Enforcing employer policies outside the workplace
Originally posted August 7, 2014 by Tracy Moon and John Stapleton on https://ebn.benefitnews.com
All employers adopt and enforce policies regulating conduct at the workplace. Many employers expect that employees will follow their employment polices at all times regardless of whether the employee is working or at work. Many employers expect that employees will follow their employment polices at all times regardless of whether the employee is working or at work.
Today, in the age of social media and smartphones, employers and employees have much greater visibility when they leave work – giving employers the ability (and desire) to monitor their workers after hours, and resulting in greater exposure and potential for harm to an employer’s reputation. But can you monitor or discipline employees for policy violations that occur when an employee is off-duty and off-premises?
First, regardingillegal off-duty conduct, employers are generally entitled to take action after learning of an employee’s conviction, although they may have to demonstrate that the decision or policy is job-related and consistent with business necessity. For instance, an employer would have a valid interest in an employee-driver’s recent conviction for drunk driving. In fact, failing to take remedial action could lead to a claim for negligent hiring or retention against the employer down the road.
The answer is slightly more complicated when an employer attempts to regulatelawful off-duty conduct, such as social-media postings or tobacco use. There are several competing interests at play. On one hand is the employees’ right to be free from the employer’s control while they are away from work, and to engage in conduct which may have no impact on their work performance. On the other hand is the employer’s desire to enforce its policies in order to minimize liability, protect its reputation, and maintain employee productivity.
In an at-will employment relationship, both the employer and the employee can end the employment relationship at any time without notice or reason. In other words, the employer has the right to terminate an employee at any time, for any reason, for no reason at all, or even for a “bad” reason, as long as it is not an unlawful reason. In order to determine what reasons are unlawful, one must look to federal, state, and local laws.
Federal law
Federal law clearly outlines many factors which would be unlawful reasons for making employment decisions. These include: race; color; religion; genetic information; national origin; sex (including same-sex harassment); pregnancy, childbirth, or related medical conditions; age; disability or handicap; citizenship status; and service member status.
Likewise, federal law prohibits making employment decisions based on whether employees have taken time off under the Family and Medical Leave Act, made a safety complaint to the Occupational Safety and Health Administration, questioned the overtime practices of their employer, or filed a charge of discrimination or harassment.
Off-duty social media use may also be protected under federal law. As many employers have learned the hard way, the National Labor Relations Act applies to the private sector and may restrict an employer’s ability to terminate an employee for posting disparaging comments on social media. An employer may also violate the NLRA by maintaining an overbroad social-media policy if it could be construed by employees to prevent them from discussing their wages or other conditions of employment.
State and local laws
Next, consider state and local laws. Most states have laws that are similar to or mimic federal law. But many have laws that are much more expansive and protective of employees’ rights. For example, many states have laws protecting smoking, elections and voting, certain types of court-related leaves of absence, victims of crimes or abuse, medical marijuana, or the possession of firearms, among others.
In addition to laws that protect specific types of off-duty conduct, some states have enacted laws which protect broad categories of off-duty conduct, or require an employer to demonstrate some nexus between the employee’s engagement in an activity and the employer’s business before allowing the employer to take adverse action against the employee for engaging in the conduct. (This is also a typical standard under collective bargaining agreements in unionized workforces).
In Colorado, for example, it is illegal for an employer to terminate an employee because that employee engaged in any lawful activity off the employer’s premises during nonworking hours unless the restriction 1) relates to a bona fide occupational requirement or is reasonably and rationally related to the employee’s employment activities and responsibilities; or 2) is necessary to avoid, a conflict of interest, or the appearance of a conflict, with any of the employee’s responsibilities to the employer.
In Montana, an employer is prohibited from refusing to hire a job applicant or disciplining or discharging an employee for using “lawful consumable products” (such as tobacco or alcohol) if the products are used off the employer’s premises outside of work hours, with certain exceptions for a bona fide occupational requirement or a conflict of interest, similar to Colorado’s law.
In addition to the examples set forth above, here are additional instances of off-duty conduct which may be grounds for discipline or termination, depending on the state and the circumstances:
- 20 states have enacted medical marijuana laws, and 13 states have similar legislation pending (Arizona and Delaware even restrict an employer’s ability to terminate an employee in response to a failed drug test);
- while most employers may prefer that employees not bring firearms onto company property, some states have laws which protect an employee’s right to do so, including Arizona, Georgia, Idaho, Indiana, Kentucky, Louisiana, Maine, Minnesota, Mississippi, North Dakota, Oklahoma, Utah, and Wisconsin; and
- 29 states and the District of Columbia have statutes protecting the rights of employees who smoke.
