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Legal Alert- DOL Updates Model Employer CHIP Notice

The U.S. Department of Labor (DOL), through its Employee Benefits Security Administration (EBSA), has released a new model Employer CHIP Notice with information current as of Jan. 31, 2024.

Background

As a reminder, the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) imposes an annual notice requirement on employers that maintain group health plans in states that provide premium assistance subsidies under a Medicaid plan or a Children’s Health Insurance Plan (CHIP).

An employer can choose to provide the notice on its own or concurrent with the furnishing of:

  • Materials notifying the employee of health plan eligibility;
  • Materials provided to the employee in connection with an open season or election process conducted under the plan; o
  • The summary plan description (SPD).

Covered Employers

An employer is subject to this annual notice requirement if its group health plan covers participants who reside in a state that provides a premium assistance subsidy, regardless of the employer’s location.

The DOL’s model notice, which employers may use for this disclosure, is updated periodically to reflect changes in the states that offer premium assistance subsidies. The DOL’s model Employer CHIP Notice includes information current as of Jan. 31, 2024.

Employers could also choose to prepare their own notices or modify the model notice. Employers should be sure to include at least the minimum relevant state contact information for any employee residing in a state with premium assistance.

Employer Resources

The EBSA’s CHIPRA webpage includes the latest model notice (English language and Spanish language versions are available), a fact sheet, a compliance assistance guide and other publications for employers and advisers.

By |February 4th, 2024|Broad Reach Benefits, Human Resources, U.S. Department of Labor|Comments Off on Legal Alert- DOL Updates Model Employer CHIP Notice
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Compliance Matters: 30-Day Grace Period Election Myth

Myth: 

Employees may change their pre-tax election if they do so within 30 days of when the election first becomes effective.

Ex: Peanut’s Pro Shop has open enrollment from 11/1-11/15 and benefi ts become effective 1/1. Peanut’s Pro Shop allows employees to make changes to their elections if made prior to 1/31.

Fact:

Although most carriers will allow insurance elections to be changed within 30 days, there is no 30-day grace period under Code §125 permitting a change to a pretax election. Once the period of coverage starts, elections are irrevocable and may not be changed during the plan year unless another permissible midyear change in status event as recognized by Code §125 occurs, permitting the change to a pretax election.

The IRS has informally indicated that when there is “clear and convincing evidence” a mistake has been made an employer may correct the mistake.

  • Ex: Peanut’s Pro Shop discovers after open enrollment when auditing their first invoice in January that an administrative error occurred. Charlie elected employee-only coverage on his enrollment form but he is showing enrolled in family coverage on the invoice.

However, when an employee changes their mind or it is unclear whether it was a genuine mistake (i.e. subjective vs. objective), there is no IRS guidance suggesting a change is permissible.

An employer permitting a change to an employee’s unproven mistake risks jeopardizing the tax qualifi ed status of the entire plan, not just the employee whom which the change was made.  In other words, according to the regulations, failure to follow the terms of the plan or otherwise failing to comply with the requirements of Code §125, the plan is not a cafeteria plan and employees’ elections between taxable and nontaxable benefi ts will result in gross …

By |January 15th, 2024|Compliance|Comments Off on Compliance Matters: 30-Day Grace Period Election Myth
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7 Key Employee Benefits Trends in 2024

Attracting and retaining employees has challenged employers since the onset of the COVID-19 pandemic. In 2024, the labor market is expected to cool slightly; however, competition for talent will remain. As such, employers must remain agile and adapt to developing labor and market trends that will shape the market in 2024. In particular, current labor challenges are forcing employers to find ways to balance rising health care costs and inflation while providing employees with benefits they value and need. Understanding this year’s key employee benefits trends can help employers attract and retain talented individuals in an evolving labor market.

This article discusses seven key employee benefits trends in 2024.

