by US Rx Care | Nov 23, 2021 | Uncategorized
ERISA stands for the Employee Retirement Income Security Act of 1974, which was a sweeping federal law that created the Individual Retirement Arrangement (IRA), as well as established a set of rules for pension plans and other employee benefit plans to qualify for preferential tax treatment.
The term “qualified plan” as we use it today, in the pension and employee benefit context, generally means the plan in question meets the requirements for favorable tax treatment under ERISA.
Pensions
While employers are not obligated to establish a pension plan for workers (some narrow-margin businesses would find this to be very difficult if it did!), employer-sponsored pensions must meet certain criteria under ERISA to qualify for a full tax deduction for the employer and tax-favored status for the employee, as well. Among these requirements:
- Workers must be vested in their pensions within a certain number of years.
- Traditional pension plans must calculate retiree benefits based on the joint life expectancies of a married couple, and not just on one spouse, unless both spouses specifically waive this benefit (in exchange for a higher initial payout).
ERISA also established funding standards for sponsors of traditional, defined benefit pension plans.
Additionally, ERISA formally established the Pension Benefit Guaranty Corporation – a quasi-government entity that steps in to take over pensions when a given plan becomes insolvent and cannot pay expected benefits. This way, retiree incomes are more secure: If a pension should fail, the PBGC will pay pension obligations, up to a certain monthly amount.
If you sponsor any kind of traditional defined benefit or defined contribution pension, plan, you must file a Form 5500 with the Department of Labor.
ERISA also requires you to provide plan summaries to all plan participants. On request, plan sponsors must provide all participants with calculations of accrued and/or vested benefits earned in their pensions.
ERISA also holds plan investment managers, trustees and sponsors to a fiduciary standard. That’s the highest standard of care, fair dealing and utmost good faith recognized under the law.
This high standard imposed on plan sponsors benefits workers, but it also creates an elevated level of risk to the employer in the form of potential liability for failures to live up to that exacting standard. For this reason, many plan sponsors also carry Directors & Officers’ Liability Insurance and employment practices liability insurance to protect the company officers and the company itself from liability arising from errors and omissions related to the benefit.
Later amendments to ERISA prohibits employers from discriminating against lower-paid workers. Congress intended the bulk of ERISA’s tax benefits to go to lower to middle class employees. Anti-discrimination rules and so-called “Top Hat” rules that prohibit managers from fully participating in plans unless the plan gets sufficient participation from the rank and file.
Health Plans
ERISA provides similar benefits and conditions to medical plans. If an employer wants the benefit of a full tax deduction for medical plans as part of its compensation package, it must offer the benefit to all full-time employees and not just to executives and management.
The well-known COBRA, or Consolidated Omnibus Budget Reconciliation Act of 1985, amended ERISA to require employers to provide workers who leave the company the option of continuing to remain on board with their current health insurance plan for a limited period of time.
HIPAA, or the Health Insurance Portability and Accountability Act of 1986, also amends ERISA to prevent health carriers from discriminating against individuals with pre-existing conditions.
by US Rx Care | Nov 16, 2021 | Uncategorized
A new study has found that in response to the COVID-19 pandemic nearly half of U.S. workers added one new supplemental health-related benefit on top of their group health coverage.
The 2021 “Aflac WorkForces Report” found that 44% of employees bought one additional benefit, with life insurance policies seeing the biggest uptake. The fact that so many workers decided to boost their supplemental health benefits reflects the profound effect the pandemic has had on people and how it has opened their eyes to the fragility of life.
“Anxieties over the past year brought questions about health coverage ― especially about whether current coverage is enough for workers and their families,” Aflac wrote in its report. “The survey found that employees sought ways to help offset the financial burdens they experienced, including through supplemental insurance.”
Interestingly, the largest uptake of these benefits was among millennial workers.
With the pandemic still not over and more people having seen the effects on friends, family and acquaintances, the report predicts that the trend will continue.
The most popular additional benefits
The percentages of workers who have purchased a voluntary benefit since the pandemic started:
- Life insurance: 22% overall and 34% of millennial workers.
