Compliance Checklist for Group Health Plansayallc.com/documents/AYANFP_Compliance_Checklist_2015.pdf• Compliance Checklist for Group Health Issues: ... Changes Upon Request Nondiscrimination

Compliance ChecklistFor Group Health Plans

continues >

This Compliance Checklist outlines general federal group health plan requirements, including certain federal mandates, plan reporting requirements, plan document requirements and required policies and procedures.

This resource is divided into three sections:• Compliance Checklist Quick Reference Guide: charts each requirement and the timeline for compliance• Compliance Checklist for Group Health Issues: details each requirement, the penalty for failure to comply, citation of the regulation and applicability based on plan size

• Compliance Model Notices: provides text for model notices and language, which have been provided by federal regulations and guidance

Please note that the Compliance Checklist:

• Contains limited information and is not a comprehensive list of group health plan requirements; therefore, it should not be relied upon as an employer’s sole resource for compliance information.

• Includes information related to Health Care Reform provisions which are effective beginning in 2010 - 2015. Future versions will include upcoming Health Care Reform provisions scheduled for implementation in later years.

• Is a federal resource only, and therefore does not cover state mandates. Please check with your state’s insurance board for local requirements.

• Is a proprietary NFP Benefits resource and is solely for the use of NFP and Benefits Partners member firms.

National Financial Partners Corp. (NFP) and its subsidiaries do not provide legal or tax advice. Compliance, regulatory and related content is for general informational purposes and is not guaranteed to be accurate or complete. You should consult an attorney or tax professional regarding the application or potential implications of laws, regulations or policies to your specific circumstances.

Compliance Checklist for Group Health PlansPage 2 of 47

continues >

Available Model Notices:COBRA: Initial COBRA Notice

COBRA: Election Notice

ERISA: ERISA Rights Statement

ERISA: Summary Annual Report (SAR)

FMLA: General Notice

FMLA: Eligibility & Rights and Responsibilities Notice

FMLA: Designation Notice

PPACA: Exchange Notice

PPACA: Grandfathered Health Plans

PPACA: Notice of Adverse Benefit Determination

PPACA: Notice of Final Internal Adverse Benefit Determination

PPACA: Notice of Final External Review Decision

PPACA: Patient Protections

PPACA: Summary of Benefits and Coverage (SBC)

HIPAA: Certificate of Creditable Coverage

HIPAA: Notice of Availability of Reasonable Alternative Standard

HIPAA: Notice of Privacy Practices

HIPAA: Notice of Special Enrollment Rights

HIPAA: General Notice of Pre-existing Condition Exclusion

HIPAA: Employer CHIP Notice

MEDICARE: Part D Creditable Coverage Notice to Eligible Individuals

MEDICARE: Part D Non-creditable Coverage Notice to Eligible Individuals

GINA: EEOC Poster

HSA: Notice to Employees Regarding Employer Contributions to HSA

Newborns’ and Mothers’ Health Protection Act Model Language

USERRA: Notice of Your Rights Under USERRA

WHCRA: Women’s Health and Cancer Rights Act Notice

Compliance Checklist for Group Health PlansPage 3 of 47

continues >

Page 4 Compliance Checklist for Group Health Plans

Quick Reference GuideTimeline for compliance ofnotice or other requirement Quarterly Annually Every 3

YearsEvery 5-10

YearsAs

RequiredCOBRA

CoverageTermed

CoverageTermed

NewEnrollee

NewlyEligible Ongoing Upon Plan

ChangesUpon

Request

Cafeteria Plans

Cafeteria Plan Documents ü ü

Cafeteria Plan NondiscriminationTesting ü

Health FSA NondiscriminationTesting ü

DCAP Nondiscrimination Testing ü

Simple Cafeteria Plan SafeHarbor ü ü

Health FSA Limit ü ü

COBRA

COBRA Initial Notice ü

COBRA Election Notice ü

Notice of Unavailability ofContinuation Coverage ü

Notice of Early Termination ofCOBRA Coverage ü

ERISA

Plan Documents ü

Summary Plan Description (SPD) ü ü ü

Summary of Material Modification(SMM) ü ü ü

Summary of Material Reductionin Covered Services or Benefits ü ü

Form 5500 ü

Form 5500-SF ü

Accountant's Report ü

Summary Annual Report (SAR) ü ü

Summary of Benefits andCoverage (SBC) ü ü ü ü ü

Fidelity Bond ü

FMLA

General Notice ü

Eligibility Notice ü

Rights and ResponsibilitiesNotice ü

Pages 8-10

Pages 11-12

Pages 12-16

Pages 16-19

of 47

continues >


Quick Reference Guide continuedTimeline for compliance ofnotice or other requirement Quarterly Annually Every 3

