by admin | Apr 24, 2025 | Blog
Navigating the complexities of the Family and Medical Leave Act (FMLA) can be challenging, especially when it comes to maintaining health coverage for employees on unpaid leave. This guide will help you understand what to do when an employee on FMLA leave fails to pay their health insurance premiums on time, and how it affects Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), Health Savings Accounts (HSAs), and COBRA.
Employer Obligations
Under FMLA, employers must maintain health coverage for employees on leave as if they were still working. This obligation ends if the premium payment is over 30 days late, unless your company policy allows a longer grace period.
Steps Before Dropping Coverage
Before dropping an employee’s health coverage, provide written notice at least 15 days before coverage ends, specifying the termination date if payment isn’t received. Send the notice at least 15 days before the end of the grace period.
Termination of Coverage
Coverage can be terminated retroactively if your company policy allows, otherwise, it ends prospectively at the grace period’s end.
Impact on FSAs, HRAs, and HSAs
- FSAs: Employees can choose to continue or revoke their FSA coverage during unpaid FMLA leave. Payment options include pre-pay, pay-as-you-go, and catch-up contributions.
- HRAs: Employers must extend COBRA rights to HRAs. Employees can use their HRA balance during COBRA coverage, and employers should calculate a reasonable premium for the HRA.
- HSAs: Employees can continue contributing to their HSA during COBRA coverage and use HSA funds to pay for COBRA premiums.
COBRA and ACA Rules
A COBRA election notice isn’t required for coverage loss due to nonpayment. However, failure to return to work after FMLA leave is a COBRA qualifying event. ACA allows cancellation for nonpayment, but stricter state laws may apply.
Restoring Coverage
If an employee returns from FMLA leave after coverage was dropped, their health coverage must be restored.
Managing health coverage for employees on FMLA leave requires careful attention to legal requirements and company policies. By following these steps, you can ensure compliance and support your employees during their leave.
Source: Thomson Reuters
by admin | Feb 13, 2025 | Blog
When managing COBRA coverage, it’s important to know what happens if a qualified beneficiary pays less than the full premium amount. Here’s a simplified guide:
Timely Payments and Grace Periods
Qualified beneficiaries must make timely COBRA premium payments, with a 30-day grace period each month. If the full premium isn’t paid by the end of this period, coverage can be terminated. However, there are special rules for small shortfalls.
What is an Insignificant Shortfall?
An insignificant shortfall is a payment that is less than or equal to the lesser of $50 or 10% of the required premium. For example, if the premium is $490, a shortfall of up to $49 is considered insignificant.
Handling Insignificant Shortfalls
- Notify the Beneficiary: Inform them of the shortfall and give them a reasonable period (usually 30 days) to pay the difference.
- Grace Period: Allow the beneficiary to pay the remaining amount during this period to avoid termination.
- Accept Underpayment: Alternatively, the plan can accept the underpayment as full payment.
Best Practices
- Include Procedures: Clearly outline shortfall procedures in your COBRA plan.
- Prepare Notices: Have a standard notice ready for shortfalls.
- Prompt Notification: Send the notice as soon as a partial payment is received.
By following these steps, you can manage COBRA coverage effectively and ensure compliance with regulations. This helps prevent unnecessary termination and gives beneficiaries a fair chance to maintain their health benefits.
Source: Thomson Reuters
by admin | Oct 18, 2024 | Blog
NueSynergy was honored to be recognized by Morningstar as a Top HSA Administrator in 2024. This recognition highlights NueSynergy’s commitment to offering exceptional HSA services that help individuals and families manage their healthcare expenses effectively.
Why NueSynergy Stands Out
NueSynergy has earned its place among the top HSA providers by offering a range of features that cater to the needs of its users:
- Investment Options: NueSynergy was recognized for its extensive variety of value-based investment options, with the majority consisting of gold rated Morningstar funds.
- Competitive Interest Rates: Account holders benefit from competitive interest rates on their deposits, ensuring their money grows even as they use it for medical expenses.
- User-Friendly Platform: The intuitive platform makes it easy to manage accounts, track expenses, and make informed investment decisions.
National HSA Day
Earlier this week, we celebrated National HSA Day, which recognizes the importance of Health Savings Accounts (HSAs), raising awareness about their benefits. HSAs can be used not only for immediate medical expenses but also as a strategic tool for retirement planning. By understanding and utilizing HSAs, individuals can take control of their healthcare finances and secure a healthier financial future.
As we celebrate National HSA Day, it’s the perfect time to explore the benefits of HSAs and consider why NueSynergy is a top choice for managing your healthcare savings. With its competitive interest rates and robust investment options, NueSynergy stands out as a leader in the industry. Take advantage of this day to learn more about HSAs and how they can benefit you and your family.
What is an HSA?
A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals with high-deductible health plans (HDHPs) save for medical expenses. HSAs offer a triple tax benefit: contributions are tax-deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are also tax-free. This makes HSAs a powerful tool for both current healthcare spending and long-term savings.