- Critical illness insurance: 16% overall and 23% of millennial workers.
- Mental health resources: 14% overall and 21% of millennial workers.
- Hospital insurance: 14% overall and 21% of millennial workers.
- Accident insurance: 12% overall and 19% of millennial workers.
- Disability insurance: 10% overall and 16% of millennial workers.
- Cancer insurance: 4% overall and 6% of millennial workers.
Overall views of supplemental benefits have also improved since the pandemic started. The survey found that:
- One-third of employees say supplemental insurance is more important now due to the pandemic.
- 51% of all American workers view supplemental benefits as a core component of a comprehensive benefits program.
- 90% of employees believe the need for supplemental insurance is increasing.
- 48% employees (and 63% of millennials) are highly interested in purchasing supplemental insurance to help cover the financial costs related to COVID-19 or other pandemics.
The takeaway
In light of these findings, it’s more important than ever that employers offer more than group health coverage and provide their workers with a slate of voluntary benefit offerings, many of which do not cost the employer much extra.
In fact, the study found that 70% of employers believe supplemental insurance helps them recruit employees and 75% say it helps with retention.
But keep in mind that may employees believe they already have enough coverage to meet their needs. Open enrollment is a prime time to educate them about the health-related expenses that group health insurance doesn’t cover, such as death benefits and long-term care.
One way you can put together a slate of offerings that your workforce needs and is interested in, is to conduct a study of your staff to see which options they would most prefer.
And finally: Introduce your benefits consultant (in person or virtually) prior to or at the start of open enrollment. That way, employees become familiar with them and can be more comfortable asking questions about the various coverages they can choose from.
by US Rx Care | Nov 9, 2021 | Uncategorized
One of the most important decisions a person will make is choosing the right health insurance plan. However, very few employees do enough research about their health benefits. A recent study conducted by Aflac showed that more than 40 percent of employees spent less than 15 minutes researching available benefits during the 2013 open enrollment period. About 25 percent of the people surveyed spent less than five minutes researching benefits. The survey was conducted in June of 2014 and included more than 2,000 participants. To show a comparison of what people will spend more time researching, Aflac provided some other common topics of interest and average time frames for research or shopping. These include the following:
- Participants spent 10 hours researching new vehicle purchases.
- Participants shopped for new computers for four hours.
- Participants spent about five hours planning vacations.
- Participants spent nearly two hours deciding which television to buy.
Most employees pay more than $4,500 annually toward employer-sponsored health plans for themselves and their families. Since they spend this much, it puzzles experts that these workers invest so little time researching benefits in comparison with other major purchases. Choosing a health plan should always be considered a major purchase and treated as such when it comes to investing time for research. Experts encourage employers to stress the importance of not only participating in benefits plans but also researching what is available.
Common Enrollment Mistakes
People who do not spend enough time researching their available benefits will often make quick decisions that cost them money later. Researchers found that about 90 percent of employees are using automatic enrollment, so they use the same benefits every year instead of researching what is newly available and possibly better. About 40 percent of participants waste as much as $750 annually on insurance benefits mistakes. Researchers also found the following:
- Nearly 75 percent of workers never, rarely or barely understand all that their policy covers.
- About 65 percent of workers disagree or barely agree that they are better prepared this year for open enrollment in contrast with last year.
- More than 60 percent of workers never, rarely or barely understand changes made to their coverage.
To better prepare for open enrollment every year, it is important for workers to take steps to be proactive. The best way to do this is to find and use the available educational resources offered. Contact a benefits plan manager or employer to obtain this information. To help reduce the amount of confusion during enrollment, experts recommend these tips:
- Understand all of the financial consequences that decisions have on a budget.
- Make sure deductibles and premiums are both affordable, and find a good median between them.
- Attend seminars, webinars and other educational events for benefits.
- Review and compare all benefits options carefully.
- Request meetings with agents or brokers to answer questions when necessary.
- If there are questions or terms are difficult to understand, ask for clarification.