YearsEvery 5-10

YearsAs

RequiredCOBRA

CoverageTermed

CoverageTermed

NewEnrollee


ChangesUpon

Request

FMLA

Designation Notice ü

Notice of Opportunity to ChangeHealth Plans ü

Notice of Nonpayment ofPremiums ü

Health Care Reform

Grandfathered Health Plans ü ü

Prohibition on Stand-alone HRA's ü ü

Dependent Coverage ü ü

Internal Claims and Appeals andExternal Review Procedures ü ü ü ü ü

Annual and Lifetime Dollar Limits ü ü ü

OTC Medicines or Drugs ü

Patient Protections ü ü ü

Preventive Care Mandate ü ü

Pre-existing Condition ExclusionProhibition ü ü

Rescission of Coverage ü ü ü

Patient-centered OutcomesResearch (PCOR) Institute Fee ü ü

Notice of Exchange ü ü

Form W-2 ReportingRequirement ü ü

Reinsurance Fee ü

Health Insurance Tax (HIT) ü

90-day Waiting Periods ü ü

Women's Preventive CareServices ü

Maximum Out-of-pocket (MOOP)Limit ü ü

Coverage for Clinical Trials ü ü

Health Care Reform- 2015

Employer Mandate ü ü ü

Information Reporting underSection 6055 ü ü ü

Pages 16-19

Pages 19-29

Pages 30-32

of 47

continues >



YearsEvery 5-10

YearsAs

RequiredCOBRA

CoverageTermed

CoverageTermed

NewEnrollee


ChangesUpon

Request

Health Care Reform- 2015

Informational Reporting underSection 6056 ü ü ü

HIPAA Privacy

Privacy Policies and Procedures ü

Security Policies and Procedures ü

Notice of Privacy Practices ü ü ü

Breach Notifications ü ü

Business Associate Agreement ü

HIPAA Portability

Certificate of CreditableCoverage ü ü ü

Special Enrollment Rights ü

General Notice of Pre-existingCondition Exclusion ü

Individual Notice of Pre-existingCondition Exclusion ü

CHIPRA ü ü ü

Wellness Program Requirements ü

HIPAA Nondiscrimination Rulesfor Eligibility and Benefits ü

Medicare/TRICARE

Medicare Part D DisclosureNotice to CMS ü ü

Medicare Part D DisclosureNotice to Eligible Individuals ü ü ü ü ü ü ü

Medicare Section 111 Reporting ü

Medicare Prohibitions ü

TRICARE Prohibitions ü

Nondiscrimination

Section 105(h) NondiscriminationTesting ü ü

Cafeteria Plan, Health FSA andDCAP Nondiscrimination Testing ü

Genetic InformationNondiscrimination Act (GINA) ü

Pages 30-32

Pages 32-34

Pages 35-39

Pages 39-41

Pages 42-43

of 47

continues >



YearsEvery 5-10

YearsAs

RequiredCOBRA

CoverageTermed

CoverageTermed

NewEnrollee


ChangesUpon

Request

Nondiscrimination

HIPAA Nondiscrimination

Taxation

Taxation of Group Term LifeInsurance ü

Taxation of Same-sex Benefits ü

Other Federal Mandates

HSA Notice to EmployeesRegarding EmployerContributions

ü

Mental Health Parity andAddiction Equity Act (MHPAEA) ü ü

Newborns' and Mothers' HealthProtection Act (NMHPA) ü ü

Qualified Medical Child SupportOrder (QMCSO) ü

Uniformed Services Employmentand Reemployment Rights Act(USERRA)

ü ü

Women's Health and CancerRights Act (WHCRA) ü ü

Pages 42-43

Pages 43-44

Pages 44-46

of 47

continues >


Cafeteria PlansItem Description Due Date Penalty Employer Size

Cafeteria PlanDocuments

Applies to every employer that permits employees to pay for benefits withpre-tax dollars. Must have a written document containing the operating rulesof the plan, descriptions of each qualified benefit available (i.e., healthpremiums, health FSA, DCAP, group term life insurance, HSA, etc.), graceperiod availability, eligibility rules, manner of contributions, maximumemployer and employee contributions, ordering rules, plan year, electionprocedures, timing of and irrevocability of participant elections, allowablequalified changes, claims and reimbursement procedures, substantiationrules, health FSA uniform coverage and use-it-or-lose-it rule (if applicable),run-out period description, and amendment procedure.

Must be formally adopted by theemployer prior to the first day of theplan year.

Failure to adopt plan document priorto the plan's effective date or failure tooperate in compliance with thedocument or the regulations can resultin disqualification of the plan'sfavorable tax status.

All sizes

In compliance? Comments/Plan of action:Yes No N/A

Cafeteria PlanNondiscriminationTesting

Cafeteria plans provide tax advantages to employees. Accordingly, acafeteria plan must not discriminate in favor of -

(1) Highly compensated individuals as to eligibility to participate (the EligibilityTest);(2) Highly compensated participants as to contributions and benefits (theContributions and Benefits (C&B) Test); or(3) Key employees as to concentration of benefits (the Key EmployeeConcentration Test).

Note that the cafeteria plan will not cease to be a valid Code Section 125 planjust because it is discriminatory.

The term "highly compensated participant" means a participant who is -

(1) An officer;(2) A shareholder owning more than 5 percent;(3) Highly compensated as determined by looking at the preceding plan year($115,000 for 2014 and 2013, $120,000 for 2015); or(4) A spouse, parent, child or grandchild of an individual described above.

The term "key employee" means a participant who, during the plan year, is -

(1) An officer with annual compensation of $170,000 for 2014 and 2015;(2) More-than-5 percent owner; and(3) More-than-1 percent owner with compensation over $150,000.

Simple cafeteria plan safe harbor is available for small employers.

Compliance requirements areongoing, but nondiscrimination testingmust be performed as of the last dayof the plan year.

A highly compensated participant orkey employee participating in adiscriminatory cafeteria plan mustinclude in gross income the value ofthe taxable benefit with the greatestvalue that the employee could haveelected to receive, even if theemployee elects to receive only thenontaxable benefits offered.