As the above examples illustrate, you must carefully analyze each situation before refusing to hire a candidate, or disciplining or terminating an employee for having engaged in lawful off-duty conduct, even if such conduct violates your established policy.
Even with all of the possible restrictions in some states, employers may have more leeway than they think to consider off-duty conduct when making employment decisions. A wise employer seeks wise counsel to help the employer avoid possible legal pitfalls while exercising the full extent of its rights.
IRS releases draft of employer reporting form for health reform law compliance
Originally post July 25, 2014 by Matt Dunning on www.businessinsurance.com.
The Internal Revenue Service has issued draft versions of the reporting forms most employers will begin using next year to show that their group health insurance plans comply with the health care reform law.
The long-awaited draft forms, posted late Thursday afternoon to the IRS' website, are the first practical application of employers' health care coverage and enrollment reporting obligations under the Patient Protection and Affordable Care Act since the regulations were finalized in March.
The forms are the primary mechanism through which the government intends to enforce the health care reform law's minimum essential coverage and shared responsibility requirements for employers.
Beginning in 2015, employers with at least 100 full-time employees will be required to certify that benefits-eligible employees and their dependents have been offered minimum essential coverage and that their employees' contributions to their premiums comply with cost-sharing limits established under the reform law. Smaller employers with 50-99 full-time employees are required to begin reporting in 2016.
Additionally, self-insured employers will be required to submit documentation to ensure compliance with minimum essential coverage requirements under the reform law's individual coverage mandate.
“In accordance with the IRS' normal process, these draft forms are being provided to help stakeholders, including employers, tax professionals and software providers, prepare for these new reporting provisions and to invite comments from them,” the IRS said in a statement released Thursday.
The IRS said it expects to publish draft instructions for completing the reporting forms by late August and that both the forms and the instructions would be finalized later this year.
Last year, the Obama administration announced it would postpone implementation of employers' minimum essential coverage and shared responsibility obligations under the reform law for one year, largely due to widespread complaints about the complexity of the reporting requirements.
Though several months have passed since the administration issued a simplified set of information reporting rules, many employers have delayed preparations for meeting the requirements until the forms and instructions are available for review, said Richard Stover, a principal with Buck Consultants at Xerox in Secaucus, New Jersey.
“A lot of employers really haven't been doing anything about reporting requirements, even with the final regulations in place, because they were waiting for these forms,” Mr. Stover said. “This is something they've been anxious to see.”
Employer Mandate Repeal Won’t Relinquish Employers From ACA Compliance
Originally posted May 13, 2014 by Melissa A. Winn on https://eba.benefitnews.com.
Eliminating the Affordable Care Act’s employer mandate would not significantly reduce the number of insured Americans, according to a recent analysis by researchers at the Urban Institute in Washington. But, it would also not eliminate your employer client’s need to maintain an ACA-compliant plan, one industry expert notes.
Completely abandoning the employer shared responsibility rule would reduce the number of people in 2016 with health insurance from 251.1 million to 250.9 million, a decrease of just 200,000 people, the report says, adding that it would also eliminate labor market distortions in the law and lessen opposition to the law from employers.
Regardless of whether the mandate is eliminated, however, work will remain for benefit advisers helping employers meet ACA compliance, says Jessica Waltman, senior vice president of government affairs for the National Association of Health Underwriters.
“Maintaining an ACA-compliant plan requires a lot of other components,” she says. “Employers have to comply with all of the market reforms and notice requirements and offer all of the benefit mandates, as well,” requirements brokers and agents can assist employers with, she says.
“There are significant penalties for not maintaining ACA compliance” with other requirements of the health law, such as limits on mandatory waiting periods, she adds.
Also, employer-sponsored health plans will not go away if the employer shared responsibility rule is eliminated, she says, noting that the value of benefit advisers will remain there, as well. “The vast majority of businesses affected by the mandate offered coverage before the mandate.”
The authors of the analysis — Why Not Just Eliminate the Employer Mandate? — agree. About two thirds of American workers now have offers of employer coverage when there is no mandate to do so, they write. “Most employers would not drop coverage if the penalties were eliminated,” the report says.
Downfall?
Ending the employer responsibility rule would, however, eliminate the federal revenue expected from penalty payments that employers would pay under the law, which the authors estimate at just less than $4 billion in 2016. Slight increases in Medicaid and marketplace subsidies due to the elimination of the employer requirement would also cost the government about $46 billion between 2014 and 2023.
