by admin | Dec 12, 2024 | Blog
Employee benefits often include a lot of acronyms. What do these and other acronyms mean? They are primarily used in Cafeteria Plans, Consumer-Driven Health Care, ERISA Compliance, COBRA, HIPAA, and Group Health Plan Mandates manuals. The list below provides a comprehensive collection of all the acronyms used.
AD&D Plan – Accidental Death and Dismemberment Plan
ADA – Americans with Disabilities Act
ASG – Affiliated Service Group
ASO – Administrative-Services-Only
ATIN – Adoption Taxpayer Identification Number
CE – Covered Entity
CMS – Center for Medicare and Medicaid Services
COB – Coordination of Benefits
COBRA – Consolidated Omnibus Budget Reconciliation Act
COLA – Cost-of-Living Adjustment
CONUS – Continental United States
DCAP – Dependent Care Assistance Program
DCTC – Dependent Care Tax Credit
DFVC Program – Delinquent Filer Voluntary Compliance Program
DOL – Department of Labor
EAP – Employee Assistance Plan
EBHRA – Excepted Benefit HRA
EBSA – Employee Benefits Security Administration
EDI – Electronic Data Interchange
EFAST2 – ERISA Filing Acceptance System II (electronic submission of Form 5500s)
EIN – Employer Identification Number
EOB – Explanation of Benefits
EOI – Evidence of Insurability
EPP – Employer Payment Plan
ERISA – Employee Retirement Income Security Act
ePHI – Electronic Protected Health Information
FAVR – Fixed and Variable Rate
FICA – Federal Insurance Contributions Act
FITW – Federal Income Tax Withholding
FLSA – Fair Labor Standards Act
FMLA – Family and Medical Leave Act
FSA – Flexible Spending Arrangement
FUTA – Federal Unemployment Tax Act
GCPCA – Gag Clause Prohibition Compliance Attestation
GHP – Group Health Plan
GTL Insurance – Group Term Life Insurance
HCE – Highly Compensated Employee
Source: Thomson Reuters
HCI – Highly Compensated Individual
HCP – Highly Compensated Participant
HDHP – High-Deductible Health Plan
Health FSA – Health Flexible Spending Arrangement
HHS – Department of Health and Human Services
HIPAA – Health Insurance Portability and Accountability Act
HMO – Health Maintenance Organization
HRA – Health Reimbursement Arrangement
HSA – Health Savings Account
ICHRA – Individual Coverage HRA
IIAS – Inventory Information Approval System
LTCI – Long-Term Care Insurance
LTD Plan – Long-Term Disability Plan
MACRS – Modified Accelerated Cost Recovery System
MCC – Merchant Category Code
MEWA – Multiple Employer Welfare Arrangement
OCR – Office for Civil Rights
PBM – Pharmacy Benefit Manager
PCORI – Patient-Centered Outcomes Research Institute
PEO – Professional Employer Organization
PHI – Protected Health Information
POP – Premium-Only Plan
PPO Plan – Preferred Provider Organization Plan
PTO – Paid Time Off
QB – Qualified Beneficiary
QE – Qualified Event
R&C – Reasonable and Customary
RRTA – Railroad Retirement Tax Act
SAR – Summary Annual Report
SBC – Summary of Benefits and Coverage
SIFL – Standard Industry Fare Level
SIHP – Self-Insured Health Plan
SMM – Summary of Material Modification
SPD – Summary Plan Description
STLDI – Short-Term, Limited-Duration Insurance
TPA – Third-Party Administrator
UCR Rate – Usual, Customary, and Reasonable Rate
VEBA – Voluntary Employees’ Beneficiary Association
by admin | Sep 19, 2024 | Blog
When companies contribute to the cost of health club memberships or provide on-site fitness centers, questions often arise about whether these benefits fall under the Employee Retirement Income Security Act (ERISA). Understanding the nuances of ERISA and how it applies to health-related benefits is crucial for employers.
What is ERISA?
ERISA is a federal law that sets standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans. For a benefit program to qualify as an ERISA plan, it must provide one or more of the benefits listed in the ERISA definition, such as medical, sickness, or disability benefits.
Health Club Memberships and ERISA
Generally, paying for employees’ health club memberships does not constitute an ERISA plan. Health and fitness clubs promote general good health but are typically made available without regard to sickness or disability. They do not diagnose or treat specific medical conditions, so they usually do not provide medical care or any other ERISA benefit. Therefore, a policy or program of paying for health club memberships would not be considered an ERISA plan.