All sizes


of 47

continues >


Cafeteria Plans continuedItem Description Due Date Penalty Employer Size

Health FSANondiscriminationTesting

Health FSAs are subject to nondiscrimination testing under both Section 125Cafeteria Plan Nondiscrimination Testing and Section 105(h)Nondiscrimination Testing. Please check with your advisor to determinestrategies to assist with passing this test.

Compliance requirements areongoing, but nondiscrimination testingmust be performed as of the last dayof the plan year.

If the health FSA discriminates in favorof highly compensated individuals,then amounts considered to be"excess reimbursements" paid to themwill be taxable.

All sizes


DCAPNondiscriminationTesting

A dependent care assistance program (DCAP) may not favor highlycompensated employees (HCEs) and must satisfy four specificnondiscrimination tests:

(1) Eligibility Test: A DCAP must not discriminate in favor of HCEs or theirdependents as to eligibility to participate.

(2) Contributions and Benefits Test: A DCAP must not discriminate in favorof HCEs or their dependents as to contributions and benefits received underthe plan.

(3) More-than-5 percent Owners Concentration Test: Not more-than-25percent of the amounts paid or incurred by the employer for dependent carefor a plan year may be provided to shareholders or owners (or their spousesor dependents) who own more-than-5 percent in the stock, capital or profitsinterest in the employer.

(4) 55 percent Average Benefits Test: The average DCAP benefits providedto the non-HCEs under all plans of the employer must be at least 55 percentof the average benefits provided to HCEs under all plans of the employer.

In general, HCEs for purposes of DCAP testing are employees whosecompensation during the preceding plan year exceeded the HCE dollarthreshold for that year or who were more-than-5 percent owners in thecurrent or preceding plan year. For 2013 and 2014, the HCE dollar thresholdis $115,000. For 2015 (used for 2016 testing), the HCE dollar threshold is$120,000.

Compliance requirements areongoing.

IRC Section 129 does not addresswhen DCAP nondiscrimination testingmust be performed. As a general rule,though, testing should be performed ateach of the following times:

• Before the beginning of the plan year(based on projected data). Such earlytesting is valuable because anticipatedproblems may be resolved withelection or plan design changes. (Itmay be useful to perform the testingafter open enrollment, to determinewhether actual participation reflectsprojected participation.)

• Several months before the end of theplan year (using year-to-date data,plus projections). At this point, theemployer can take into account actualdata for the year, including new hires,midyear election changes for changein status, terminations of employment,etc. If any testing problems appear atthis point, the employer will still havetime to make corrections before theend of the plan year.

• After the close of the plan year. Finalplan testing with year-end numbersshould be documented and retainedso that the employer can show, uponaudit, that the plan passes theappropriate tests.

• Before completing any businessacquisition or reorganization.

The consequence of failing to meetthe requirements of the discriminationtests outlined in this section is that theHCEs as defined in Code Section 414(q) lose their exclusion for DCAPreimbursements.

All sizes


of 47

continues >


Cafeteria Plans continuedItem Description Due Date Penalty Employer Size

Simple Cafeteria PlanSafe Harbor

Health care reform allows eligible small employers to establish a simplecafeteria plan in order to exempt the plan from certain nondiscrimination teststhat are otherwise applicable. An employer eligible to establish a simplecafeteria plan is any employer that, during either of the two preceding years,employed an average of 100 or fewer employees.

All employees with at least 1,000 hours of service must be eligible toparticipate, and employers must make certain employer contributions if theywish to elect this plan design.

Available for plan years beginning onor after Jan. 1, 2011. Employers mustadopt the plan no later than the daybefore the first day the SIMPLEcafeteria plan will be offered. If anexisting plan is being amended toprovide for the simple plan design,they must amend the plan on a timelybasis prior to the beginning of the planyear in which the SIMPLE plan will beoffered.

No penalty; plan design will exemptplan from nondiscrimination rules forcafeteria plans, health flexiblespending accounts (FSAs), dependentcare assistance programs, and groupterm life insurance as long ascontribution, eligibility and participationrequirements are met.

100 or Less


Health FSA Limit Health care reform imposes a $2,500 limit on annual employee salaryreduction contributions to health FSAs offered under cafeteria plans.Nonelective employer contributions to health FSAs are not included in thislimit. Grandfathered exemptions do not apply to this requirement, so all healthFSAs offered under cafeteria plans must comply.

This limit is adjusted annually for inflation. For 2015, the limit increased to$2,550.

Effective for the first plan yearfollowing Jan. 1, 2013. Plandocuments must be amended no laterthan Dec. 31, 2014, which meansamendments may be effectiveretroactively.

Failure to operate in compliance withthe plan document or the regulationscan result in disqualification of theplan's favorable tax status.

A cafeteria plan that erroneouslyallowed an employee to elect salaryreductions in excess of the limit for aplan year will not fail to qualify as acafeteria plan for that plan year if thefollowing requirements are met:

(1) The terms of the plan applyuniformly to all participants;(2) The error results from areasonable mistake by the employeror its agent; and(3) Salary reductions in excess of thelimit are paid to the employee andreported as wages for federal incometax withholding and employment taxpurposes for the employee's taxableyear in which, or with which, ends thecafeteria plan year that the correctionis made.