Alternative sources of revenue would have to be found to compensate for the federal loss of penalties, the analysis notes.
The Internal Revenue Service in February issued final guidance saying that employers with fewer than 100 employees won’t have to provide health insurance coverage until Jan. 1, 2016.
Previously, on July 2, 2013, the Obama administration delayed the need for all employers with 50 or more employees to provide health insurance coverage until Jan. 1, 2015.
401(k) contribution remittance: What’s an employer to do?
Originally posted March 19, 2014 by Kerri Norment on https://eba.benefitnews.com
Over the past several years the U.S. Department of Labor’s Employee Benefits Security Administration has identified delinquent employee contributions as an ongoing national policy priority. With assets in 401(k)-type plans reaching $2.8 trillion on behalf of more than 50 million active participants, protecting employee contributions has become more important for the government, particularly since employees have been forced to take more responsibility for their retirement savings.
On the other hand, employers and sponsors of 401(k) plans are responsible for ensuring plans comply with federal law. But ever-changing interpretations of government regulations have resulted in employers being out of compliance with certain rules and not even knowing it.
One particular regulation that has been a source of confusion for employers — and in some cases, has landed them in hot water with the DOL — is the timely deposit of employee contributions into 401(k) plans. The regulation states employers should remit employee contributions on the earliest date they can reasonably be segregated from the employer’s general assets, but no later than the 15th business day of the following month. While this has come to be known as the "15 day rule," the reality is that deposits — for small and large plans — are expected to be made much sooner.
In fact, the DOL issued an amendment to the regulation in January 2010 to create a safe harbor rule under which small plans — classified as plans with fewer than 100 participants — would be considered in compliance if employee contributions were deposited within seven business days. The DOL has not issued a similar safe harbor rule for large plans. However, most in the industry believe larger plans will be held to an equal, if not higher, standard, meaning deposits should be made within two to three business days.
If you are scratching your head on this one, you’re not alone. When the regulation was implemented, there were no automated payroll processing systems that allowed for contributions to be easily segregated from general assets. With advancements in technology, this process is essentially instantaneous. And because of it, the DOL has changed its expectations on remittance, despite not rewriting the rule.
So what’s an employer to do? The best advice is to be consistent. If an employer demonstrates the ability to remit contributions within one business day, the employer better make sure all remittances happen within one business day each pay period — no exceptions! The second best advice, don’t rely on safe harbor rules to protect you.
If you find your plan is not in compliance with the new interpretation of the regulation, it is recommended you self-correct the plan. The DOL website provides a guide for correcting under the Voluntary Fiduciary Correction Program that even includes a user-friendly online calculator for lost earnings.
As in most cases, knowledge is power. Whether that knowledge is obtained through the use of a reputable service provider, consultant, or HR expert, employers and plan sponsors must stay on top of changes in government regulations and rules.
Ohio State Minimum Wage Requirement
Can you believe it’s nearly 2014? This is just a friendly reminder that with the new year comes a new minimum wage requirement for employees in the state of Ohio. On January 1, 2014, the state minimum wage will increase to $7.95 per hour for non-tipped employees and $3.98 per hour (plus tips) for tipped employees. This increase only applies to employers with annual gross receipts of more than $292,000. The federal minimum wage of $7.25 per hour still applies to companies with annual gross receipts of less than $292,000 after January 1, 2014.
In addition to increasing the hourly rate of any employee who is currently making less than the new state minimum wage, you must also update your Ohio Minimum Wage poster. The poster must be displayed in a conspicuous place, to which all employees have regular access. For your convenience, here is a link to the updated poster: https://www.com.ohio.gov/documents/dico_2014Minimumwageposter.pdf
Need help making sure you’re compliant with wage and hour laws? Give us a call or send us an email! We’re here to help!
Don't forget about employee ACA communication due Oct. 1
Originally posted by Keith R. McMurdy August 16, 2013 on https://eba.benefitnews.com
With the recent employer mandate delay, some businesses might be overlooking the requirement to provide a notice to employees about health insurance coverage that may be available through a public exchange.
Employers must provide a notice to each employee, regardless of plan enrollment status or part-time or full-time status, by Oct. 1. The notice must be provided automatically, free of charge, and written in language that the average employee can understand. It may be provided by first class mail or electronically, if the requirements of the U.S. Department of Labor’s electronic disclosures safe harbor are met. It must also be provided to new hires — for 2014, the DOL will consider a notice delivered timely to a new employee if it’s provided within 14 days of the start date.
