Federal and state laws impose numerous requirements on the health coverage that employers provide to their employees. These rules can change from year to year and pertain to businesses of all sizes. If your business offers any type of health or wellness benefits plan, it is important to remain in compliance. Review the following employee benefits compliance checklist to prepare for the 2020 plan year.
Changes for Large Companies
In 2020, large companies must meet certain Affordable Care Act (ACA) requirements. To comply with the ACA’s “Play or Pay” mandate, any applicable large employer (ALE) that does not offer “minimum essential coverage” that is both affordable and meets the established minimum value requirements for full-time employees and dependent children may face penalties if said employees receive a subsidy for health coverage through a marketplace.
You may be an ALE if you employed 50 or more full-time employees or full-time-equivalent (FTE) employees in the previous calendar year. A full-time employee is considered any common law employee who averages at least 30 hours per week, or at least 130 hours per month. Employers are responsible for tracking employee hours to determine if they meet the definition of “full-time.”
Updates on Government Mandates
While some government mandates will stay the same for employers in 2020, others have been modified for the new plan year. Open enrollment for individual market Obamacare policies will begin November 1st and conclude December 15th. Of course, open enrollment periods among individual companies may be shorter.
Employer-based health insurance benefit costs are also projected to rise by a total of 3.9 percent. Price increases will affect private individuals, small businesses and large group plans. While short-term, limited-coverage policies will be available at a lower cost, they do not provide comprehensive coverage compared to ACA-compliant policies. Keep this in mind when updating your employee benefits package.
Applicable large employers who fail to offer minimum essential coverage to its full-time employees and their dependents may face certain penalties. The 4980H(a) penalty may be enforced if a company fails to comply with the employer shared responsibility mandate. This monthly penalty is equal to the ALE’s number of full-time employees, minus 30, and times 1/12 of the annual 4980H(a) penalty for that specific month.
ALEs may also face a 4980H(b) penalty if they do not offer coverage to full-time employees and dependents, or if the coverage is unaffordable or does not meet minimum value. The penalty may also be imposed if even a single full-time employee obtains a subsidy through a marketplace. The 4980H(b) penalty is a monthly penalty that is enforced for each full-time employee who obtains a subsidy and consists of 1/12 of the annual penalty for that specific month.
Health Plan Reporting Requirements
There have also been changes made to the annual reporting of health plan coverage information. All health insurance issuers and sponsors that provide self-insured plans with minimum essential coverage are required by law to report certain changes in health coverage enrollment and other information. These details must be completed on Forms 1095-B or Form 1095-C and issued to the covered individuals, as well as to the IRS.
In addition, ALEs are required to report any offers of health care coverage to full-time employees and their dependents, as well as other related healthcare information, on Form 1095-C. Forms 1095-C, which consists of employer data, should be transmitted to the IRS using Form 1094-C. Individuals must receive 2019 forms by January 1, 2020.
Other Documents and Provisions to Review
When checking for employee benefits compliance, there are some other general requirements that are important to review. Start by reviewing your ERISA plan document to ensure that it is up-to-date and readily available to participants, beneficiaries, and the U.S. Department of Labor. Also, review your SPD and cafeteria plan document to ensure that they are both up-to-date and have been formally adopted.
There are certain forms and documents that may not pertain to all businesses but should be reviewed if they do pertain to your company. If applicable, ensure that the annual Form 5500 has been filed in a timely manner and that your Summary Annual Reports (SARs) have been distributed. Also, check to see if regular testing has been performed on any tax-favored benefits offered to ensure that these plans do not discriminate against certain employees.
Speak to a Benefits Consultant
Having the proper tools and resources can be invaluable when dealing with any administrative task, especially employee benefits compliance. To avoid hefty penalties and to keep your staff content, it is important to remain in compliance with current government mandates and laws pertaining to employee healthcare coverage. Our team of certified human resource professionals can assist your company in all aspects of employee benefits compliance. For more information or to schedule a consultation, call BenefitCorp today.