All sizes


of 47

continues >


COBRAItem Description Due Date Penalty Employer Size

COBRA Initial Notice COBRA applies to group health plans sponsored by employers with 20 ormore employees in the previous calendar year. The Initial Notice providesgeneral information on COBRA rights.

The notice should include plan name, address and telephone number, ageneral description of continuation coverage under the plan, a description ofqualifying event notice requirements and plan procedures. Also include astatement regarding contact information to obtain more complete information.

On May 2, 2014, the DOL released a new version of the COBRA InitialNotice, which has been updated to reflect the Marketplace enrollmentopportunity. Employers and administrators should ensure they are utilizingthe most current version of the notice.

The law is unclear on whether Indian Tribal plans are subject to COBRA.Such plans should seek legal counsel.

Must be distributed to new planparticipants (and covered spouses,but not dependents) within 90 days ofcoverage start date.

Legal action may be brought byparticipants and an ERISA $110 perday fine may be assessed. If violationis not corrected within 30 days ofdiscovery, then employer must self-report violation on IRS Form 8928 anda civil penalty of $100 per day wouldbe assessed.

20+


COBRA Election Notice Notifies qualified beneficiaries of their right to continue coverage following aqualifying event. Should be written in plain language that the averageparticipant can understand. Must include the plan name, administrator'scontact information, qualifying event, coverage termination date, names ofqualified beneficiaries (QBs), statement that each QB has an independentright to elect COBRA, election procedures, election deadline, consequencesof not electing coverage, coverage description, and payment information.Also include a statement that the notice does not fully describe all QB's rights;more information can be obtained from the SPD.

On May 2, 2014, the DOL released a new version of the COBRA ElectionNotice, which has been updated to reflect the Marketplace enrollmentopportunity. Employers and administrators should ensure they are utilizingthe most current version of the notice.


Employer has 30 days to notify planadministrator of qualifying event; planadministrator must distribute notice tocovered employees, spouse anddependents within 14 days ofemployer notification. If employer andplan administrator are the same, thereis a combined 44 days from thequalifying event in which the employeris required to provide notice. Longerperiods may apply to the noticetimeframe for multiple employer plans.

Legal action may be brought byparticipant and an ERISA $110 perday fine may be assessed.Additionally, employer may be heldliable for any medical costs incurredby participant. If violation is notcorrected within 30 days of discovery,then employer must self-reportviolation on IRS Form 8928, and a civilpenalty of $100 per day will beassessed.

20+


Notice of Unavailabilityof ContinuationCoverage

Provides explanation as to why individual is not entitled to continuationcoverage. Should be written in plain language that the average participantcan understand.


The plan administrator must providethe notice of unavailability within thetime period that would apply forproviding the election notice. Thisdeadline is generally 14 days after theplan administrator has received noticeof a qualifying event. See COBRAElection Notice for more information.

Legal action may be brought byparticipant and an ERISA $110 perday fine may be assessed. If violationis not corrected within 30 days ofdiscovery, then employer must self-report violation on IRS Form 8928 anda civil penalty of $100 per day will beassessed.

20+


of 47

continues >


COBRA continuedItem Description Due Date Penalty Employer Size

Notice of EarlyTermination of COBRACoverage

Notifies a qualified beneficiary that continuation coverage will terminateearlier than the maximum period. Should be written in plain language that theaverage participant can understand. Must include the early termination date,reason for early termination and explanation of any conversion rights.


Must be distributed to a qualifiedbeneficiary as soon as practicablefollowing the administrator'sdetermination that continuationcoverage will terminate.

Legal action may be brought byparticipants and an ERISA $110 perday fine may be assessed. If violationis not corrected within 30 days ofdiscovery, then the employer mustself-report a violation on IRS Form8928 and pay a civil penalty of $100per day.

20+


ERISAItem Description Due Date Penalty Employer Size

Plan Documents The written instruments under which a benefit plan is established or operated.The plan documents must:

(1) Designate a named fiduciary and plan administrator;(2) Identify the plan year, plan name, and plan number;(3) Include a description of benefits and eligibility;(4) Describe how benefits will be funded;(5) Include plan amendment and termination procedures;(6) Add required provisions for group health plans (including COBRA,USERRA, HIPAA, QMCSOs); and(7) Include subrogation and reimbursement clauses.

Must be provided to participants andbeneficiaries within 30 days of writtenrequest.

When implementing a new plan, oramending an existing plan, most plansponsors adopt or amend the planprior to the first day of the plan year.The expected due dates have beenpre-filled taking this into account.However, mid-year plan amendmentsare permitted when adoptedprospectively, so due dates may bemanually overridden.

Plan administrator could be subject toa penalty of up to $110 per day. WillfulERISA violations can carry up to 10years in prison and $100,000 fine.

All sizes


Summary PlanDescription (SPD)

Advises participants and beneficiaries of their rights and obligations under theplan. Should be written in plain language so that the average participant canunderstand. Must include plan name, employer name, type of plan, type ofadministration, plan administrator name/address/telephone number, legalagent name/address, plan eligibility requirements, summary of benefits,claims procedures, and ERISA rights.

If the plan has been amended, an updated SPD incorporating the subsequentSMMs must be prepared and distributed to plan participants every five years.

If the plan has not been amended, an updated SPD must be prepared anddistributed to plan participants every ten years.

Model language for ERISA rights statement is provided.