The notice must inform each employee of three things:
- The existence of state or federal health insurance exchanges.
- If the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60%, then the employee may be eligible for a federal premium tax credit if the employee purchases a qualified health plan through an exchange.
- If the employee purchases a qualified health plan through an exchange, then the employee may lose the employer contribution to any health benefits plan offered by the employer; also, all or a portion of such contribution may be excludable from income for federal income tax purposes.
The good news is that employers don’t have to create the notices from scratch. The DOL published model notices, one for Employers Who Offer Health Plans, and one for Employers that Do Not Offer Health Plans. If employers have questions about how to complete the forms, this is an opportunity for an employee benefit adviser to step in and provide guidance. Above all, advisers should remind employers that they need to issue them. Just because employers have a year to wait on the coverage mandate does not mean they can ignore other compliance rules like this one.
Medicare Part D Notice Due Before October 15th
- You have flexibility in the form and manner of providing the Notice
- You may use the model notice form published by the Centers for Medicare & Medicaid Services (CMS) (although you are not required to do so).
- You are not required to send the Notice as a separate mailing. You can provide it with other participant information materials (although note that certain formatting requirements may apply)
- A separate disclosure must be provided if you know that the spouse or dependent resides at a different address than the participant.
- You may distribute the Notice electronically if you follow the same electronic disclosure requirements that apply to summary plan descriptions (SPDs), except you should inform the participant that he/she is responsible for providing a copy of the disclosure to his/her Medicare-eligible spouse and/or dependents eligible for coverage under the plan (otherwise, you will need to separately send them a hard copy notice) And you must post the Notice on your website (if you have one) with a link on your home page to the Notice.
- If you have not yet finished your 2013 offerings, the Notice should still be provided now based on your current 2012 offerings. If the status of those offerings changes from creditable to non-creditable (or vice versa), you will need to provide an additional Notice within a reasonable period of time (maximum 60 days) after the change occurs. You should indicate on your Notice that it will not be updated if coverage changes but it remains creditable or non-creditable (as applicable)
IRS Issues Final Rule on Comparative Evidence PCORI Fees
This content was originally published by Stephen Miller on the SHRM website.
Fees, due by July 31, will be charged to health care insurers, and to sponsors of self-insured health plans, to fund the new Patient-Centered Outcomes Research Institute (PCORI)
Revised Form 720 Issued
For sponsors of self-insured health plans, the IRS posted an updated Form 720 and accompanying instructions on its website. The new Form 720 (with a revision date of April 2013), along with related payment voucher Form 720-V, should be used to report and remit the "PCORI fee" to the IRS. Although the Form 720 is designed for quarterly payments of certain excise taxes, the PCORI fee is paid only annually.
The fee, as described below, is required to be reported annually on the second quarter Form 720 and paid by its due date, July 31, with the first fee payment due July 31, 2013.
PCORI Fee Is Deductible
In another development, the PCORI fee is an “ordinary and necessary business expense paid or incurred in carrying on a trade or business” and as result is tax-deductible, the IRS said in a May 31, 2013, memorandum.
The U.S. Internal Revenue Service issued a final rule on Fees on Health Insurance Policies and Self-Insured Plans for the Patient-Centered Outcomes Research Trust Fund, published in the Federal Register on Dec. 6, 2012.
The Patient Protection and Affordable Care Act (PPACA) establishes the nonprofit Patient-Centered Outcomes Research Institute (PCORI) to promote the use of evidence-based medicine by disseminating comparative clinical effectiveness research findings.
To fund the PCORI, the PPACA imposes a fee on health insurers and employer who sponsor self-insured health plans, for each policy or plan year ending on or after Oct. 1, 2012, and before Oct. 1, 2019, with the first fee payment due July 31, 2013. Subsequently, the PCORI fee will be due no later than July 31 following the last day of the plan year.
The fee will be $1 per plan participant for the first plan year ending after Sept. 30, 2012, and $2 per participant in succeeding years. For policy or plan years ending on or after Oct. 1, 2014, the fee will be increased based on increases in the projected per capita amount of national health expenditures.
Scope of Fees Clarified
Among other points, the final rule clarifies that the fee imposed on an employer sponsoring a self-insured health plan is based on the average number of lives covered under the plan during the plan year.
If an employer sponsors more than one self-insured arrangement, those arrangements may be treated as a single plan for purposes of calculating the PCORI fee, but only if the plans have the same plan year.
