On October 12, 2017, the White House released an Executive Order, signed by President Trump, titled “Promoting Healthcare Choice and Competition Across the United States.”

It is important to note that the Executive Order (EO) does not implement any new laws or regulations, but instead directs various federal agencies to explore options relating to association health plans, short term limited-duration coverage (STLDI), and health reimbursement arrangements (HRAs), within the next 60 to 120 days.

The Department of Labor is ordered to explore expansion of association health plans (AHPs) by broadening the scope of ERISA to allow employers within the same line of business across the country to join together in a group health plan. The EO notes employers will not be permitted to exclude employees from an AHP or develop premiums based on health conditions. The Secretary of Labor has 60 days to consider proposing regulations or revising guidance.

Practically speaking, this type of expansion would require considerable effort with all state departments of insurance and key stakeholders across the industry. Employers should not wait to make group health plan decisions based on the EO, as it will take time for even proposed regulations to be developed.

The Department of the Treasury, Department of Labor, and Department of Health and Human Services (the agencies) are directed to consider expanding coverage options from STLDI, which are often much less expensive than Marketplace plans or employer plans. These plans are popular with individuals who are in and outside of the country or who are between jobs. The Secretaries of these agencies have 60 days to consider proposing regulations or revising guidance.

Finally, the EO directs the same three agencies to review and consider changing regulations for HRAs so employers have more flexibility when implementing them for employees. This could lead to an expanded use of HRA dollars for employees, such as for premiums. However, employers should not make any changes to existing HRAs until regulations are issued at a later date. The Secretaries have 120 days to consider proposing regulations or revising guidance.

By Danielle Capilla
Originally Published By United Benefit Advisors

A dependent care flexible spending account (DCFSA) is a pre-tax benefit account used to pay for eligible dependent care services. The IRS determines which expenses are eligible for reimbursement and these expenses are defined by Internal Revenue Code §129 and the employer’s plan. Eligible DCFSA expenses include: adult day care center, before/after school programs, child care, nanny, preschool, and summer day camp. Day nursing care, nursing home care, tuition for kindergarten and above, food expenses, and overnight camp are ineligible expenses.

Qualifying Individuals

Only qualifying individuals are eligible for dependent care expenses. A qualifying individual is an individual who spends at least eight hours in the participant’s home.

Dependent care includes care for a child who is under the age of 13 and in the participant’s custody for more than half the year. Dependent care also includes care for a spouse or relative who is physically or mentally incapable of self-care and lives in the participant’s home.

If parents are divorced, then the child is a qualified dependent of the custodial parent. A non-custodial parent cannot be reimbursed under a DCFSA even if the parent claims the child as a tax dependent.

Contributing to a DCFSA

The election is the participant’s contribution amount, which is the amount the participant puts into a DCFSA at enrollment. Participants may change the amount of money to be withheld within a 31-day window after a qualifying event, such as marriage, birth or adoption of a child, dependent death, divorce, or change in employment. Participants may enroll in or renew their election in a DCFSA during open enrollment. Participation is not automatic. Participants must re-enroll every year by the enrollment date.

The employer determines the minimum election amount and the IRS determines the maximum election amount. The IRS sets the following annual contribution limits for a DCFSA:

  • $2,500 per year for a married employee who files a separate tax return
  • $5,000 per year for a married employee who files a joint tax return
  • $5,000 per year for the head of household
  • $5,000 per year for a single employee

Even though a different maximum contribution limit may apply depending on the employer’s plan, the maximum contribution cannot exceed the following earned income limitations:

  • If you are single, the earned income limit is your salary, excluding contributions to your DCFSA.
  • If you are married, the earned income limit is the lesser of: your salary, excluding contributions to your DCFSA, or your spouse’s salary.

All DCFSA contributions are subject to IRS use-it-or-lose-it rules, which means that unused funds within the plan year will be forfeited to the employer unless the employer’s plan offers a grace period extension. Some plans include a two-and-a-half-month grace period.

Participants must report their DCFSA contributions on their federal tax return along with the name, address, and Social Security number (if applicable) of the dependent care service provider.