1.     Managing Health Care Costs

High inflation, provider shortages, an increase in serious chronic conditions and deferred care due to the pandemic continue to drive health care costs. According to several industry surveys and reports, employers anticipate health care costs to grow between 6% and 8.5% in 2024, the largest increase in more than a decade. This year, employers may struggle to mitigate skyrocketing health care costs while keeping benefits affordable for employees. Thus, many employers will plan and implement multiple cost-saving strategies in 2024 to mitigate rising health care costs, such as:

  • Modifying health plan designs
  • Incorporating health care analytics
  • Using artificial intelligence to streamline administrative workflows, help employees make informed benefits decisions and decrease costs
  • Implementing pharmacy management strategies
  • Maintaining full coverage of recommended prevention and screening services
  • Tailoring benefits to meet employees’ specific needs
  • Expanding voluntary benefits offerings
  • Improving employee health care literacy
  • Investing in more virtual health opportunities
  • Incentivizing employees to seek cost-effective care options
  • Revisiting cost-sharing arrangements

2.     Increasing Personalization and Flexibility

The modern workforce is comprised of four or five generations of workers from various …

By |January 9th, 2024|Employee Benefits, Employee Communications|Comments Off on 7 Key Employee Benefits Trends in 2024
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Small Employers Focus on Retention, While Large Employers Hire Slower

Recent findings from payroll provider ADP showed that small businesses hired more than large employees during the fall of 2023. According to ADP, employers with fewer than 50 employees added 95,000 employees, while employers with 500 or more employees cut 83,000 jobs in September 2023. The divergent trends suggest that small businesses still need employees to produce and grow, while large employers can afford to reduce their workforce to mitigate inflation’s impact on their businesses.

For job seekers, this means that although job opportunities are available, they may not come with the most competitive wages or benefits. In fact, ADP found that only 18% of small businesses plan to change wages in the next three months, compared to 50% of midsized businesses and 58% of large businesses. Therefore, small businesses may need to consider other tactics to attract and retain workers.

With many midsized and large businesses planning on improving compensation to better retain workers, small businesses will need to make tough decisions about how to increase compensation or face the prospect of losing workers to competitors who are offering more. For small businesses unable to raise employee compensation as high as they would like, voluntary benefits can offer more perks to employees without raising health care costs. Voluntary benefits supplement traditional benefits (e.g., health insurance) and are usually employee-paid.

While many organizations have embraced offering voluntary benefits as an integral part of their benefits strategy, more small businesses will either embrace

these benefits or expand their offerings in 2024. According to ADP, 24% of small businesses plan on expanding employee benefits in the next three to six months. Voluntary benefits are extremely popular with employees and allow employers to tailor their benefits to employee demands and needs. Bolstering …

By |December 28th, 2023|Employee Communications, Human Resources|Comments Off on Small Employers Focus on Retention, While Large Employers Hire Slower
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DOL Proposes Rescinding Final Rule on Association Health Plans

On Dec. 19, 2023, the Department of Labor (DOL) released a proposed rule that would rescind in full a final rule it released in 2018 on association health plans (AHPs). According to the DOL, its proposal is intended to support critical health care protections for consumers under the Affordable Care Act (ACA) and resolve any uncertainty surrounding the final rule.

AHPs—Single ERISA Plans

An AHP is a type of ERISA-covered group health plan sponsored by a group or association of employers (instead of a single employer) to provide health coverage to employees of the AHP’s employer members. When an AHP is treated as a single ERISA plan, all employees covered by the plan are considered when determining the insurance market rules (that is, small group or large group) that apply to the plan. This allows small businesses to join together and enjoy many of the regulatory and negotiating advantages that large employers experience. For example, coverage in the large group market is not subject to the ACA’s reforms regarding premium rating restrictions and coverage of essential health benefits items and services, such as maternity and newborn care.

The DOL has released a series of advisory opinions that establish a narrow pathway for an AHP to qualify as a single ERISA plan (e.g., DOL Advisory Opinion 2008-07A). The DOL applies a facts and circumstances approach to determine whether a group or association of employers is a bona fide employer group or association capable of sponsoring an ERISA plan on behalf of its employer members.

Final Rule

The final rule from 2018 would have made it easier for an AHP to be considered a single ERISA plan. However, on March 28, 2019, a federal district court vacated key …

By |December 19th, 2023|Broad Reach Benefits, Compliance, Legislation|Comments Off on DOL Proposes Rescinding Final Rule on Association Health Plans
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High Health Care Costs Are Impacting Americans’ Physical and Mental Health

More than half of consumers feel stressed when paying their medical bills, and more than 9 in 10 say these payments have impacted their physical and mental health, according to a study from health care payment processing company PayMedix. Unaffordable medical bills, higher deductible health plans and confusing bills have increased physical and mental health issues for many insured Americans.