Several commentators had requested that the final regulations provide that PCORI fees do not apply multiple times if accident and health coverage is provided to one individual through more than one policy or self-insured arrangement (for example, where an individual is covered by a fully insured major medical insurance policy and a self-insured prescription arrangement).
The final rule does not adopt the requested change. For example, for an employee covered by both a group insurance policy and a health reimbursement arrangement (HRA), the group insurance policy falls within the definition of a specified health insurance policy and the fee applies to the insurer, while the HRA falls within the definition of an applicable self-insured health plan, so that the fee applies to the plan sponsor.
The final rule also applies PCORI fees to policies and plans that provide accident and health coverage to retirees, including retiree-only policies and plans. And it states explicitly that COBRA and other types of continuation coverage must be taken into account in determining PCORI fees, unless the arrangement is otherwise excluded.
However, in response to comments, the final rule permits a self-insured health plan that provides accident and health coverage through fully insured options and self-insured options to determine the fee imposed by disregarding the lives that are covered solely under the fully insured options.
What Plans Are Subject to the Comparative Evidence "PCORI" Fee?
Plans subject to the fee:
• Medical plans.
• Prescription drug plans.
• Self-insured dental or vision plans, if provided without a separate election or premium charge.
• Health reimbursement arrangements (HRAs).
• Retiree-only health plans (even though some are exempt from other PPACA mandates).
Plans exempt from the fee:
• Separately insured dental or vision plans.
• Self-insured dental or vision plans, if subject to separate coverage elections and employee contributions.
• Expatriate coverage provided primarily for employees who work and reside outside of the U.S.
• Health savings accounts (HSAs).
• Most flexible spending accounts (FSAs).
• Employee assistance programs (EAPs), wellness programs and disease management programs that do not provide "significant benefits in the nature of medical care or treatment."
Source: Pinnacle Financial Group, Patient-Centered Outcomes Research Fee Overview
Reconsidering Plan Designs
According to an alert from law firm Leonard, Street and Deinard, employers who sponsor multiple self-funded plans with the same plan year ends can aggregate those plans and pay the fee once on overlapping lives. However, because the fee is imposed on the plan sponsor and not on the plan itself, the employer must pay the fee outside the plan, meaning that plan assets cannot be used to pay the fee.
The law firm's alert also notes that:
Employers with self-funded high deductible health plans that are paired with self-funded HRAs can aggregate those plans and pay the fee once with respect to an individual covered by both the high deductible health plan and the HRA. In contrast, an employer that sponsors a fully insured high deductible health plan paired with a self-funded HRA will essentially be required to pay the fee twice on the same lives. The IRS concluded that because separate statutes impose the fee on plan sponsors of self-funded plans and insurance companies issuing fully insured policies, the IRS is unable to permit employers with both types of plans to combine them for purposes of determining the number of covered lives that they have.
Employers who sponsor self-funded HRAs with fully insured medical plans may wish to consider other plan designs to avoid this fee, such as self-funding the high deductible health plan or moving to a plan design that uses HSAs instead of HRAs. Alternatively, if there are relatively few people covered under the HRA and if the HRA has been an effective plan design, employers may simply decide to continue offering the plan and pay the additional fee.
New IRS Plan Correction Program Effective April 1
Source: https://ebn.benefitnews.com
On the last day of 2012 the IRS updated the Employee Plans Compliance Resolution System (EPCRS), published as Rev. Proc 2013-12. The program allows plan sponsors to declare, fix and pay penalties (where applicable) for certain operational or demographic missteps under the “voluntary correction program” (VCP).
The revisions, effective April 1, “include changes and additional guidance with respect to correction methods as well as procedural changes for VCP submissions,” according to a client bulletin by the law firm Drinker Biddle. According to that document, authored by Sharon L. Klingelsmith and Heather B. Abrigo, changes to the program include the following:
Corrective contributions for excluded employees in 401(k) plans. “Previously all corrective matching contributions and, if the plan used nonelective contributions to satisfy a safe harbor, all corrective nonelective contributions, related to missed deferrals for an excluded employee were required to be made in the form of a qualified nonelective contribution ‘(QNEC)’ which is a nonforfeitable (i.e., fully vested) contribution. Except for corrective matching and nonelective contributions used to satisfy the safe harbor requirements under section 401(k)(12) of the Code, contribution in the form of a QNEC is no longer required for corrective matching and nonelective contributions,” according to the authors.
