Summer is almost over and schools are back in session. That must mean it’s time to check the calendar for important benefit compliance dates that will be here before the end the year. Here are some of the key items:
- ERISA Deadlines for Calendar Year Plans
- Medicare Part D Disclosure Notice
- Transitional Reinsurance Program
- COBRA Federal v. State Annual Review
Fall ERISA Deadlines
Employer sponsored welfare benefit plans with 100 or more plan participants at the beginning of the plan year are required to file a Form 5500 Annual Report with the Department of Labor within 210 days of the end of the plan year and provide plan participants with the related Summary Annual Report (SAR) no later than 9 months after the end of the plan year. For calendar year plans that filed Form 5500 on or before the July 31 deadline, this means the Summary Annual Report must be provided to plan participants no later than September 30. Calendar year plans that filed for an extension have until October 15 to file Form 5500 without incurring late penalties and 60 days thereafter to provide plan participants with the SAR.
As with most other participant notices, employers may provide the SAR electronically to participants who regularly receive information electronically as an integral part of their job and to other participants who have affirmatively agreed to receive information electronically. In all cases, plan sponsors must take reasonable measures to ensure the actual receipt of the electronically transmitted information, include a statement of the significance of the information being sent and provide notice of the participant’s right to request a paper copy. Be sure not to forget your COBRA participants! (And, by the way, the same deadlines apply to the Form 5500 for employer sponsored pension plans, such as 401(k) plans, 403(b) plans, and IRA plans.)
Medicare Part D Disclosure Notice
Employers who provide a prescription drug benefit to employees or their dependents who are eligible for Medicare Part D must provide certain individuals with a Creditable Coverage Disclosure Notice prior to the start of the Medicare annual open enrollment period, no later than October 14. Individuals who must receive the Notice include:
- Medicare-eligible actively working employees, COBRA participants, and their dependents;
- Medicare-eligible disabled individuals, including dependents; and any retirees and their dependents.
In addition to providing this Notice once a year, plan sponsors also need to provide it in the following circumstances:
- prior to the effective date of an individual's enrollment in the plan and upon any change that affects whether the coverage is creditable prescription drug coverage;
- prior to an individual’s initial enrollment period for the Medicare prescription drug benefit; and
- upon request by a plan participant.
To determine whether or not your prescription benefit may be considered Creditable Coverage, review the document “Creditable Coverage Simplified Determination” at the Center for Medicare and Medicaid Services’ (CMS) website.
Since you may not necessarily know the Medicare status of a dependent, (especially a disabled dependent), we recommend making the Notice available to all plan participants. You may meet the annual distribution requirement by incorporating the Notice into your benefit and enrollment materials, if you make those materials available at least once a year and in other required instances. In any event, it is important to document how the Notice is distributed so you are able to demonstrate compliance. The Model Notices (available in English and Spanish) are available at the CMS website.
Transitional Reinsurance Program
The Transitional Reinsurance Program was created by the ACA to provide relief to insurers and help stabilize premiums in the individual market for providing coverage to high-risk individuals. The Program, managed by Health and Human Services, runs from 2014-2016 and requires the collection of $25 billion over the three year period.
Reporting and payment for fully insured plans will be handled by the carriers and those plans can expect to see the Reinsurance fees reflected on their invoices. Self-insured plans are responsible for reporting their membership counts and making the Reinsurance fee payments themselves, however most ASOs will provide the required data to their groups (although you may need to ask for it). Remember that this fee is calculated per covered life not per covered employee, so dependents do need to be included in your count.
Here are the key dates and steps for the Reinsurance Program:
- November 15, 2015 - Provide 2015 membership count to HHS via pay.gov and schedule your payment(s); and deadline for payment of the 2014 second installment.
- January 15, 2016 - Due date for making the full 2015 payment of $44.00 per covered life, or for making the first payment of $33.00 per covered life, if paying in two installments.
- November 15, 2016 - Due date for making the second installment payment of $11.00 per covered life for the 2015 amount due.
The Contributions Submission Form will be available at pay.gov sometime in October. Flexible spending arrangements (FSAs), health savings accounts (HSAs), integrated health reimbursement arrangements (HRAs), and expatriate coverage are not subject to the Reinsurance fee. In a change from last year, unless you are reporting for 4 or more Contributing Entities, there will be no need to upload the Supporting Documentation csv file. Also note that the fee is tax deductible as an ordinary and necessary business expense.
Annual COBRA Review
While the Marketplace is now headed into its third year, COBRA is still alive and well. Whether or not any employer sponsored health plan is subject to Federal COBRA in any given year depends on whether the employer had 20 or more employees for more than 50 percent of its business days during the previous calendar year. Both full and part-time employees need to be counted, with part-time employees being included according to their proportion of full time work.
Employers may find that they are newly subject to Federal COBRA or conversely, no longer subject to it. Many states however, have their own COBRA statutes, (California included), so even if you fall below the federal threshold, your employees may still be eligible for state required continuation coverage. In general, this coverage is handled directly between the employee and the carrier, with much less involvement and administration on the employer's part.
We recommend you take some time to make this calculation soon, especially if you think you could be newly subject to Federal COBRA, so that you have enough time to prepare to meet its requirements by January 1.
We hope this has helped to clarify some of the upcoming benefit compliance issues for you and look forward to continuing to provide you with important updates throughout the year.