Must be updated and provided toparticipants and beneficiaries within90 days of participation, within 120days of plan effective date, every fiveyears (when the plan has beenamended) and every 10 years (evenwhen the plan has not beenamended).

Plan sponsor could be subject to apenalty of up to $110 per day if it doesnot provide within 30 days after anindividual's written request. WillfulERISA violations can carry up to 10years in prison and a $100,000 fine forindividuals and fines up to $500,000for companies.

All sizes


of 47

continues >


ERISA continuedItem Description Due Date Penalty Employer Size

Summary of MaterialModification (SMM)

Summarizes "any material modification to the plan and any change in theinformation required to be in the SPD." Should be written in plain languagethat the average participant can understand.

Although there is not clear guidance on what constitutes a materialmodification, more information may be reviewed under Additional Resourcesbelow. Further, employers should err on the side of disclosure or consult withlegal counsel.

Must be provided to participants andbeneficiaries within 210 days of theend of the plan year in which themodification is adopted. Any SMMsthat are not yet included in an SPDmust be distributed along with theSPD until a revised SPD is distributed.Therefore, any outstanding SMMsmust also meet the due daterequirements of the SPD, which arelisted above.

If changes incorporated by the SMMalso affect the content of the mostrecently distributed SBC, the plan mayhave an accelerated notificationrequirement under the SBC rules.


All sizes


Summary of MaterialReduction in CoveredServices or Benefits

Summarizes any modification or change to covered services or benefits thatwould be considered by the average participant to be an important reduction,such as "eliminates or reduces benefits payable, increases amount to be paidby participant, reduces HMO service area, or creates new conditions orrequirements for obtaining services or benefits."

Must be provided to participants andbeneficiaries within 60 days of whenchange was adopted.


All sizes


Form 5500 Applies to all health and welfare plans subject to ERISA. Serves as theannual reporting requirement under ERISA Title I. There is an exclusion forcertain fringe benefit plans (group legal services, education assistance plans,adoption assistance programs) and health plans with less than 100participants at the beginning of the plan year which are unfunded, fullyinsured, or a combination of unfunded and fully insured.

Must be submitted electronically(along with the necessary schedules)to the EBSA by the last day of theseventh month following the end of theplan year, or by the extension duedate, if Form 5558 is filed.

Both administrative and criminalpenalties apply. Administrativepenalties range from $25 per day to$1,100 per day. Willful violations cancarry penalties up to 10 years inprison and a $100,000 fine.

100 or more


of 47

continues >



Form 5500-SF Certain small welfare benefit plans may file a simplified annual reporting formin lieu of a Form 5500. In order to be eligible for the simplified filing, plansmust be considered small (i.e., generally have fewer than 100 participants atthe beginning of the plan year), meet the conditions for being exempt fromproviding an accountant's report, have 100 percent of assets invested incertain secure investments, hold no employer securities, and not be a multi-employer plan.

Electronically submitted along with theForm 5500 to the EBSA by the lastday of the seventh month following theend of the plan year or by theextension due date, if Form 5558 isfiled.


Less than 100


Accountant's Report Applies to health plans with 100 or more participants. There is an exclusionfor plans which are unfunded, insured or a combination of the two that meetthe requirements of DOL Reg. Section 2520.104-44.

Submitted electronically along with theForm 5500 to the EBSA by the lastday of the seventh month following theend of the plan year, or by theextension due date if Form 5558 isfiled.


100 or more


Summary Annual Report(SAR)

Summarizes the Form 5500 financial information in a narrative form. Themodel language from DOL Reg. Section 2520.104b-10(d) has been providedas a model notice.

Unfunded welfare plans, regardless of size are exempt from the SARrequirement.

Must be distributed to participants andbeneficiaries within nine months afterthe end of the plan year. If extensionis filed, must be distributed within twomonths after the end of the period forwhich the extension was granted.

No specific civil penalties, but willfulERISA violations can carry criminalpenalties up to 10 years in prison and$100,000 fine.

100 or more


of 47

continues >



Summary of Benefitsand Coverage (SBC)

Group health plans are required to provide a Summary of Benefits andCoverage (SBC) that accurately describes the benefits and coverage underthe applicable plan or coverage to all applicants and enrollees. The summarymay be provided in paper or electronic form and must include certain requiredcontent. A template has been provided by HHS, along with instructions,language for the section in the template labeled "Why That Matters,"coverage examples and a tool for calculating cost for the coverage examples.

The Uniform Glossary is also required to be provided upon request.

Guidance released on Feb. 14, 2012 relating to the SBC, clarified that thesame rules relating to the “culturally and linguistically appropriate manner,”that apply to the claims and appeals notices also apply to the SBCrequirement, so the two rules remain consistent. The regulations regardingthis requirement look to whether 10 percent or more of the populationresiding in a county is literate only in the same non-English language (basedon U.S. Census data) and imposes certain requirements when a plan orinsurer sends a notice to an address in a county that meets the 10 percentthreshold.

The Culturally and Linguistically County Data may be reviewed by followingthe link below.

Significantly, the SBC requirement applies to all plans, regardless ofgrandfathered status or plan size.

The SBC should be distributed toexisting employees with the openenrollment materials, prior to thebeginning of the plan year. New hiresshould receive the SBC withapplication materials, prior to the firstday of coverage. For participants andbeneficiaries who enroll in grouphealth plan coverage outside of openenrollment (i.e., special enrollees), theSBC must be provided within 90 daysof enrollment.

