Employee Benefits

This is the Employee Benefits category of the Broad REach Benefits blog. At Broad Reach Benefits, we focus on employers that have between 30 and 500 benefit eligible employees. We’re employee benefit specialists, not a big box brokerage firm or payroll company with a sales force peddling policies.

Department of Labor Issues Updated FFCRA Regulations In Light Of Recent Federal Court Decision

On September 11, 2020, the U.S. Department of Labor (“DOL”) released a temporary rule updating certain FFCRA regulations.  The temporary rule is scheduled to be published on September 16, 2020 and will be effective immediately through the expiration of the FFCRA’s paid leave provisions on December 31, 2020.

The temporary rule updates FFCRA regulations issued in April 2020 in response to a recent federal District Court decision which found four portions of the initial regulations invalid:  provisions related to whether the FFCRA applies if employers do not have work available for employees; the timing for which employees must request the need for leave; the definition of health care provider; and the availability of intermittent leave.

While many anticipated that the DOL would appeal the decision, the DOL elected to reaffirm and clarify its position on some of these issues, while choosing to revise or update others. Thus, while the court’s order was limited to companies operating in New York (or potentially only those in the Southern District of New York), the DOL’s revisions to the regulations apply to all employers subject to the FFCRA (inside and outside New York).

The District Court’s order and the updated regulations are discussed in more detail below.

New York Federal District Court Decision

Soon after the FFCRA regulations were implemented, the State of New York sued the DOL in the United Stated District Court for the Southern District of New York claiming the DOL exceeded its authority when it implemented several provisions of the FFCRA regulations. The District Court agreed in part and, in August, the court issued an order invalidating several portions of the FFCRA regulations.

  • Work Availability Requirement – The original regulations limited the availability of emergency paid sick […]
By |September 17th, 2020|Compliance, Employee Benefits, Legislation, Medical, U.S. Department of Labor|Comments Off on Department of Labor Issues Updated FFCRA Regulations In Light Of Recent Federal Court Decision

5 Strategies for Reducing Health Benefits Costs in 2021

Health benefits costs are almost certainly going to rise in 2021. They’ve been trending upward for years—over 50% in the last decade, according to the Kaiser Family Foundation—and the current state of economic uncertainty over COVID-19 won’t slow things down. Realistically, after enduring months of business closures and managing exhausted workforces, many employers will be lucky to maintain uninterrupted operations.

That’s why it’s critical for employers to think about reducing health costs right now—figure out cost-effective benefits first so money can be shuffled as needed later. Having a solid plan going into 2021 will better position organizations facing limited budgets.  Better yet, work with your advisor on a 3-5 year benefits strategy to control costs instead of playing the year-to-year renewal game.

Here are five basic cost-reduction strategies employers should explore:

1. Dig Into Health Costs

Employers don’t let themselves overpay for the materials they use during production, so why is health care any different? Employers should look into every health care figure they can, from overall premium costs to individual employee expenditures. Understanding where money goes can help focus cost-cutting efforts.
For instance, if employees are going to the emergency room for every health visit, employers know they must promote more health literacy among their workforce.
Speak with Broad Reach Benefits for details about digging into your health plan cost data.

2. Embrace Technology

The health care landscape of today is starkly different than the one of even a few years ago. Now, the name of the game is virtual health care or “telemedicine.” There are numerous ways for individuals to take charge of their health care without the hassle—and added cost—of in-person consultations.
For example, there is tech that can monitor glucose levels to help diabetic employees without test strips; there […]

By |September 8th, 2020|Employee Benefits, Employee Benefits Adviser, Medical|Comments Off on 5 Strategies for Reducing Health Benefits Costs in 2021

IRS Issues Affordability Percentage Adjustment for 2021

The Internal Revenue Service (IRS) has released Rev. Proc. 2020-36, which contains the inflation adjusted amounts for 2021 used to determine whether employer-sponsored coverage is “affordable” for purposes of the Affordable Care Act’s (ACA) employer shared responsibility provisions and premium tax credit program. As shown in the table below, for plan years beginning in 2021, the affordability percentage for employer mandate purposes is indexed to 9.83%.  Employer shared responsibility payments are also indexed.

