by Lexi Garcia | Aug 20, 2026 | Blog
Many employers offer health coverage to employees after they retire. If a retiree can stay on the company health plan, it’s natural to wonder whether COBRA still needs to be offered.
In most cases, yes, retiring employees must still be given a COBRA election notice, even if they can continue participating in the employer’s health plan.
Why Does COBRA Apply?
Under COBRA, employees and their covered family members may have the right to continue health coverage after certain events, known as qualifying events.
Retirement is generally considered a qualifying event because it involves the employee’s termination of employment.
The important question is whether the employee experiences a loss of coverage after retirement.
What Counts as a Loss of Coverage?
Many employers assume there is no loss of coverage if retirees stay on the same health plan. However, COBRA rules look at more than just whether coverage continues.
A loss of coverage can occur when the retiree is no longer covered under the same terms and conditions that applied while they were an active employee.
For example:
- Active employees pay nothing because the employer covers 100% of the premium.
- After retirement, the employer pays only 60% of the premium.
- The retiree must pay the remaining 40%.
Even though the retiree stays on the same health plan, the higher cost is considered a change in coverage terms. For COBRA purposes, that is treated as a loss of coverage.
Does the Employer Still Have to Offer COBRA?
Yes.
When retirees move from fully employer-paid coverage to coverage that requires them to pay a larger share of the premium, employers generally must offer COBRA.
This means the retiree and any covered dependents should receive a COBRA election notice and have the opportunity to choose COBRA coverage.
Will Retirees Actually Choose COBRA?
Often, they won’t.
In many cases, retiree coverage is less expensive because the employer continues to subsidize part of the premium.
For example:
- Retiree coverage: Employee pays 40% of the premium.
- COBRA coverage: Employee may pay up to 102% of the full premium.
Because retiree coverage is usually the more affordable option, many retirees choose it instead of COBRA.
However, the availability of retiree coverage does not remove the employer’s obligation to offer COBRA.
Key Takeaway
If an employee retires and moves from active employee coverage to retiree coverage with different costs or terms, COBRA generally must be offered. Even when retirees can remain on the company health plan, a change in premium contributions may be considered a loss of coverage under COBRA rules. To stay compliant, employers should provide timely COBRA election notices to eligible retirees and their covered dependents.
Source: Thomson Reuters
by Lexi Garcia | Jan 23, 2025 | Blog
In today’s competitive job market, offering attractive employee benefits is crucial for retaining top talent. One effective way to enhance your benefits package is by implementing matching Health Savings Account (HSA) contributions through your company’s cafeteria plan. This blog post will guide you through the process, ensuring compliance with relevant regulations and maximizing the benefits for your employees.
Understanding HSA Contributions and Cafeteria Plans
Health Savings Accounts (HSAs) are tax-advantaged accounts that allow employees to save for medical expenses. Contributions to HSAs can be made by both employees and employers. A cafeteria plan, also known as a Section 125 plan, allows employees to make pre-tax salary reduction contributions to various benefits, including HSAs.
Can Employers Make Matching HSA Contributions?
Yes, employers can make matching contributions to employees’ HSAs through a cafeteria plan. However, it’s essential to understand the regulatory requirements to avoid potential pitfalls.
Comparability Requirements vs. Nondiscrimination Rules
Employers’ HSA contributions are generally subject to comparability requirements, which mandate that contributions must be the same dollar amount or the same percentage of the high-deductible health plan (HDHP) deductible for all eligible employees. This standard effectively prohibits matching contributions, as they would trigger a 35% excise tax on the employer.
However, these comparability requirements do not apply to employer HSA contributions made through a cafeteria plan. Instead, such contributions are subject to the Code § 125 nondiscrimination requirements, which include the eligibility, contributions and benefits, and key employee concentration tests. These tests provide more flexibility for employers to vary HSA contributions on a nondiscriminatory basis.
Designing a Compliant Matching Contribution Plan
To ensure compliance with nondiscrimination rules, carefully design your matching contribution plan. Consider the following:
- Eligibility: Ensure that all eligible employees have the opportunity to participate in the HSA matching program.
- Contribution Limits: Be mindful of the annual dollar limitations for HSA contributions. All contributions made to an employee’s HSA, whether by the employee, employer, or another entity, must be aggregated for these limits.
- Nonforfeitable Contributions: Once made, matching HSA contributions are nonforfeitable. They cannot be subject to a vesting schedule or be returned to the employer if the employee terminates employment midyear.
Communicating the Plan to Employees
Effective communication is key to the success of your HSA matching program. Ensure that the details of the matching contributions are clearly outlined in the cafeteria plan document, summary plan description, and other employee communications, such as open enrollment materials.
Implementing matching HSA contributions through your company’s cafeteria plan can significantly enhance your employee benefits package. By understanding and complying with the relevant regulations, you can offer a valuable benefit that helps attract and retain top talent while providing employees with a tax-advantaged way to save for medical expenses.
For more information on setting up a compliant HSA matching program, reach out to Sales@NueSynergy.com.
Source: Thomson Reuters
by Lexi Garcia | Nov 25, 2024 | Blog
In today’s competitive job market, offering attractive employee benefits is essential for attracting and retaining top talent. One effective way to enhance your benefits package is by providing low-cost Health Savings Account (HSA) investment options. NueSynergy stands out as a leader in this space, having been named among the top HSA providers by Morningstar. Our innovative solutions not only support employee health but also promote financial wellness. Let’s explore the key benefits of integrating low-cost HSA investment options into your employee benefits strategy.