On-Site Fitness Centers and ERISA
Similarly, providing an on-site fitness center for employees does not typically make the program subject to ERISA. On-site fitness centers, like health clubs, promote general wellness but do not provide medical care or benefits in the event of sickness. Thus, they do not meet the criteria for an ERISA plan.
Exceptions: Disease-Management Programs
In rare cases, health club memberships or access to on-site fitness centers may be part of a disease-management program that includes diagnostic, therapeutic, or preventive care. These programs might offer “coaching” for specific health conditions or risks. Such arrangements could be viewed as providing a medical benefit, potentially making them subject to ERISA and applicable group health plan rules. The complexity and fact-specific nature of these programs mean that legal counsel should be consulted to determine ERISA applicability.
Tax Considerations
Whether a benefit is subject to ERISA does not affect whether it produces taxable income for participants or beneficiaries. However, an employer’s payment or reimbursement of health club dues or provision of an on-site fitness center may raise tax issues, which should also be reviewed with legal counsel.
Conclusion
While health club memberships and on-site fitness centers generally do not fall under ERISA, exceptions exist, particularly when these benefits are part of a broader health management program. Employers should carefully evaluate their programs and consult with legal counsel to ensure compliance with ERISA and tax regulations.
Source: Thomson Reuters
by Lexi Garcia | May 2, 2024 | Blog
Question: One of our employees would like to drop his DCAP election under our calendar-year cafeteria plan because a neighbor has offered to take care of his child at no cost. Can we allow this midyear election change?
Answer: Absolutely! However, there are specific conditions to consider. If your plan document has been drafted expansively, in line with IRS rules, midyear election changes due to changes in cost or coverage are permissible. Let’s break it down:
- Broad Application of Rules:
- The IRS rules apply broadly to DCAPs, allowing midyear election changes in various circumstances.
- These circumstances include changes in care providers or adjustments in the cost of care.
- Childcare Provider Switch:
- A DCAP election change is permitted when a child transitions from a paid provider to free care (or no care, in the case of a “latchkey” child).
- So, your employee’s situation aligns with this provision.
- Other Allowable Changes:
- Beyond provider switches, other scenarios also warrant a DCAP election change:
- Adjustments in the hours for which care is provided.
- Changes in the fee charged by a provider.
- Relative Exception:
- Be cautious: An election change isn’t allowed if the cost change is imposed by a care provider who is the employee’s relative (as defined by IRS rules).
- Health FSAs vs. DCAPs:
- Remember that the cost or coverage election change rules apply broadly to DCAPs but not to health flexible spending arrangements (health FSAs).
- This distinction is essential for employers to navigate effectively.
As an employer, staying informed about DCAP rules ensures that you can accommodate midyear changes when necessary. By understanding the nuances, you can support your employees while maintaining compliance with IRS guidelines. If you have further questions, consult your tax or employee benefits advisors.
Remember, flexibility within the rules allows for better employee experiences and smoother transitions.
Source: Thomson Reuters
by Lexi Garcia | Feb 29, 2024 | Blog
QUESTION: I am reviewing our company’s employee benefit programs and confirming that they are treated appropriately for ERISA compliance purposes. Our disability program provides income-replacement benefits to employees who are unable to work because of illness or injury; payments commence once an employee is out of work for more than two weeks. Benefits are paid from the company’s general assets, not from a trust or separate account. Am I right that for this reason, our program is not an ERISA plan, or do additional conditions apply?
ANSWER: You are correct that a DOL regulation exempts certain “payroll practices,” including disability payments, from ERISA-plan status. You are also correct that the main condition of this regulatory exemption (often referred to as a safe harbor) is that the payments come from the employer’s general assets. It sounds like your program meets this requirement—but several other elements also must be considered to determine whether your program falls within the exemption. If a disability program has any of the following features, the payroll practice safe harbor is not available, and the program is most likely subject to ERISA:
- Trust or Separate Account. As noted above, making payments from the employer’s general assets is a key component of the exemption, so funding the program through a trust or separate account will take it outside the safe harbor. It is, however, generally permissible to earmark funds for the program within the employer’s general assets, so long as the funds remain available for other purposes, such as to pay the employer’s creditors.
- Insurance. Payment of benefits through insurance is not payment from the employer’s general assets, so using insurance will take the program outside the safe harbor.
