HIPAA Special Enrollment Rights: Notices for Group Health Plans and Their Impact on HRAs, HSAs, and FSAs

HIPAA Special Enrollment Rights: Notices for Group Health Plans and Their Impact on HRAs, HSAs, and FSAs

HIPAA special enrollment rights allow eligible employees to enroll in health plans outside the regular enrollment period due to specific life events. These rights also impact Health Reimbursement Arrangements (HRAs), Health Savings Accounts (HSAs), and Flexible Spending Accounts (FSAs).

When and Who Receives the Notice?

Notices must be provided to all eligible employees at or before the time they are first offered the opportunity to enroll. This includes employees who:

  1. Decline coverage due to other health insurance and later lose eligibility.
  2. Become eligible for state premium assistance under Medicaid or CHIP.
  3. Acquire a new spouse or dependent by marriage, birth, adoption, or placement for adoption.

What Should the Notice Include?

The notice must describe special midyear enrollment opportunities and inform participants about deadlines for enrollment requests—30 days for most events, 60 days for Medicaid or CHIP-related events.

Distribution Methods

Include the notice with plan enrollment materials and, if conditions are met, distribute it electronically.

Impact on HRAs, HSAs, and FSAs

Special enrollment rights can affect contributions and usage of HRAs, HSAs, and FSAs:

  • HRAs: Adjust contributions or usage to align with new coverage.
  • HSAs: Review HSA contributions and ensure compliance with IRS rules.
  • FSAs: Update FSA elections to reflect changes in coverage or dependent status.

Consequences of Non-Compliance

Failing to provide the notice timely can lead to enrollment issues and potential penalties from the Department of Labor (DOL).

Providing HIPAA special enrollment notices is essential for compliance and helps employees make informed decisions about their health coverage and financial accounts. Understanding the impact on HRAs, HSAs, and FSAs ensures that employees can effectively manage their health-related financial accounts in conjunction with their health plan enrollment.

Source: Thomson Reuters

HIPAA Special Enrollment Rights: Notices for Group Health Plans and Their Impact on HRAs, HSAs, and FSAs

Midyear Health FSA Election Changes: Essential Guidelines for Employers and Employees

Administering a Health Flexible Spending Account (FSA) can be challenging, especially when employees request midyear changes to their elections due to unforeseen medical circumstances. This blog post aims to clarify the rules surrounding midyear election changes and provide practical tips for employers to manage these situations effectively.

Can Employees Change Health FSA Elections Midyear?

Question: Can employees reduce their Health FSA contributions if they are prevented from receiving anticipated medical care after enrollment?

Answer: No, employees cannot change their Health FSA elections under these circumstances. According to IRS regulations, an employee’s Health FSA election is irrevocable during a plan year unless an event occurs that fits within one of the exceptions available under IRS regulations or other guidance. Changes in medical condition or a provider’s recommendation do not qualify as changes in status and do not fall within the other exceptions applicable to Health FSAs.

Examples of Non-Qualifying Situations
  • Pregnancy and Laser Eye Surgery: If a doctor refuses to perform laser eye surgery on an employee who is pregnant, the employee cannot change their Health FSA election.
  • Dental Work Changes: If an employee’s spouse does not undergo planned dental work because the dentist’s recommendation changed, the employee cannot adjust their Health FSA contributions.

These situations do not qualify as “mistakes” that would allow an election change. The IRS’s 2007 proposed cafeteria plan regulations include an example where an employee elects Health FSA salary reductions for the next plan year in anticipation of eye surgery. If the surgery cannot be performed after the plan year starts, the employee must forfeit the remaining balance under the use-or-lose rule if their other eligible medical expenses are less than the amount contributed.

Minimizing Employee Relations Issues

While election changes are not allowed under these circumstances, employers can take steps to minimize employee relations issues:

  1. Clear Communication: Ensure that enrollment and other materials clearly explain the limited reasons for midyear election changes. Including real-life examples can be helpful.
  2. Remind Employees of Eligible Expenses: Employees may still use the funds by submitting other eligible expenses for reimbursement.
  3. Plan Amendments: Consider amending your plan to allow Health FSA carryovers of up to $660 to the next plan year. The maximum carryover amount is indexed, so stay updated on the latest limits.
  4. Grace Period: Adopt a grace period to give employees extra time to use up remaining funds.

By proactively addressing these issues, employers can help employees better understand their Health FSA options and reduce frustration related to midyear election changes.

Source: Thomson Reuters

HIPAA Special Enrollment Rights: Notices for Group Health Plans and Their Impact on HRAs, HSAs, and FSAs

Understanding DCAP Reimbursements: Application Fees, Deposits, and Indirect Expenses

Navigating the intricacies of Dependent Care Assistance Programs (DCAP) can be challenging, especially when it comes to understanding what expenses qualify for reimbursement. One common question that arises is whether application fees, deposits, and similar expenses can be reimbursed. Here, we break down the IRS regulations and provide clarity on this topic.

What Are Indirect Expenses?

Indirect expenses are costs that are not directly for care but are necessary to obtain care. Examples include application fees and deposits paid to day-care centers or preschools. According to IRS regulations, these expenses may qualify for reimbursement under a DCAP if they meet specific criteria.

Criteria for Reimbursement

To be eligible for reimbursement, indirect expenses must:

  1. Be Required for Care: The employee must be required to pay these expenses to obtain related care.
  2. Meet DCAP Rules: The expenses must comply with DCAP rules and the plan document.
  3. Relate to Provided Care: The care to which these expenses relate must actually be provided.

Examples of Reimbursable and Non-Reimbursable Expenses

  • Reimbursable: If a DCAP participant pays a $100 application fee to secure a spot at a new day-care provider, this fee can be reimbursed once the care is provided.
  • Non-Reimbursable: If a participant pays a $100 deposit to a preschool but later decides not to enroll the child, the deposit is not reimbursable since the care was not provided.

Timing of Reimbursement

The IRS does not specify whether indirect expenses can be reimbursed in full once care commences or if they must be reimbursed proportionately over the duration of the care agreement. To err on the side of caution, it is advisable to prorate the reimbursement over the agreement’s duration. For instance, if the agreement is month-to-month, the entire fee might be reimbursed after the first month of care. For longer agreements, the fee should be prorated accordingly.

Conclusion

Understanding the nuances of DCAP reimbursements for indirect expenses like application fees and deposits is crucial for both employers and employees. By ensuring these expenses meet the necessary criteria and timing the reimbursements appropriately, you can navigate the DCAP rules effectively and make the most of your benefits.

Source: Thomson Reuters

HIPAA Special Enrollment Rights: Notices for Group Health Plans and Their Impact on HRAs, HSAs, and FSAs

Understanding Employee Benefit Acronyms: A Quick Guide

Employee benefits often include a lot of acronyms. What do these and other acronyms mean? They are primarily used in Cafeteria PlansConsumer-Driven Health CareERISA 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

HIPAA Special Enrollment Rights: Notices for Group Health Plans and Their Impact on HRAs, HSAs, and FSAs

Is Health Club Membership an ERISA Benefit? Understanding Employer Contributions and On-Site Fitness Centers

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