A revised SBC must be distributed toparticipants 60 days prior to theeffective date of any change to theinformation found in the SBC.

The SBC must also be provided to aparticipant or beneficiary uponrequest, as soon as practicable, but inno event later than seven businessdays following the request.

A revised SBC, provided in a timelymanner and notifying eligibleparticipants of any changes, will alsosatisfy the requirement to provide anSMM or notice of material reduction.

A penalty of up to $1,000 per failure.The fine cannot be paid from plan ortrust assets.

Church plans are subject to differentpenalties and procedures fornoncompliance.

All sizes


of 47

continues >



Fidelity Bond Plan officials who handle plan funds or other plan property generally must becovered by a fidelity bond. A fidelity bond is a type of insurance that protectsthe plan against loss by reason of acts of fraud or dishonesty on the part ofpersons covered by the bond.

A plan official must be bonded for at least 10 percent of the amount of fundshe or she handles, subject to a minimum bond amount of $1,000 per planwith respect to which the plan official has handling functions. In mostinstances, the maximum bond amount that can be required under ERISA withrespect to any one plan official is $500,000 per plan.

Employers with insured plans usually are not subject to the bondingrequirements for those plans. No bonding is required when premiums or otherpayments made to purchase benefits are paid directly from the employer'sgeneral assets to the insurance carrier.

Unfunded plans are exempt from ERISA bonding requirements, and a self-insured plan is considered unfunded if the company pays the health claimsdirectly out of the employer's general assets. If there is any segregation of theemployer and employee contributions to a trust or another account in thename of the plan, then the plan is funded and subject to the ERISA bondingrequirement.

There are no notices for thisrequirement, although the existence ofa Fidelity Bond is reported on Form5500. The bond should be maintainedon an ongoing basis.

A plan’s fiduciaries can be heldpersonally liable under ERISA’sgeneral fiduciary duty rules for anyloss to the plan that should have beenbut was not covered by a bond. WillfulERISA violations can also carry up to10 years in prison and a $100,000fine.

All sizes


FMLAItem Description Due Date Penalty Employer Size

General Notice The FMLA applies to private-sector employers with 50 or more employees foreach working day in 20 or more workweeks in the current or precedingcalendar year. However, FMLA applies to governmental employers of allsizes.

Every employer covered by the FMLA is required to provide a noticeexplaining the FMLA and providing information about the procedures for filingcomplaints of violations of the FMLA with the Wage and Hour Division of theDOL. Electronic posting is sufficient to meet this posting requirement as longas it otherwise meets the requirements. If an employer's workforce iscomprised of a significant portion of workers who are not literate in English,the employer must provide the general notice in a language in which theemployees are literate.

Final FMLA regulations effective March 8, 2013 require a review of anemployer's policies and procedures to incorporate the changes to the law. Inconjunction with the final rule, the DOL provided a revised General Notice.Employers must ensure they have posted the newest General Notice byMarch 8, 2013.

Employers must keep the noticeposted on its premises at all times.The most recent model notice iseffective March 8, 2013. Employerswith FMLA-eligible employees mustinclude the notice in employeehandbooks or other written guidanceon employee benefits or leave rightsor must distribute a copy of thegeneral notice to each new employeeupon hiring.

An employer may be liable forcompensation and benefits lost byreason of the violation, for other actualmonetary losses sustained as a directresult of the violation, and forappropriate equitable relief, includingemployment, reinstatement, promotionor any other relief.

50 or more


of 47

continues >


FMLA continuedItem Description Due Date Penalty Employer Size

Eligibility Notice The employer must notify the employee of the employee's eligibility to takeFMLA leave. If the employee is not eligible for FMLA leave, the notice muststate at least one reason why the employee is not eligible (e.g., the number ofmonths the employee has been employed by the employer, the number ofhours of service worked for the employer during the 12-month period, andwhether the employee is employed at a worksite where 50 or moreemployees are employed by the employer within 75 miles of that worksite).Notification of eligibility may be oral or in writing.

Final FMLA regulations effective March 8, 2013 require a review of anemployer's policies and procedures to incorporate the changes to the law.When an employer acquires knowledge that an employee's leave may be forFMLA, an employer must ensure the most recent changes (and reasons forleave) under the law are taken into consideration.

On June 20, 2014, the DOL announced a proposed rule extending theprotections of FMLA to all eligible employees in legal same-sex marriages,regardless of where they reside. This rule, if adopted, would requireemployers in all states to provide leave to legally married same-sex spouseseven if the state of the employee's residence or the state of the employer'sbusiness does not recognize same-sex marriage, ensuring consistent FMLArights across the nation no matter where an employee may reside. Since therule is only in proposed format and cannot yet be relied upon, employersshould be prepared to revise and deploy internal policies and proceduresupon finalization of the definition; however, employers are not yet required touse the amended definition of "spouse."

The notice must be provided withinfive business days (absentextenuating circumstances) of whenan employee requests FMLA leave, orwhen the employer acquiresknowledge that an employee's leavemay be for an FMLA-qualifyingreason.