Code Section 4980H(a) 4980H(b) 36B(b)(3)(A)(i)
Description Coverage not offered to 95% (or all but 5) of full-time employees. Coverage offered, but unaffordable or is not minimum value. Premium credits and affordability safe harbors.
2021* $2,700 $4,060 9.83%
2020 $2,570 $3,860 9.78%
2019 $2,500 $3,750 9.86%
2018 $2,320 $3,480 9.56%
2017 $2,260 $3,390 9.69%
2016 $2,160 $3,240 9.66%
2015 $2,080 $3,120 9.56%
2014** $2,000 $3,000 9.50%

*Section 4980H(a) and (b) penalties 2021 are projected.

**No employer shared responsibility penalties were assessed for 2014.

Under the ACA, applicable large employers (ALEs) must offer affordable health insurance coverage to full-time employees. If the ALE does not offer affordable coverage, it may be subject to an employer shared responsibility payment. An ALE is an employer that employed 50 or more full-time equivalent employees on average in the prior calendar year. Coverage is considered affordable if the employee’s required contribution for self-only coverage on the employer’s lowest-cost, minimum value plan does not exceed 9.83% of the employee’s household income in 2021 (prior years shown above). An ALE may rely on one or more safe harbors in determining if coverage is affordable: W-2, Rate of Pay, and Federal Poverty Level.

If the employer’s coverage is not affordable under one of the safe harbors and a full-time employee is approved […]

By |August 6th, 2020|Affordable Care Act, Employee Benefits, Employee Benefits Adviser, Employee Communications, Legislation, Medical|Comments Off on IRS Issues Affordability Percentage Adjustment for 2021

IRS Releases Updated Form 720 Used For PCORI Fee Payments

IRS Releases Updated Form 720 Used For PCORI Fee Payments

As we recently reported, on June 8, 2020, the IRS released the applicable PCORI fee for plan years ending between October 1, 2019 and September 30, 2020.  As we indicated in that alert, an updated Form 720 had not yet been released and, therefore, employers were advised to wait to file their PCORI fees until the IRS released the updated form.  Late last week, the IRS issued the updated Form 720, which is the April 2020 Revised form. Employers who sponsored a self-funded health plan, including an HRA, with a plan year that ended in 2019 should use this updated Form 720 to pay the PCORI fee by the July 31, 2020 deadline.

As a reminder:

  • The insurance carrier is responsible for paying the PCORI fee on behalf of a fully insured plan.
  • The employer is responsible for paying the fee on behalf of a self-insured plan, including an HRA. In general, health FSAs are not subject to the PCORI fee.
  • Plans that ended between January 1, 2019 and September 30, 2019 use Form 720 to pay their PCORI fee of $2.45 per covered life.
  • Plans that ended between October 1, 2019 and December 31, 2019, use Form 720 to pay their PCORI fee of $2.54 per covered life.
By |June 18th, 2020|Compliance, Employee Benefits, Health Care Reform, IRS, Medical|Comments Off on IRS Releases Updated Form 720 Used For PCORI Fee Payments

PCORI Fees Due By July 31, 2020

Employers that sponsor self-insured group health plans, including health reimbursement arrangements (HRAs) should keep in mind the upcoming July 31, 2020 deadline for paying fees that fund the Patient-Centered Outcomes Research Institute (PCORI).  As background, the PCORI was established as part of the Affordable Care Act (ACA) to conduct research to evaluate the effectiveness of medical treatments, procedures and strategies that treat, manage, diagnose or prevent illness or injury.  Under the ACA, most employer sponsors and insurers were required to pay PCORI fees until 2019, as it only applied to plan years ending on or before September 30, 2019.  However, the PCORI fee was extended to plan years ending on or before September 30, 2029 as part of the Further Consolidated Appropriations Act, 2020.

The amount of PCORI fees due by employer sponsors and insurers is based upon the number of covered lives under each “applicable self-insured health plan” and “specified health insurance policy” (as defined by regulations) and the plan or policy year end date.  This year, employers will pay the fee for plan years ending in 2019.

For plan years that ended between January 1, 2019 and September 30, 2019, the fee is $2.45 per covered life and is due by July 31, 2020.