Reimbursement Requests

A valid DCFSA claim will either have the dependent care provider certify the service by signing the claim form or have the participant provide an itemized statement from the dependent care provider that includes the following: service dates, dependent’s name, type of service, amount billed, and the provider’s name and address along with a completed claim form.

Participants should save supporting documentation related to their DCFSA expenses and claims because the IRS may request itemized receipts to verify the eligibility of their expenses.

By Danielle Capilla
Originally Published By United Benefit Advisors

A health flexible spending account (FSA) is a pre-tax account used to pay for out-of-pocket health care costs for a participant as well as a participant’s spouse and eligible dependents. Health FSAs are employer-established benefit plans and may be offered with other employer-provided benefits as part of a cafeteria plan. Self-employed individuals are not eligible for FSAs.

Even though a health FSA may be extended to any employee, employers should design their health FSAs so that participation is offered only to employees who are eligible to participate in the employer’s major medical plan. Generally, health FSAs must qualify as excepted benefits, which means other nonexcepted group health plan coverage must be available to the health FSA’s participants for the year through their employment. If a health FSA fails to qualify as an excepted benefit, then this could result in excise taxes of $100 per participant per day or other penalties.

Contributing to an FSA

Money is set aside from the employee’s paycheck before taxes are taken out and the employee may use the money to pay for eligible health care expenses during the plan year. The employer owns the account, but the employee contributes to the account and decides which medical expenses to pay with it.

At the beginning of the plan year, a participant must designate how much to contribute so the employer can deduct an amount every pay day in accordance with the annual election. A participant may contribute with a salary reduction agreement, which is a participant election to have an amount voluntarily withheld by the employer. A participant may change or revoke an election only if there is a change in employment or family status that is specified by the plan.

Per the Patient Protection and Affordable Care Act (ACA), FSAs are capped at $2,600 per year per employee. However, since a plan may have a lower annual limit threshold, employees are encouraged to review their Summary Plan Description (SPD) to find out the annual limit of their plan. A participant’s spouse can put $2,600 in an FSA with the spouse’s own employer. This applies even if both spouses participate in the same health FSA plan sponsored by the same employer.

Generally, employees must use the money in an FSA within the plan year or they lose the money left in the FSA account. However, employers may offer either a grace period of up to two and a half months following the plan year to use the money in the FSA account or allow a carryover of up to $500 per year to use in the following year.

By Danielle Capilla
Originally Published By United Benefit Advisors

Small employers, those with fewer than 100 employees, have a reputation for not offering health insurance benefits that are competitive with larger employers, but new survey data from UBA’s Health Plan Survey reveals they are keeping pace with the average employer and, in fact, doing a better job of containing costs.

According to our new special report: “Small Businesses Keeping Pace with Nationwide Health Trends,” employees across all plan types pay an average of $3,378 toward annual health insurance benefits, with their employer picking up the rest of the total cost of $9,727. Among small groups, employees pay $3,557, with their employer picking up the balance of $9,474 – only a 5.3 percent difference.

When looking at total average annual cost per employees for PPO plans, small businesses actually cut a better deal even compared to their largest counterparts—their costs are generally below average—and the same holds true for small businesses offering HMO and CDHP plans. (Keep in mind that relief such as grandmothering and the PACE Act helped many of these small groups stay in pre-ACA plans at better rates, unlike their larger counterparts.)

PPO Plan Average Annual Cost per Employee

Think small businesses are cutting coverage to drive these bargains? Compared to the nations very largest groups, that may be true, but compared to average employers, small groups are highly competitive.

By Bill Olson
Originally Published By United Benefit Advisors

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) allows qualified beneficiaries who lose health benefits due to a qualifying event to continue group health benefits. The COBRA payment process is subject to various rules in terms of grace periods, notification, premium payment methods, and treatment of insignificant shortfalls.

Grace Periods

The initial premium payment is due 45 days after the qualified beneficiary elects COBRA. Premium payments must be made on time; otherwise, a plan may terminate COBRA coverage. Generally, subsequent premium payments are due on the first day of the month. However, under the COBRA grace period rules, premiums will still be considered timely if made within 30 days after the due date. The statutory grace period is a minimum 30-day period, but plans may allow qualified beneficiaries a longer grace period.

