those that had been working 30+ hours per week, may attempt to make an ERISA 510 claim. To minimize exposure and risk, consult with counsel before making any business decisions that could result in an ERISA 510 claim.
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
Overload ahead.
Over the next year, the administrative requirements associated with employee benefits are going to become unmanageable for one HR or benefits department to handle on their own. The ACA play-or-pay benefits eligibility tracking process and IRS reporting requirements alone will introduce hours of work never seen before. As such, request administrative support from other departments (payroll, IT, etc.), your broker, and external vendors. If not handled appropriately, your risk for penalties and audits will increase. Examples include learning the administrative requirements from your broker and using external vendors to assist with the play-or-pay and IRS reporting requirements.
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
Prepare for the Cadillac tax.
25% of employers have already started to redesign their primary health plan to avoid triggering the 2018 Cadillac tax, which is a steady increase since 2011, and more than 33% are considering action, according to the IFEBP 2014 Employer-Sponsored Health Care: ACAs Impact Survey. Run a financial projection to determine if your organization is expected to be affected by the Cadillac tax.
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
Questions and more questions.
Given the significant activity and media coverage associated with the ACA, employee questions will continue to increase. According to the IFEBP 2014 Employer-Sponsored Health Care: ACA's Impact Survey, some of the top employee questions include: How does the law affect me? Do I need to do anything? What will this cost me? Why are my costs going up? Will I have an average of 30 hours per week and qualify for benefits in 2015? To minimize the impact of such questions on your daily workload, be sure to inform employees that you (and not the news, Internet, or a neighbor) are in the best position to help answer their questions and then be prepared to answer these type questions. If you have a first-time benefits-eligible population (due to the ACA play-or pay provision), offer a Benefits 101 session as they may be completely unfamiliar with benefits.
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
Ready for play-or-pay?
Hopefully yes, given the compliance effective date for many applicable large employers is January 1, 2015. However, if not, take the necessary steps to become compliant as there are significant penalties for noncompliance, plus your benefits eligibility will need to be correct in order to report accurate employee benefits information to the IRS in early 2016. Employers have generally focused on the following areas as they have prepared for compliance: effective date, measurement period process (for determining employee full-time eligibility), plan affordability and minimum value, transitional relief opportunities, and any new benefits-eligibility cost impact.
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
Study employee health metrics.
To ensure effective health insurance cost control, you need to determine the key drivers of such costs within your organization. By gathering employee health data (to the extent accessible and allowable by law) and developing employee health metrics, you will learn the drivers. This will maximize your ability to develop value-add solutions, such as plan changes, plan eligibility and design modifications, and targeted employee wellness programs.
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
Take benefits compliance very seriously.
The governments magnifying glass over your health insurance plan will significantly increase over the next few years, especially given the new ACA play-or-pay and IRS reporting requirements. Thus, if your employee benefits program is not currently compliant, you will want to develop a master employee benefits compliance project plan and start taking action now. Some common areas of compliance include: developing and distributing appropriate employee benefits materials (ERISA documentation, notices, and reporting; Section 125 documentation; ACA documentation), nondiscrimination testing, and HIPAA privacy and security.
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
Understand your new job description.
It's safe to say that ensuring compliance with the ACA requirements is now part of your everyday job. That said, if you have not taken the time to learn the ACA yet, here are some compelling reasons to do so: 1) You can ensure benefits program remains compliant with the law; 2) You are in the best position to develop short- and long-term benefits strategies and solutions; 3) You can effectively address any employee compliance questions or issues; 4) You can assist employees and dispel any myths they are hearing or reading; 5) You can appropriately budget; 6) You can validate the information/guidance you receive from your broker; and 7) You can lead, as opposed to follow, ACA initiatives with your C-suite.
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
Virtual benefits information is available.
Given it is very difficult for you to leave your desk to attend association meetings and conferences, yet you want to remain up-to-date with what is occurring in the employee benefits space, bookmark and sign up for free online benefits information. Some websites with valuable information include: Employee Benefits News, BenefitsLink; U.S. government ACA website; and the U.S. Department of Labor's ACA website. Try to attend at least one conference per year as it will provide an opportunity to network and learn how others are surviving in this new world of employee benefits.
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
Wait-and-see approach regarding private exchanges.
A National Business Group on Health survey of large U.S. employers showed just 3% plan to use private exchanges for active employees in 2015 while another survey conducted by Benfield Research of large and midsize companies found that 4% of the large employers and 6% of midsize companies plan to move to private exchanges in 2015. Its safe to say that many employers are waiting to see if these exchanges can effectively meet their needs before making such a major business decision.
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
X-amine "skinny plans."
Understand the risks and communication requirements before introducing a skinny health insurance plan (a plan that is deemed to be minimum essential coverage but does not meet the 60% minimum value test). In addition to the potential plan disruption (if the government decides to abolish these plans), it may be markedly different than the plan you historically offered to the affected employees (e.g., mini-med (with some level of hospital indemnity) v. skinny (with no hospital coverage or indemnity)).
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
Year of ACA transitional relief.
2015 is shaping up as the year of ACA transitional relief. For example, if you are a midsized employer (50-99 full-time and full-time equivalent employees), you may be able to delay compliance with the ACA play-or-pay provision until 2016 or if you offer a noncalendar year health insurance plan, your play-or-pay provision compliance date could be the first day of your plan year in 2015. That said, in order to delay or minimize the impact of the ACA, work with your broker to determine if any transitional relief applies to your health insurance plan(s).
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
Zero in on your numbers.
With your CFO and CEO more involved in employee benefits and significant new costs on the horizon, prepare a five-year financial model of projected health insurance costs which will serve a number of different purposes: 1) You will be speaking the CFOs language; 2) He/she will get to see the dramatic financial impact of the ACA over the next five years, including the expected Cadillac tax impact; and 3) You will have the opportunity to develop, present and gain approval for short- and long-term strategies to mitigate the financial impact of such requirements.
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
For part 1, see: The 2015 ABC's of employee benefits
[Image: Fotolia]