Since the extension of the PCORI fee deadline in December, issuers and sponsors of self-funded plans have been anxiously awaiting information from the IRS concerning the applicable PCORI fee for plans with plan years ending between October 1, 2019 and before October 1, 2020.  On June 8, 2020, the IRS Issued Notice 2020-44, which sets the applicable PCORI fee for these plans at $2.54 per covered life.  As of June 8, the IRS has not released the second quarter Form […]

By |June 10th, 2020|Employee Benefits, Health Care Reform, IRS, Legislation, Medical|Comments Off on PCORI Fees Due By July 31, 2020

IRS Releases 2021 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits

In Rev. Proc. 2020-32, the IRS released the inflation adjusted amounts for 2020 relevant to HSAs and high deductible health plans (HDHPs).  The table below summarizes those adjustments and other applicable limits.

  2021 2020 Change
Annual HSA Contribution Limit

(employer and employee)

Self-only: $3,600 Family: $7,200 Self-only: $3,550 Family: $7,100 Self-only: +$50 Family: +$100
HSA catch-up contributions

(age 55 or older)

$1,000 $1,000 No change
Minimum Annual HDHP Deductible Self-only: $1,400 Family: $2,800 Self-only: $1,400 Family: $2,800 No change
Maximum Out-of-Pocket for HDHP

(deductibles, co-payment & other amounts except premiums)

Self-only: $7,000 Family: $14,000 Self-only: $6,900 Family: $13,800 Self-only: +$100 Family: +$200

Out-of-Pocket Limits Applicable to Non-Grandfathered Plans

The ACA’s out-of-pocket limits for in-network essential health benefits have also been announced and have increased for 2021.

  2021 2020 Change
ACA Maximum Out-of-Pocket Self-only: $8,550

Family: $17,100

Self-only: $8,150

Family: $16,300

Self-only: +$400

Family: +$800

Note that all non-grandfathered group health plans must contain an embedded individual out-of-pocket limit within family coverage, if the family out-of-pocket limit is above $8,550 (2021 plan years) or $8,150 (2020 plan years). Exceptions to the ACA’s out-of-pocket limit rule are available for certain small group plans eligible for transition relief (referred to as “Grandmothered” plans).  A one-year extension of transition relief was announced on January 31, extending the transition relief to policy years beginning on or before October 1, 2021, provided that all policies end by December 31, 2022. (This transition relief has been extended each year since the initial announcement on November 14, 2013.)

Next Steps for Employers

As employers prepare for the 2021 plan year, they should keep in mind the following rules and ensure that any plan materials and participant communications reflect the new limits:

  • HDHPs cannot have an embedded […]
By |May 29th, 2020|Employee Benefits, Employee Benefits Adviser, Employee Communications, Human Resources, IRS, Legislation, Medical|Comments Off on IRS Releases 2021 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits

Carrier Premium Credits and ERISA Fiduciary Obligations

Due to COVID-19 and state and local stay-at-home orders, utilization of group medical and dental insurance benefits is down.  As a result, some carriers recently notified employers that they will be issued premium credits. When asking how these premium credits should be treated by the employer, we often compare then to the ACA’s medical loss ratio (MLR) rebates.  While these premium credits are not MLR rebates, a similar decision must be made to determine whether they, like MLR rebates, are ERISA plan assets.

Background

As background, the Affordable Care Act’s MLR rule requires health insurers to spend a certain percentage of premium dollars on claims or activities that improve health care quality, otherwise they must provide a rebate to employers. At the same time the U.S. Department of Health and Human Services issued the MLR rule, the U.S. Department of Labor (DOL) issued Technical Release 2011-04 (TR 2011-04), which clarifies how rebates should be treated under ERISA.  Under ERISA, anyone who has control over plan assets, such as the plan sponsor, has fiduciary obligations and must act accordingly.

Clearly, the premium credits we are seeing are not subject to the MLR rule; however, a similar analysis applies.   TR 2011-04 clarified that insurers must provide any MLR rebates to the policyholder of an ERISA plan.  However, while the DOL’s analysis was focused on MLR rebates, it recognized that distributions from carriers can take a variety of forms, such as “refunds, dividends, excess surplus distributions, and premium rebates.”  Regardless of the form or how the carrier describes them, to the extent that a carrier credit, rebate, dividend, or distribution is provided to a plan governed by ERISA, then the employer must always consider whether it is a “plan […]

By |May 18th, 2020|Compliance, Employee Benefits, Employee Benefits Adviser, Employee Communications, Legislation, Medical, Private Health Care Exchange, U.S. Department of Labor, Voluntary Benefits|Comments Off on Carrier Premium Credits and ERISA Fiduciary Obligations

Our Team is Here for You, Your Employees and Their Families

Our team is focused on helping our many friends, clients, and associates through these difficult times. There is tremendous pressure to either maintain business operations or figure out how to restructure in the short-term to come out on the other side of this pandemic. Either way, it is no small feat.