About NueSynergy
NueSynergy is known for industry-leading service, innovative technology, and excellence in providing full-service administration of consumer-driven and traditional account-based plans to employers of all sizes and sectors. NueSynergy offers a fully integrated suite of administration services, which include Health Savings Account (HSA), Health Reimbursement Arrangement (HRA), Flexible Spending Account (FSA), Lifestyle Savings Account (LSA), and COBRAcare+ administration as well as SpouseSaver Incentive Account, Combined Billing, Direct Billing, and Specialty Solutions. For more information, visit https://nuesynergy.com/
About Morningstar
Morningstar is a leading provider of independent investment research and insights. The company offers a wide range of products and services for individual investors, financial advisors, asset managers, and institutional investors. Morningstar provides data and research on various investment offerings, including mutual funds, ETFs, stocks, and bonds. Additionally, they offer investment management services through their subsidiaries, managing approximately $286 billion in assets as of December 31, 2023. Morningstar operates in 32 countries, empowering investor success globally.
by admin | Aug 8, 2024 | Blog
COBRA, the Consolidated Omnibus Budget Reconciliation Act, provides employees with the option to continue their health insurance coverage after leaving their job. However, certain circumstances can lead to the early termination of this coverage. One such circumstance is the submission of fraudulent claims.
Terminating COBRA Coverage for Fraudulent Claims
A qualified beneficiary’s COBRA coverage can be terminated for submission of fraudulent claims if three key requirements are met:
- The health plan must allow the termination of active employees’ coverage for the same reason.
- The plan must permit the termination of COBRA coverage for cause.
- The plan’s COBRA notices and communications must disclose the plan’s right to terminate coverage for cause.
Regulatory Guidelines
COBRA regulations specify that a qualified beneficiary’s coverage may be terminated for cause on the same basis that would apply to similarly situated active employees under the terms of the plan. This includes the submission of fraudulent claims. Thus, if an active employee’s coverage can be terminated for submission of fraudulent claims, COBRA coverage can be terminated early for the same reason, provided it is allowed by the plan and disclosed in COBRA notices and the plan’s summary plan description.
Proceeding with Caution
Terminating coverage early is a decision that should be made with caution. Employers wishing to terminate COBRA coverage early for other types of misconduct would need to analyze the circumstances to determine whether the plan would allow termination of an active employee’s coverage for that type of misconduct. It is advisable to consult with legal counsel and the plan’s insurer or stop-loss insurer if applicable.
Final Steps
If you decide to terminate the qualified beneficiary’s coverage based on fraudulent submission, remember to send the required notice of termination of COBRA coverage to any qualified beneficiary whose COBRA coverage terminates before the expiration of the maximum coverage period.
In conclusion, while it is possible to terminate COBRA coverage early due to fraudulent claims, it is a decision that should be made carefully, following the guidelines set forth by your health plan and COBRA regulations.
Source: Thomson Reuters
by admin | Jul 25, 2024 | Blog
Navigating the complexities of medical coverage during unpaid Family and Medical Leave Act (FMLA) leave can be challenging for both employees and employers. One common question that arises is whether employees can prepay their share of medical plan coverage on a pre-tax basis. The answer is yes, but it depends on the specifics of your cafeteria plan.
Prepayment Option Under FMLA
The IRS FMLA regulations permit three payment options for employees wishing to pay their share of the premiums for group health coverage during an unpaid FMLA leave. These options are prepay, pay-as-you-go, and catch-up.
Prepay allows employees to pay the contributions due during the leave before the leave commences. This option cannot be the sole option offered to employees on FMLA leave, although it may be restricted to employees on FMLA leave.
Pay-as-you-go enables the employee to pay his or her share of the cost of coverage during the leave.
Catch-up involves the employer advancing payment of the employee’s share during leave, and the employee repays the employer upon return.
Your cafeteria plan may provide one or more of these payment options, as long as the options for employees on FMLA leave are offered on terms at least as favorable as those offered to employees not on FMLA leave.
How Does Prepayment Work?
Under the prepay option, employees are given the opportunity to pay, before starting FMLA leave, the contributions that will be due during the leave period. They can voluntarily elect to reduce their final pre-leave paychecks or make special salary reduction contributions to cover their share of the premiums for all or part of the expected duration of the leave. Prepay contributions could also be made on an after-tax basis.
During the leaves, your company would pay its share of the premium in the same manner as before. When an employee’s leave ends, the employee’s previous salary reduction election would resume for the rest of the plan year unless the employee makes a change in election permitted under IRS regulations upon return from leave.
Limitations of Prepayment
If an employee’s leave straddles two plan years, only the contributions for coverage during the first plan year can be prepaid on a pre-tax basis. This is due to the cafeteria plan “no-deferred-compensation” rule that generally prohibits the use of one year’s contributions to fund benefits in a subsequent year. However, a cafeteria plan with a grace period under its premium payment component could arguably allow employees taking an FMLA leave that straddles two plan years to make pre-tax prepayments for up to 2-1/2 months of coverage during the second plan year before the leave begins.
Conclusion
Understanding the options for medical coverage during unpaid FMLA leave is crucial for both employees and employers. While prepayment is a viable option, it’s essential to consider the specifics of your cafeteria plan and the IRS regulations to ensure compliance.
Source: Thomson Reuters