A COBRA premium payment is made when it is sent to the plan. Thus, if the qualified beneficiary mails a check, then the payment is made on the date the check was mailed. The plan administrators should look at the postmark date on the envelope to determine whether the payment was made on time. Qualified beneficiaries may use certified mail as evidence that the payment was made on time.

The 30-day grace period applies to subsequent premium payments and not to the initial premium payment. After the initial payment is made, the first 30-day grace period runs from the payment due date and not from the last day of the 45-day initial payment period.

If a COBRA payment has not been paid on its due date and a follow-up billing statement is sent with a new due date, then the plan risks establishing a new 30-day grace period that would begin from the new due date.

Notification

The plan administrator must notify the qualified beneficiary of the COBRA premium payment obligations in terms of how much to pay and when payments are due; however, the plan does not have to renotify the qualified beneficiary to make timely payments. Even though plans are not required to send billing statements each month, many plans send reminder statements to the qualified beneficiaries.

While the only requirement for plan administrators is to send an election notice detailing the plan’s premium deadlines, there are three circumstances under which written notices about COBRA premiums are necessary. First, if the COBRA premium changes, the plan administrator must notify the qualified beneficiary of the change. Second, if the qualified beneficiary made an insignificant shortfall premium payment, the plan administrator must provide notice of the insignificant shortfall unless the plan administrator chooses to ignore it. Last, if a plan administrator terminates a qualified beneficiary’s COBRA coverage for nonpayment or late payment, the plan administrator must provide a termination notice to the qualified beneficiary.

The plan administrator is not required to inform the qualified beneficiary when the premium payment is late. Thus, if a plan administrator does not receive a premium payment by the end of the grace period, then COBRA coverage may be terminated. The plan administrator is not required to send a notice of termination in that case because the COBRA coverage was not in effect. On the other hand, if the qualified beneficiary makes the initial COBRA premium payment and coverage is lost for failure to pay within the 30-day grace period, then the plan administrator must provide a notice of termination due to early termination of COBRA coverage.

By Danielle Capilla
Originally Published By United Benefit Advisors

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires employers to offer covered employees who lose their health benefits due to a qualifying event to continue group health benefits for a limited time at the employee’s own cost. The length of the COBRA coverage period depends on the qualifying event and is usually 18 or 36 months. However, the COBRA coverage period may be extended under the following five circumstances:

  1. Multiple Qualifying Events
  2. Disability
  3. Extended Notice Rule
  4. Pre-Termination or Pre-Reduction Medicare Entitlement
  5. Employer Extension; Employer Bankruptcy

In this blog, we’ll examine the first circumstance above. For a detailed discussion of all the circumstances, request UBA’s Compliance Advisor, “Extension of Maximum COBRA Coverage Period”.

When determining the coverage period under multiple qualifying events, the maximum coverage period for a loss of coverage due to a termination of employment and reduction of hours is 18 months. The maximum coverage period may be extended to 36 months if a second qualifying event or multiple qualifying events occur within the initial 18 months of COBRA coverage from the first qualifying event. The coverage period runs from the start of the original 18-month coverage period.

The first qualifying event must be termination of employment or reduction of hours, but the second qualifying cannot be termination of employment, reduction of hours, or bankruptcy. In order to qualify for the extension, the second qualifying event must be the covered employee’s death, divorce, or child ceasing to be a dependent. In addition, the extension is only available if the second qualifying event would have caused a loss of coverage for the qualified beneficiary if it occurred first.

The extended 36-month period is only for spouses and dependent children. In order to qualify for extended coverage, a qualified beneficiary must have elected COBRA during the first qualifying event and must have been receiving COBRA coverage at the time of the second event. The qualified beneficiary must notify the plan administrator of the second qualifying event within 60 days after the event.

Example: Jim was terminated on June 3, 2017. Then, he got divorced on July 6, 2017. Jim was eligible for COBRA continuation coverage for 18 months after his termination of employment (the first qualifying event). However, his divorce (the second qualifying event) extended his COBRA continuation coverage to 36 months because it occurred within the initial 18 months of COBRA coverage from his termination (the first qualifying event).