50 or more


of 47

continues >



Rights andResponsibilities Notice

Employers must provide written notice detailing the specific expectations andobligations of the employee related to FMLA leave and consequences offailure to meet these obligations, including:

(1) The leave may be counted against the employee's annual FMLA leaveentitlement;(2) Any requirement to furnish certification of a serious health condition, etc.,and the consequences of failing to do so;(3) Employee's right to substitute paid leave, whether employer will requiresuch, and the conditions related to substitution;(4) Requirement to make premium payments to maintain benefits, how tomake such payments and the consequences of failure to make timelypayments;(5) Employee's status as a "key employee" and that restoration may bedenied following FMLA leave and conditions for such denial;(6) Employee's rights to maintain benefits during FMLA leave and restorationto the same or an equivalent job upon return; and(7) Employee's potential liability for payment of premiums paid by theemployer during FMLA leave if the employee fails to return to work.

Final FMLA regulations effective March 8, 2013 require a review of anemployer's policies and procedures to incorporate the changes to the law andmay expand the rights of an employee entitled to leave.

This notice shall be provided to theemployee each time the EligibilityNotice is provided. If leave hasalready begun, the notice should bemailed to the employee's address ofrecord. Additional requirements if theinformation provided by this noticechanges.


50 or more


Designation Notice The employer must notify the employee whether the employee's leave will bedesignated and will be counted as FMLA leave. If the employer will requirethe employee to present a fitness-for-duty certification to be restored toemployment, the employer must provide notice of such requirement with thedesignation notice.

Final FMLA regulations effective March 8, 2013 require a review of anemployer's policies and procedures to incorporate the changes to the law.When designating leave as FMLA, an employer must ensure the most recentchanges are taken into consideration.

On June 20, 2014, the DOL announced a proposed rule extending theprotections of FMLA to all eligible employees in legal same-sex marriages,regardless of where they reside. This rule, if adopted, would requireemployers in all states to provide leave to legally married same-sex spouseseven if the state of the employee's residence or the state of the employer'sbusiness does not recognize same-sex marriage, ensuring consistent FMLArights across the nation no matter where an employee may reside. Since therule is only in proposed format and cannot yet be relied upon, employersshould be prepared to revise and deploy internal policies and proceduresupon finalization of the definition; however, employers are not yet required touse the amended definition of "spouse."

Within 5 days of when the employerhas enough information to determinewhether the leave is being taken foran FMLA-qualifying reason (e.g., afterreceiving a certification).

An employer may be liable forcompensation and benefits lost byreason of the violation, for other actualmonetary losses sustained as a directresult of the violation and forappropriate equitable relief, includingemployment, reinstatement, promotionor any other relief.

50 or more


of 47

continues >



Notice of Opportunity toChange Health Plans

If an employer provides a new health plan, has open enrollment or changeshealth benefits or plans while an employee is on FMLA leave, then theemployee is entitled to the new or changed plans/benefits to the same extentas if the employee were not on leave.

Notice of an opportunity to changehealth plans or benefits must be givento an employee on FMLA leave whengiven to active employees. Therefore,the due date is ongoing and typicallyoccurs around an employer's openenrollment season.


50 or more


Notice of Nonpaymentof Premiums

In the absence of an established employer policy providing a longer graceperiod, an employer's obligation to maintain the health insurance coverage ofan employee on FMLA leave also ceases if the employee's payment of his orher share of the premium is more than 30 days late.

The notice must be mailed to theemployee at least 15 days beforecoverage is to cease and must advisethe employee that coverage will bedropped on a specified date at least15 days after the date of the letter,unless the payment has been receivedby that specified date.


50 or more


Health Care ReformItem Description Due Date Penalty Employer Size

Grandfathered HealthPlans

To maintain grandfathered status, a plan must provide notice to participantsthat the plan or coverage is believed to be a grandfathered plan, and providecontact information for questions or complaints. This disclosure requirementapplies to any SPD, SMM or benefit enrollment materials provided toparticipants or beneficiaries.

To maintain status as a grandfathered health plan, the plan or coverage mustalso document the terms in existence on March 23, 2010 (e.g., plandocuments, policies, certificate or contracts of insurance, SPDs, etc.), andretain documentation as long as the plan maintains grandfathered status.

If grandfathered, provide notice in anyplan materials describing benefitsbeginning with the first plan year on orafter Sept. 23, 2010. Make recordsavailable for examination uponrequest.

Loss of grandfathered status will resultin additional responsibilities underhealth care reform.

All sizes


of 47

continues >


Health Care Reform continuedItem Description Due Date Penalty Employer Size

Prohibition on Stand-alone HRA's

Group health plans are prohibited from placing certain annual dollar limits onthe value of essential health benefits. Annual dollar limits on essential healthbenefits are completely prohibited for plan years beginning on or after Jan. 1,2014. Due to this requirement, stand-alone HRAs are essentially prohibitedgoing forward. HRAs must either be integrated or designed to be an exceptedbenefit, including a retiree-only HRA or limited purpose dental/vision plan.

Stand-alone HRAs are prohibited forplan years beginning on or after Jan.1, 2014.

If violation is not corrected within 30days of discovery, then employer mustself-report violation on IRS Form8928, and pay a civil penalty of $100per day.


Governmental plans are exempt from$100 per day penalty under Section4980D.

All sizes


Dependent Coverage If a group health plan or insurer provides dependent coverage of children, theplan must make such coverage available until a child turns 26, regardless ofstudent status, marital status, residency, etc.

Effective in 2014, the special transition rule for grandfathered plans thateliminates required coverage if child has other employer-sponsored coverageis no longer in effect. Thus, all plans (including grandfathered plans) can nolonger take into account other employer-sponsored coverage.