The 2023 PayMedix study polled more than 1,000 Americans with employer-provided health insurance and over 200 HR benefits managers. Consider the additional key findings from the 2023 survey:

  • The affordability of medical bills is shifting for credit-challenged Americans. Almost half (44%) of people with a credit score of 669 or lower say their deductible is not affordable.
  • The impact of high medical bills is forcing employees to make tough financial decisions. Almost one-third (30%) of Americans say they dug into their savings after an unexpected medical bill, and 17% delayed payments.
  • Consumer confusion is a compounding factor for Americans. Employees receive more than 70 bills or statements annually, and more than a quarter are unable to decipher what they owe.
  • Employees want help from their employers to address financial stress and confusion. More than half (60%) say their employers are responsible for providing financial strategies. Many want flexible payment options and guaranteed credit for out-of-pocket maximums.

Billing complexities are adding to the health equity crisis in the country. Many underprivileged populations still struggle to access financial credit—even when insured. Furthermore, these affordability challenges are causing many Americans to avoid care or disengage with the health care system altogether.

Employer Takeaway

The high cost of health care is taking a toll on the health of Americans, with health care billing and payment worries …

By |December 4th, 2023|Broad Reach Benefits, Employee Benefits, Human Resources|Comments Off on High Health Care Costs Are Impacting Americans’ Physical and Mental Health
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2024 Health Plan Compliance Deadlines

Employers must comply with numerous reporting and disclosure requirements throughout the year in connection with their group health plans. This Compliance Overview explains key 2024 compliance deadlines for employer-sponsored group health plans. It also outlines group health plan notices employers must provide each year. Some compliance deadlines summarized below are tied to a group health plan’s plan year. For these requirements, the chart below shows the deadline that applies to calendar-year plans. For non-calendar-year plans, these deadlines will need to be adjusted to reflect each plan’s specific plan year.

Determining the Plan Year

The “plan year” is the calendar, policy or fiscal year on which the records of the plan are kept. Many employers operate their group health plans on a calendar-year basis from Jan. 1 through Dec. 31 of each year. Other employers operate their plans on a non-calendar-year basis, which may be consistent with the company’s taxable year or with an insured plan’s policy year.

 

Download the full document for reference.

2024 Health Plan Compliance Deadlines

By |November 14th, 2023|Broad Reach Benefits, Compliance|Comments Off on 2024 Health Plan Compliance Deadlines
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IRS Announces 2024 Retirement Plan Limits

The Internal Revenue Service (IRS) has released Notice 2023-75, containing cost-of-living adjustments for 2024 that affect the amounts employees can contribute to 401(k) plans and individual retirement accounts (IRAs).

2024 Increases

The employee contribution limit for 401(k) plans in 2024 has increased to 23,000, up from $22,500 for 2023. Other key limit increases include the following:

  • The employee contribution limit for IRAs is increased to $7,000, up from $6,500.

 

  • The IRA catch‑up contribution limit for individuals aged 50 and over remains unchanged at $1,000 for 2024 (despite this limit now including an annual cost‑of‑living adjustment because of legislation enacted at the end of 2022, referred to as “SECURE 2.0”).

 

  • The employee contribution limit for SIMPLE IRAs and SIMPLE 401(k) plans is increased to $16,000, up from $15,500.

 

  • The limits used to define a “highly compensated employee” and a “key employee” are increased to $155,000 (up from $150,000) and $220,000 (up from $215,000), respectively.

 

  • The annual limit for defined contribution plans (for example, 401(k) plans, profit-sharing plans and money purchase plans) is increased to $69,000, up from $66,000.

 

  • The annual compensation limit (applicable to many retirement plans) is increased to $345,000, up from $330,000.

 

  • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans and the federal government’s Thrift Savings Plan remains unchanged at $7,500. Therefore, participants in these plans who are 50 and older can contribute up to $30,500, starting in 2024.