- Be sure to understand upfront expenses, deductibles and voluntary insurance options.
by US Rx Care | Nov 4, 2021 | Uncategorized
One mistake more and more employers are making is failing to file the required Affordable Care Act tax-related forms with the IRS.
If you are what’s considered an “applicable large employer” (ALE) under the ACA, you are required to file with the IRS forms 1094 and 1095, often separately and before your annual tax returns are due.
Under the ACA, employers with 50 or more full-time and “full-time equivalent” workers are considered an ALE and are required to provide affordable health insurance to their staff that also covers 10 essential benefits as prescribed by the law. This is what’s known as “the employer mandate.”
Filing these documents is not the responsibility of your health insurer as it’s you that’s arranging the employer-sponsored health insurance for your staff. Be aware that you can face penalties if you:
- Don’t file the forms in a timely manner,
- Make mistakes when filing the forms, or
- Fail to file the forms altogether.
The IRS requires these forms to ensure that ALEs are providing health coverage to their employees and that the employer is complying with the employer mandate portion of the ACA.
- Form 1095-C — This is basically the W-2 reporting form for health insurance. The form tells the IRS which employers are providing coverage and which employees are getting coverage through their employers.
- Form 1094-C — This form provides information about health insurance coverage that the employer provides.
Here are the deadlines you need to be aware of:
- Jan. 31, 2022 — Individual statements (Form 1094 C) for 2021 must be furnished to employees by this date.
- Feb. 28, 2022 — If filing paper returns, Forms 1094 C and 1095 C must be filed by this date.
- March 31, 2022 — If filing electronically, Forms 1094 C and 1095 C must be filed by this date.
Penalties
The general potential late/incorrect ACA reporting penalties are $280 for the late/incorrect Forms 1095-C furnished to employees, and $280 for the late/incorrect Forms 1094-C and copies of the Forms 1095-C filed with the IRS.
That comes to a total potential general ACA reporting penalty of $560 per employee when factoring in both the late/incorrect Form 1095-C furnished to the employee and the late/incorrect copy of that Form 1095-C filed with the IRS.
The maximum penalty for a calendar year will not exceed $3,392,000 for late/incorrect furnishing or filing.
by US Rx Care | Oct 27, 2021 | Uncategorized
Employers are entering the second year of open enrollment taking place during the COVID-19 pandemic, which is still having an outsized impact on the process and which has changed the face of health insurance.
There are a number of issues that will have an effect on health plans, including regulations and laws affecting coverage that were born out of the pandemic. Mercer LLC recently published a list of compliance-related priorities that health plan administrators and sponsors have to consider, including:
Legal and regulatory changes
Health plan transparency in coverage rules takes effect on Jan. 1, 2022. Newly introduced regulations require hospitals to publish their standard prices, and for negotiated rates between health plans and providers to be made transparent too.
Employers will need to communicate these changes to their employees, particularly rules that require health plans to provide enrollees with out-of-pocket estimates for upcoming procedures.
Also, the No Surprises Act, which will prohibit surprise bills for certain out-of-network services, takes effect at the start of 2022 for providers and group health plans. Employers need to meet with their plan administrator to make sure that their plans are in compliance with these new regulations.
COVID-19 issues
The pandemic will continue casting its shadow over health insurance and open enrollment.
Legislation passed last year requires health plans to cover additional services such as mental health and telehealth until the end of this year. Whether your plan offerings will keep providing those enhanced benefits or not, you’ll need to communicate that to plan participants and include it in your plan documents.
You should also confirm that your group plans comply with COVID-19 testing and vaccine coverage requirements in the Family First Coronavirus Response Act, the CARES Act and any state laws.
Gender and family planning issues
Employers should review their benefit eligibility rules after the Supreme Court in 2020 ruled that Title VII of the 1965 Civil Rights Act protects LEGBTW employees from discrimination in benefits.
You should ensure that benefits offered to opposite-sex spouses are the same as are offered to same-sex spouses.