Overpayments from defined contribution plans. “If a defined contribution plan overpays benefits, in most cases, the plan sponsor must request that the participant return the overpayment to the plan. Rev. Proc. 2008-50 provided that the participant should repay the overpaid amount with appropriate interest but that the employer was required to make up any amount not repaid by the employee with interest at the plan’s earnings rate. Rev. Proc. 2013-12 now also requires the plan’s earnings rate to be used for participant repayments. In addition, if the reason for the overpayment is the lack of a distributable event, the plan sponsor is not required to make a contribution to the plan even if the participant does not repay the overpayment,” Klingelsmith and Abrigo write.
Finding Missing Participants. “The IRS has discontinued the IRS Letter Forwarding Program as a method for finding lost plan participants who are owed retirement plan benefits. Rev. Proc. 2013-12 provides the following methods to locate missing participants should certified mail not result in success: (i) Social Security letter forwarding program; (ii) a commercial locator service; (iii) a credit reporting agency; or (iv) Internet search tools.”
These changes offer a glimpse of the complete Drinker Biddle report, which advisers may wish to call the attention of their clients.
How to prepare for a health and welfare compliance audit
Source: https://ebn.benefitnews.com
by John F. Galvin
When I speak with employers about health and welfare plan compliance, I’m often asked the question: “What happens if I don’t do everything?”
It’s not that employers don’t want to follow the rules. Rather, it’s that in the mid-market, especially with employers who have fewer than 500 employees, the benefit program is often managed by HR professionals who are wearing so many hats that they know the chances are high that something will fall through the cracks — and, thanks to ERISA, HIPAA and other laws, there are lots of cracks.
When I explain that they could be subject to an audit by the Department of Labor, I’m usually met with some doubts. Some want to know if the DOL really goes after mid-market employers, or if it just focuses on large corporations. Others will wonder if the DOL would be interested in their particular industry. But we’ve seen more and more DOL compliance audits in the mid-market, and with the myriad new compliance responsibilities that benefits professionals will need to deal with as a result of health care reform, this trend may continue to grow.
Summary plan descriptions
So what does the DOL tend to focus on with health and welfare audits? Much of the typical DOL audit goes back to employer requirements outlined in the original ERISA legislation – summary plan descriptions. SPDs were the government’s way of requiring employers to provide information on benefit plans that can be understood by the average participant. However, unlike an average benefits summary, the requirements of what must be included in an SPD are numerous. Detailed descriptions of benefit provisions, eligibility, and a variety of legislation passed since 1974 all must be part of the SPD. In fact, by the time all this is information is included, the document can hardly be called a “summary.”
Given all of the work that goes into the creation of SPDs, it isn’t surprising to find out that many mid-market employers aren’t compliant. In the event of an audit, the chances are high that an SPD will need to be produced, along with some assurance that the document is actually making its way to employees correctly.
Many small and mid-market employers erroneously believe this is a requirement only for large employers. But employers of every size in any industry should review the guidelines for the creation and distribution of SPDs, and ensure their practices are compliant. In fact, once an SPD is in place, many of the other compliance responsibilities associated with health and welfare plans become much easier since the document becomes the plan’s “bible.”
HIPAA compliance
The second-most frequent item in DOL audits is related to the Health Insurance Portability & Accountability Act, or HIPAA. HIPAA is like a large tree trunk with many different branches. When discussing HIPAA, one could be talking about its rules for handling pre-existing conditions under a health plan, rules for issuing certificates of creditable coverage to terminating participants, rules for informing participants about enrollment rights, protecting private health information, and more. Any one of those items might show up in a DOL audit. Employers should review HIPAA rules thoroughly to make sure their plan is in compliance.
One of the most common errors I see with mid-market employers is in regards to the requirement under HIPAA that plans inform participants about enrollment rights, or more specifically “special enrollment rights.” The HIPAA Notice of Special Enrollment Rights informs participants who are eligible for your health plan about when they can join your plan or change their election due to certain qualifying life events such as marriage, birth of a child, or loss of eligibility under another employer’s plan.
The notice is important because it informs your participants about the timeframes in which they must request these enrollment rights. While some employers may have trouble during a DOL audit because they don’t have this notice at all, more employers are making mistakes with the actual distribution of the notice. For example, it’s not uncommon for employers who have an SPD to include the notice right in that document. However, unless your SPD is being distributed to those employees who are eligible for the plan but choose not to enroll, then the distribution requirements for special enrollment rights under HIPAA are not being met. Employers should take the time to review the HIPAA notice and its requirements for distribution to make sure they are compliant.