1. Investment Growth Potential
NueSynergy offers a diverse range of investment options within its HSAs, allowing employees to grow their savings over time. With low expense ratios and a selection of high-quality investment choices, employees can benefit from potential market gains while preparing for future healthcare costs. As previously mentioned in Morningstar, NueSynergy’s investment offerings include no Neutral- or Negative-rated funds, and 64% of its menu was Gold-rated as of August 2024. This investment growth can significantly enhance their financial security.
2. Flexibility and Accessibility
NueSynergy’s HSAs are designed to be user-friendly and accessible. Employees can easily manage their accounts online, making it simple to track contributions, investments, and withdrawals. This flexibility empowers employees to take control of their healthcare spending and investment strategies, fostering a sense of ownership over their financial health.
3. Attracting and Retaining Talent
Offering low-cost HSA investment options can set your company apart in the eyes of potential employees. As more individuals prioritize financial wellness in their job search, providing a robust benefits package that includes HSAs can enhance your employer brand. NueSynergy’s commitment to affordable and effective HSA solutions makes it an attractive choice for companies looking to improve their benefits offerings.
4. Promoting Financial Literacy
By integrating HSAs into your employee benefits, you also promote financial literacy among your workforce. NueSynergy provides resources and support to help employees understand how to effectively use their HSAs for both immediate medical expenses and long-term investment growth. This education empowers employees to make informed decisions about their healthcare and finances.
Incorporating low-cost HSA investment options through NueSynergy into your employee benefits package is a strategic move that can enhance employee satisfaction and loyalty. With the potential for tax savings, investment growth, and increased financial literacy, HSAs represent a win-win for both employers and employees. By prioritizing these benefits, you can create a healthier, more financially secure workforce.
by Lexi Garcia | Nov 14, 2024 | Blog
When managing employee benefits, grasping the intricacies of Health Flexible Spending Accounts (FSAs) is essential, especially if your company is considering adding employer contributions like matching or seed contributions. You may be curious about how these contributions impact the IRS contribution limits.
Contribution Limits Overview
For plan years starting in 2026, the IRS sets the limit for health FSA salary reduction contributions at $3,300, which will increase to $3,400 in 2026. It’s important to note that this limit applies solely to contributions made through employee salary reductions.
Do Employer Contributions Count?
The good news is that nonelective employer contributions, such as matching or seed contributions, typically do not count toward this limit. However, there’s an important caveat: if employees can choose to receive these contributions in cash or as a taxable benefit, they will be considered salary reductions and will count toward the limit if contributed to the health FSA.
Compliance Considerations
Introducing employer contributions can also bring additional compliance challenges. For example, if contribution amounts differ among employees, your plan might violate the nondiscrimination rules outlined in the Internal Revenue Code.
Additionally, to qualify as an excepted benefit, the maximum benefit payable for the year must not exceed either twice the employee’s health FSA salary reduction election or the salary reduction election plus $500, whichever is greater. If employer contributions are included, it’s crucial to ensure they don’t push the health FSA beyond this maximum benefit threshold.
While employer contributions can enhance your benefits package, they require careful planning to maintain compliance with IRS regulations. By understanding how these contributions interact with the limits and other compliance issues, you can make informed decisions that benefit both your employees and your organization.
If you have any further questions or need assistance with your cafeteria plan, feel free to reach out!
Source: Thomson Reuters
by Lexi Garcia | Sep 26, 2024 | Blog
As the deadline for the 2024 HIPAA Privacy Rule approaches, companies sponsoring ERISA group health plans must take specific actions to ensure compliance. This rule introduces new prohibitions on the use and disclosure of protected health information (PHI) related to reproductive health care, along with new attestation requirements and updates to privacy practices. Here’s a comprehensive guide to help your company navigate these changes.
Modify HIPAA Policies and Procedures
Review and update your HIPAA policies and procedures to align with the 2024 Privacy Rule. Key updates include:
- Definitions: Add or revise definitions of reproductive health care, person, and public health.
- Prohibited Uses and Disclosures: Include language prohibiting the use or disclosure of PHI for:
- Investigations against individuals seeking or providing lawful reproductive health care.
- Identifying individuals for investigation or liability purposes related to lawful reproductive health care.
- Attestation Process: Describe the attestation process and required content for requests related to reproductive health care PHI. Utilize the model attestation form provided by HHS.
- Reporting and Requests: Revise provisions for reporting abuse, neglect, or domestic violence, and for law enforcement administrative requests.
- Personal Representatives: Clarify when to treat a person as an individual’s personal representative.
Conduct Training
Update your HIPAA training programs to incorporate the 2024 Privacy Rule requirements. Ensure that workforce members understand the new processes for handling PHI requests related to reproductive health care.
Review Business Associate Agreements
Examine and update business associate agreements to ensure compliance with the 2024 Privacy Rule. Verify that business associates are adhering to the new requirements.
Update Risk Analysis and Risk Management Plans
- Risk Analysis: Review and update the risk analysis to address the risk of impermissible disclosures of ePHI related to reproductive health care.
- Risk Management Plans: Evaluate and update risk management plans to address identified risks and vulnerabilities.
Conclusion
By taking these steps, your company can ensure compliance with the 2024 HIPAA Privacy Rule to Protect Reproductive Health Care. Staying proactive and informed will help safeguard PHI and uphold the privacy rights of individuals seeking reproductive health care.
Source: Thomson Reuters