Mental health parity
All health plans have to prepare a comparative analysis of their medical and surgical benefits and mental health and substance abuse treatment benefits to demonstrate that treatment limitations are applied comparably. This job does not fall on the employer, but you should make sure your plan has prepared the analysis or is working on it.
This is part of new laws that require health plans to offer similar benefit coverage for mental health and substance abuse treatment as they do for other medical and surgical procedures and services.
HSA, HRA and FSA revisions
The CARES Act temporarily authorized employers to allow employees with health savings accounts, health reimbursement arrangements and flexible spending accounts to make mid-year changes to how much they deposit in those accounts.
It also authorized them to permit employees to roll over unused amounts in their health and dependent-care flexible spending arrangements from 2020 to 2021 and from 2021 to 2022.
Employers that opted to allow their employees to make these changes and roll over funds, have to communicate to their employees that these changes come to an end on Dec. 31 this year.
There were also some permanent changes made by the CARES Act, including reinstating over-the-counter medical products as eligible expenses for HSAs, certain HRAs and FSAs without a prescription.
These accounts may now allow certain menstrual care products, such as tampons, pads, liners and cups, as eligible medical expenses. These are retroactive benefits to Jan. 1, 2020.
Make sure to notify your staff of these changes. You can tell them that if they have receipts for eligible expenses that date back to then, they can submit them for reimbursement.
by US Rx Care | Oct 19, 2021 | Uncategorized
Even if you are providing your staff with health benefits, they could be left under great financial pressure if one of them has a major accident off the job that leaves them debilitated and unable to work.
Millions of working Americans struggle with managing out-of-pocket costs for non-medical and medical expenses after suffering an unexpected event such as an accident.
If you are already offering your employees health insurance coverage, you can help fill the gap by also offering voluntary accident insurance, which can pay for:
- Lost wages,
- Deductibles and other expenses not covered by insurance,
- Transportation to and from hospitals and doctors, and
- Home modifications.
Many Americans are ill-prepared financially
According to a survey by Prudential Insurance Co.:
- Two-thirds of Americans say it would be very or somewhat difficult to meet their current financial obligations if their next paycheck were delayed for just one week.
- Half of all households say they have less than $10,000 in liquid assets available for use in an emergency.
Why your employees need coverage
- Health insurance only covers a portion of expenses, and only after the employee has paid their deductible and copay.
- Employees sometimes have to pay out of pocket for medicines, medical equipment and visits to out-of-network physicians.
- Employees have to pay out of pocket for travel to appointments, home accommodations, caregiving and housekeeping if they cannot do those things on their own after an accident.
- Lost wages are a sometimes-overlooked cost of illness or injury. This can be an issue not only for the employees directly impacted by illness or injury, but also for family members who are providing care for them.
The types of accident insurance
Traditional treatment-based plans. These pay benefits based on the occurrence of an accidental injury and the type of treatment or procedure required to treat an injury.
The injured individual will often submit a separate claim for each service they receive related to the accident. For example, if they were in a car accident in which they broke both legs, they would file individual claims for:
- The costs not covered by health insurance for each service to treat the injury.
- The cost of paying for transportation to doctors’ visits and physical therapy sessions.
- Each time a home caregiver visits them to provide care.
Incident-based plans. These pay benefits based upon the incident and type of injury. This can simplify the claims process by reducing the number of claims that must be submitted.
In the case of the car accident victim with broken legs above, they would likely be required to submit evidence only for the fractures and for their hospital stay to be reimbursed.
Benefits to the employer
A more robust benefits package — Offering accident insurance paid for by employees allows you to provide a more robust benefits package that can improve employees’ satisfaction with their jobs.
A smoother transition to high-deductible health plans — Employers replacing traditional medical insurance with an HDHP may find the transition more readily accepted by employees if it is accompanied by an offer of a voluntary accident insurance plan.
Potential for improved productivity — Employees under financial pressure may be less productive than those who are not, and knowing they have accident insurance can put their fears to rest.
Low cost and administrative burden — Most employers offer accident insurance that is paid for by the employee, meaning there is little or no cost to the organization.