The income ranges for determining eligibility to make deductible contributions to traditional IRAs, contribute to Roth IRAs and claim the Saver’s Credit (also known as the Retirement Savings Contributions Credit) also increased for 2024.

More Information

The IRS’s news release contains more details on the cost-of-living adjustments for …

By |November 1st, 2023|Broad Reach Benefits, Employee Benefits, Employee Benefits Adviser, Employee Communications, Human Resources, IRS, Legislation, Retired, Voluntary Benefits|Comments Off on IRS Announces 2024 Retirement Plan Limits
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Overview of the NLRB’s 2023 Joint-employer Standard

On Oct. 27, 2023, the National Labor Relations Board (NLRB) published a final rule that establishes new criteria to determine joint-employer status. Joint employment situations can happen when two or more employers share personnel hiring, supervision and management practices. When a joint employment status exists, joint employers are equally responsible for compliance with applicable laws and regulations.

The final rule becomes effective 60 days after publication, on Dec. 26, 2023. This final rule applies to labor issues related to the National Labor Relations Act (NLRA) and focuses on the amount of control an employer exerts over the employment relationship.

Whether joint employment is by design or unintentional, joint employers are equally:

  • Liable for unfair labor practices committed by other joint employers;
  • Required to bargain with the union that represents jointly employed workers; and
  • Subject to union picketing or other economic pressure if there is a labor dispute.

Action Items

Employers, particularly contractors and subcontractors, should become familiar with the new rule and determine whether a more inclusive joint-employer standard would reclassify them as joint employers in their operations by the rule’s effective date. Employers affected by the new standard should also take precautionary steps to ensure other joint employers comply with regulations regarding labor and employment laws for joint employees.

The 2020 Joint-employer Standard

The NLRB adopted the current joint-employer standard on April 27, 2020. This standard will expire once the 2023 final rule becomes effective. The NLRB will review cases filed before Dec. 26, 2023, under the 2020 joint-employer standard.

The 2020 standard considers the “substantial direct and immediate control” employers have over essential terms and conditions of employment for individuals who are employed by another organization. Specifically, the 2020 joint-employer standard indicates that a business is a joint …

By |October 30th, 2023|Compliance, Employee Communications, Human Resources, Legislation, U.S. Department of Labor|Comments Off on Overview of the NLRB’s 2023 Joint-employer Standard
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Federal Agencies May Expand Health Coverage for OTC Preventive Products

On Oct. 4, 2023, the Departments of Health and Human Services, Labor and the Treasury (Departments) issued a request for information (RFI) on the scope of the Affordable Care Act’s (ACA) preventive care coverage requirements for over-the-counter (OTC) products. Specifically, the Departments are gathering input from the public on requiring group health plans and health insurance issuers to cover OTC preventive products without cost sharing even when they are not prescribed by a health care provider.

The RFI signals that the Departments are considering eliminating the prescription requirement for first-dollar coverage of OTC preventive products. The Departments note that eliminating the prescription requirement is an important option to consider for expanding access to contraceptive care, as the first OTC daily oral contraceptive is expected to become available soon.

Preventive Care Coverage Requirements

The ACA requires non-grandfathered health plans and issuers to cover certain recommended preventive health services without imposing cost-sharing requirements when the services are provided by in-network providers. Most recommended preventive services require a health care provider to either provide a prescription for the item or service or directly furnish the service. However, there are several OTC preventive products available to consumers without a prescription. Examples of these include:

  • Certain types of tobacco cessation pharmacotherapy;
  • Folic acid supplements;
  • Breastfeeding supplies (e.g., breast pumps and breast milk storage supplies); and
  • Certain contraceptives, including the OTC daily oral contraceptive that was approved by the Food and Drug Administration in July 2023 and is expected to become available soon.

Current agency guidance requires health plans and issuers to cover OTC preventive products without cost sharing only when they are prescribed for an individual by their health care provider. The RFI seeks public input regarding the potential benefits and costs …

By |October 16th, 2023|Broad Reach Benefits, Compliance, Employee Communications, Legislation|Comments Off on Federal Agencies May Expand Health Coverage for OTC Preventive Products
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