- Paying More Than Normal Compensation. To fall within the safe harbor, the program may pay eligible employees only their normal compensation, or less (for example, 60% of normal compensation).
- Paying Benefits to Former Employees. The safe harbor covers only payments to employees while absent from work, not to former employees—the exemption does not apply if payments continue after an individual terminates employment. You will need to consider the duration of benefits available under the program and ensure that it does not extend beyond when the company considers termination of employment to occur. For example, if an employee who does not return to work is treated as having terminated employment before exhaustion of the disability benefits available under the program, the program does not fall within the safe harbor. As a practical matter, long-term disability programs are more likely to provide benefits beyond termination of employment and thus not meet the requirements, even if paid from the employer’s general assets.
Although it is possible that an arrangement that does not fall within the regulatory exemption may still avoid ERISA’s application under the general standard (a plan, fund, or program established or maintained by an employer to provide ERISA-listed benefits to employees), such a result is unlikely. Thus, any variations from the safe harbor requirements should be discussed with legal counsel. As a final caution, if your company wishes to treat this program as not subject to ERISA, make sure that any program documents, descriptions, and employee communications are consistent with this intent. Even though an employer generally cannot make a non-ERISA arrangement subject to ERISA by simply calling it an ERISA plan, the employer’s treatment is a factor—at least one court has found that treating a potentially exempt payroll practice as an ERISA plan was a “strong reason to find ERISA coverage.” If the company uses a single “umbrella” or “wrap” document to bundle multiple benefit programs, the document should specify which programs are—and are not—intended to be subject to ERISA.
Source: Thomson Reuters
by Lexi Garcia | Dec 7, 2023 | Blog
QUESTION: We are wondering if our company’s medical plan might qualify for an exemption from the federal mental health parity requirements. What exemptions are available?
ANSWER: The federal mental health parity requirements apply to most employer-sponsored group health plans, but there are a few exceptions. As a reminder, the mental health parity rules under the Mental Health Parity Act (MHPA) and the Mental Health Parity and Addiction Equity Act (MHPAEA) require parity between medical/surgical benefits and mental health or substance use disorder benefits in the application of annual and lifetime dollar limits, financial requirements (such as deductibles, copayments, coinsurance, and out-of-pocket maximums), quantitative treatment limitations (such as number of treatments, visits, or days of coverage), and nonquantitative treatment limitations (such as medical management standards). However, some exceptions apply:
- Small Employer and Small Plan Exemptions. An exception is available for small employers that employed an average of at least two (one in the case of an employer residing in a state that permits small groups to include a single individual) but no more than 50 employees (100 or fewer employees for certain non-federal governmental plans) on business days during the preceding calendar year. When determining whether an employer qualifies as a small employer, certain related employers (including members of a controlled group or an affiliated service group) are treated as one employer. An employer not in existence throughout the preceding calendar year will determine whether it is a small employer based on the average number of employees that it reasonably expects to employ on business days during the current calendar year. There is also an exception for plans with fewer than two participants who were current employees on the first day of the plan year (including retiree-only plans). Note that if an employer provides coverage through a group policy purchased in the small group insurance market, that group policy will be required to cover mental health and substance use disorder services in a manner that complies with the mental health parity requirements.
- Increased Cost Exemption. An increased cost exemption is available for plans that make changes to comply with the mental health parity rules and incur an increased cost of at least 2% in the first year that the MHPAEA applies to the plan (generally, the first plan year beginning on or after October 3, 2009, unless a later date applies, e.g., because the plan ceased to qualify for an exemption) or at least 1% in any subsequent plan year. Plans that comply with the parity requirements for one full plan year and satisfy the conditions for the increased cost exemption are exempt from the parity requirements for the following plan year (i.e., the exemption lasts for one plan year). After that year ends, the plan must again comply with the parity requirements for a full year before it may (potentially) qualify for the exemption again. Given the complexity of administering coverage with an every-other-year exemption, use of the increased cost exemption may be impractical.
- Excepted Benefits. The federal mental health parity requirements do not apply to group health plans that provide only excepted benefits (e.g., certain limited-scope dental or vision plans and most health FSAs).
Self-insured non-federal governmental plans could previously opt out of the requirements, but the Consolidated Appropriations Act, 2023 eliminated that right as of December 29, 2022. No new mental health parity opt-out elections may be made on or after that date and opt-out elections expiring on or after June 27, 2023, may not be renewed.
Source: Thomson Reuters