We are here to help, with no strings attached. We have the information and the resources to help. Feel welcome to reach out to any of our team for information or assistance relating to employee benefits or property & casualty issues, compliance, or the latest COVID-19 regulations that are coming out at a rapid pace.

We are Stronger Together!

Watch our Stronger Together Video

By |April 10th, 2020|Employee Benefits, Uncategorized|Comments Off on Our Team is Here for You, Your Employees and Their Families

Congress passes the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

On March 27, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The CARES Act comes as a continued response to the Coronavirus 2019 (COVID-19) pandemic that is significantly impacting the United States. The Act is a $2.2 trillion economic package that is meant to stabilize individuals and employers, while the nation continues to experience shelter-in-place advisories/orders and hospitals report a surge of severely ill COVID-19 patients. The Act’s Paycheck Protection Program is retroactive to February 15, 2020, which is important for businesses that have been experiencing financial hardships starting in February.

Overview of CARES Act

The CARES Act amends several laws, as well as appropriates funds to assist individuals, families, and businesses that are experiencing financial difficulties due to COVID-19. There are loans available to small businesses for paycheck protection and loan forgiveness, and other assistance for individuals and businesses as it relates to unemployment insurance and tax relief. The Act supports the health care system by providing financial assistance for medical supplies and coverage. It also provides economic stabilization and assistance for severely distressed sectors (such as airlines), as well as additional COVID-19 relief funds, expanded telehealth and COVID-19 testing provisions, and emergency appropriations for COVID-19 health response and agency operations.

HSA and Telehealth Expansion

The CARES Act includes a new safe harbor under which high deductible health plans (HDHPs) can cover telehealth and other remote care before participants meet their deductibles (i.e., without cost-sharing). This temporary safe harbor applies for plan years beginning on or before December 31, 2021, unless extended. As a result of this safe harbor, no-cost telehealth may be provided for any reason–not just COVID-19 related issues–without disrupting HSA eligibility.

Prescription Drug Reimbursement under FSA/HRA/HSAs

The CARES Act […]

By |April 2nd, 2020|Compliance, Employee Benefits, Employee Benefits Adviser, Employee Communications, Health Care Reform, Human Resources, Legislation, Medical, Short Term Disability, U.S. Department of Labor, Voluntary Benefits, Wellness|Comments Off on Congress passes the Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

Congress Passes Families First Coronavirus Response Act

Congress Passes Families First Coronavirus Response Act

 On March 18, Congress passed, and President Trump signed into law, the Families First Coronavirus Response Act(FFCRA). The FFCRA is a bipartisan effort to help employers and individuals alike in managing pay, benefits, and business considerations during the COVID-19 pandemic. The focus of this alert is the impact of FFCRA on employer-sponsored benefits and paid leave. The paid leave provisions of the Act apply to employers with less than 500 employees.  They are effective within 15 days from date of enactment and expire at the end of 2020, unless extended.

Mandated Free Testing

FFCRA mandates free COVID-19 testing from all group health plans, including fully insured and self-funded plans, as well as grandfathered plans. All group health plans must waive cost-sharing, prior authorization requirements, and other medical management as it relates to COVID-19 testing. This includes provider office visits, urgent care, emergency room, and other healthcare visits that are for the purpose of evaluating or administering testing.

Emergency FMLA

The FFCRA provides for up to 12 weeks of job-protected leave under the Family and Medical Leave Act (“FMLA”) for a “qualifying need related to a public health emergency.” These provisions generally apply to private-sector employers with under 500 employees and all government employers.  (There are exceptions for employers with less than 50 employees if the required leave would jeopardize the viability of their business.)  This new law expands the leave for employees who have been employed at least 30 days, overriding, for these purposes, FMLA’s general requirement that employees must be employed for at least 12 months to be covered. For these purposes, a “qualifying need” exists if an employee is unable to work or telework because he/she/they need to care […]

By |March 23rd, 2020|Employee Benefits, Employee Benefits Adviser, Employee Communications, Human Resources, Legislation, Medical|Comments Off on Congress Passes Families First Coronavirus Response Act