The health plan should indicate when the coverage period begins. The plan may provide that that the plan administrator be notified when plan coverage is lost as opposed to when the qualifying event occurs. In that case, the 36-month coverage period would begin on the date coverage was lost.

By Danielle Capilla
Originally Published By United Benefit Advisors

In conversations with HR professionals and benefit brokers, we find that the topic of long-term care insurance (LTCi) is often covered in less than two minutes during renewal meetings. When I ask why the topic of conversation is so short, they tell me, “Employees just aren’t asking about it, so they must not be interested.”

If employees aren’t asking about LTCi, does it mean they aren’t interested? They just may be unaware of the value of LTCi and that it can be offered by their employer with concessions not available in the open market. Here are the top seven reasons why LTCi should be a bigger part of the employee benefits conversation.

  1. Do you know LTCi can be offered as an employee benefit?
    There are multiple employer-sponsored products, including those with pricing discounts, guarantee issue, and payroll deduction.
  2. Do you believe Medicaid and Medicare will provide long-term care for employees?
    This is a popular misconception. Medicare and Medicaid will restrict your employees’ choices of where and how they receive care. These options will either not offer custodial or home care, or they’ll force employees to spend down their assets for care.
  3. Do you think LTCi is too expensive, or that your employee population is too young to need it?
    Many plans can be customized to meet personal budgets and potential care needs. It’s also important to know that rates are based on employees’ ages. The younger the employees are, the lower their rates will be.
  4. Are you aware of the variety of LTCi plans?
    Many policies offer flexible coverage options. Depending on the policy an employer selects, LTCi can cover a wide range of care—in some cases even adult day care and home safety modifications.
  5. Do you believe the market is unstable?
    Today’s products are priced based on conservative assumptions, and employers are enrolling very stable LTCi plans for their employees. Each month, we see new plan options and products being introduced along with new carriers entering the market.
  6. Do you already offer an LTCi plan but it’s closed to new hires?
    Being able to offer a similar LTCi benefit to all employees is crucial for most employers. Find a partner that can assist with the current LTCi plan and can assist with bringing in a new LTCi offering for new hires.

 

By Christine McCullugh
Originally Published By United Benefit Advisors

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires group health plans to provide notices to covered employees and their families explaining their COBRA rights when certain events occur. The initial notice, also referred to as the general notice, communicates general COBRA rights and obligations to each covered employee (and his or her spouse) who becomes covered under the group health plan. This notice is issued by the plan administrator within the first 90 days when coverage begins under the group health plan and informs the covered employee (and his or her spouse) of the responsibility to notify the employer within 60 days if certain qualifying events occur in the future.

The initial notice must include the following information:

  • The plan administrator’s contact information
  • A general description of the continuation coverage under the plan
  • An explanation of the covered employee’s notice obligations, including notice of
    • The qualifying events of divorce, legal separation, or a dependent’s ceasing to be a dependent
    • The occurrence of a second qualifying event
    • A qualified beneficiary’s disability (or cessation of disability) for purposes of the disability extension)
  • How to notify the plan administrator about a qualifying event
  • A statement that that the notice does not fully describe continuation coverage or other rights under the plan, and that more complete information regarding such rights is available from the plan administrator and in the plan’s summary plan description (SPD)

As a best practice, the initial notice should also:

  • Direct qualified beneficiaries to the plan’s most recent SPD for current information regarding the plan administrator’s contact information.
  • For plans that include health flexible spending arrangements (FSAs), disclose the limited nature of the health FSA’s COBRA obligations (because certain health FSAs are only obligated to offer COBRA through the end of the year to qualified beneficiaries who have underspent accounts).
  • Explain that the spouse may notify the plan administrator within 60 days after the entry of divorce or legal separation (even if an employee reduced or eliminated the spouse’s coverage in anticipation of the divorce or legal separation) to elect up to 36 months of COBRA coverage from the date of the divorce or legal separation.
  • Define qualified beneficiary to include a child born to or placed for adoption with the covered employee during a period of COBRA continuation coverage.
  • Describe that a covered child enrolled in the plan pursuant to a qualified medical child support order during the employee’s employment is entitled to the same COBRA rights as if the child were the employee’s dependent child.
  • Clarify the consequences of failing to submit a timely qualifying event notice, timely second qualifying event notice, or timely disability determination notice.

Practically speaking, the initial notice requirement can be satisfied by including the general notice in the group health plan’s SPD and then issuing the SPD to the employee and his or her spouse within 90 days of their group health plan coverage start date.

If the plan doesn’t rely on the SPD for furnishing the initial COBRA notice, then the plan administrator would follow the U.S. Department of Labor (DOL) rules for delivery of ERISA-required items. A single notice addressed to the covered employee and his or her spouse is allowed if the spouse lives at the same address as the covered employee and coverage for both the covered employee and spouse started at the time that notice was provided. The plan administrator is not required to provide an initial notice for dependents.

By Danielle Capilla
Originally Posted By www.ubabenefits.com

One of the latest things trending right now in business is the importance of office culture. When everyone in the office is working well together, productivity rises and efficiency increases. Naturally, the opposite is true when employees do not work well together and the corporate culture suffers. So, what are these barriers and what can you do to avoid them?

According to an article titled, “8 ways to ruin an office culture,” in Employee Benefit News, the ways to kill corporate culture may seem intuitive, but that doesn’t mean they still don’t happen. Here’s what organizations SHOULD do to improve their corporate culture.

Provide positive employee feedback. While it’s easy to criticize, and pointing out employees’ mistakes can often help them learn to not repeat them, it’s just as important to recognize success and praise an employee for a job well done. An “attaboy/attagirl” can really boost someone’s spirits and let them know their work is appreciated.

Give credit where credit is due. If an assistant had the bright idea, if a subordinate did all the work, or if a consultant discovered the solution to a problem, then he or she should be publicly acknowledged for it. It doesn’t matter who supervised these people, to the victor go the spoils. If someone had the guts to speak up, then he or she should get the glory. Theft is wrong, and it’s just as wrong when you take someone’s idea, or hard work, and claim it as your own.

Similarly, listen to all ideas from all levels within the company. Every employee, regardless of their position on the corporate ladder, likes to feel that their contributions matter. From the C-suite, all the way down to the interns, a genuinely good idea is always worth investigating regardless of whether the person who submitted the idea has an Ivy League degree or not. Furthermore, sometimes it takes a different perspective – like one from an employee on a different management/subordinate level – to see the best way to resolve an issue.

Foster teamwork because many hands make light work. Or, as I like to say, competition breeds contempt. You compete to get your job, you compete externally against other companies, and you may even compete against your peers for an award. You shouldn’t have to compete with your own co-workers. The winner of that competition may not necessarily be the best person and it will often have negative consequences in terms of trust.

Get rid of unproductive employees. One way to stifle innovation and hurt morale is by having an employee who doesn’t do any work while everyone else is either picking up the slack, or covering for that person’s duties. Sometimes it’s necessary to prune the branches.

Let employees have their privacy – especially on social media. As long as an employee isn’t conducting personal business on company time, there shouldn’t be anything wrong with an employee updating their social media accounts when they’re “off the clock.” In addition, as long as employees aren’t divulging company secrets, or providing other corporate commentary that runs afoul of local, state, or federal laws, then there’s no reason to monitor what they post.

Promote a healthy work-life balance. Yes, employees have families, they get sick, or they just need time away from the workplace to de-stress. And while there will always be times when extra hours are needed to finish a project, it shouldn’t be standard operating procedure at a company to insist that employees sacrifice their time.

 

By Geoff Mukhtar

Originally Published By United Benefit Advisors

Dear Ron, Thank you so much for generously supporting [us] and our AIDS walk team this year. It was a lovely foggy Sunday morning in Golden Gate Park, with thousands of folks walking to fight AIDS. It has been a pleasure working with you over the years. You have saved us LOTS of money! I want you to know how much we appreciate all that you do!

- San Francisco, Non-profit organization

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