A plan amendment or plan restatement revising the definition of dependent tocomply with this requirement is required. Grandfathered plans must amendthe plan to remove the transition rule if applicable.

State insurance laws may be more generous and require coverage of adultchildren past the age of 26.

Michelle's Law - Michelle’s Law requires that a group health plan or issuer notterminate coverage of a dependent child due to a medically necessary leaveof absence that causes the child to lose student status. Although this law hasbecome less necessary due to the dependent coverage up to 26 mandateunder PPACA, Michelle's law will still apply if a plan covers dependents thatare not “children” under the IRS definition or if a state law requires coveragefor dependents older than 26.

Effective for plan years beginning onor after Sept. 23, 2010. In 2014,grandfathered plans must remove thetransition rule from the plan excludingcoverage for those with othercoverage available.

If violation is not corrected within 30days of discovery, then employer mustself-report violation on IRS Form8928, and a civil penalty of $100 perday will be assessed.


Governmental plans are exempt fromthe $100 per day penalty underSection 4980D.

All sizes


of 47

continues >



Internal Claims andAppeals and ExternalReview Procedures

Internal Appeals - In addition to the claims procedure rules under 29 CFR2560.503-1, group health plans and insurance issuers must now meet theseadditional internal appeals requirements:

(1) The scope of adverse benefit determinations must include rescissions ofcoverage.(2) Plans or issuers must provide claimants with any new or additionalevidence considered, relied upon, or generated by the plan or issuer inconnection with a claim.(3) Plans or issuers must ensure that all claims and appeals are adjudicatedin a manner designed to ensure the independence and impartiality of thepersons involved in making the decision.(4) Plans or issuers must defer to the attending provider as to whether aclaim involves urgent care and must provide notices concerning urgent careas soon as possible (no later than 72 hours).(5) Any notice of adverse benefits must include information sufficient toidentify the claim involved; an adequate description of the reasons for thedetermination; a description of available internal appeals and external reviewprocesses; and contact information for any health insurance consumerassistance ombudsmen established under PSA Section 2793 (List ofConsumer Assistance Programs below).(6) Any notice of adverse benefits must be provided in a culturally andlinguistically appropriate manner. This is required if at least 10 percent ofpeople living in the county speak the same non-English language. (List ofcounties below)

If a plan fails to comply with these requirements, the claimant is deemed tohave exhausted the internal claims and appeals process.

External Review - Plans and issuers must comply with either a State externalreview process or the Federal external review process.

Under the DOL Private Accredited Independent Review Organization (IRO)process, self-funded plans must comply with all of the standards articulated inTR 2011-02. Additionally, to be eligible for a safe harbor from enforcement onexternal review, self-funded plans will be required to contract with at least twoIROs by Jan. 1, 2012 and at least three IROs by July 1, 2012.

Grandfathered plans are exempt from the internal claims and appeals andexternal review requirements.

Due date is ongoing for all non-grandfathered plans.

If violation is not corrected within 30days of discovery, then employer mustself-report violation on IRS Form8928, and a civil penalty of$100 per day will be assessed.



All sizes


of 47

continues >



Annual and LifetimeDollar Limits

Lifetime dollar limits on essential benefits were prohibited under PPACAeffective for plan years beginning with Sept. 23, 2010, and thereafter.Individuals who have exhausted a lifetime limit under a group health plan andwho are otherwise eligible must be given a written notice that the lifetime limitno longer applies. If individuals who exhausted a lifetime dollar limit are nolonger enrolled, they must be provided a written notice informing them of anopportunity to enroll.

Similarly, group health plans are prohibited from placing certain annual dollarlimits on the value of essential health benefits. Annual dollar limits onessential health benefits were completely prohibited for plan years beginningon or after Jan. 1, 2014.

Eligible individuals must be given awritten notice that the lifetime limit nolonger applies.

Individuals no longer enrolled due toexhaustion of the lifetime limit shouldhave been provided a 30-day specialenrollment opportunity in the first planyear beginning on or after Sept. 23,2010. This was a one-time enrollmentopportunity.

Specific information regarding annuallimits on essential health benefitsshould be included in plan documents.A plan amendment is required prior tothe first day of each new plan yearduring increases of limits each year.Subsequent SMM or revised SPDshould be provided to plan participantsupon amending the plan.




All sizes


OTC Medicines or Drugs PPACA prohibits distributions from HSAs and Archer MSAs andreimbursements from health FSAs and HRAs to cover expenses for over-the-counter (OTC) medicines or drugs without a prescription (except insulin). Therestrictions do not apply to non-medicine items available OTC (e.g.,equipment, supplies, and medical devices).

Applies to expenses incurred afterDec. 31, 2010.

Failure to abide by requirements mayresult in severe tax consequences forplan and individuals receivingreimbursements.

All sizes


of 47

continues >



Patient Protections If a group health plan provides benefits for emergency services, the plan maynot require preauthorization; must provide coverage regardless of whetherthe provider is in- or out-of-network; may not impose any administrativerequirement or coverage limitation that is more restrictive than would beimposed on in-network emergency services; and must comply with certaincost-sharing requirements. The plan may apply cost-sharing requirementsother than copayments and coinsurance to emergency services provided out-of-network if the cost-sharing generally applies to out-of-network benefits.

A group health plan may not require preauthorization or referral by the plan ora primary care physician to obtain services from an OB/GYN or pediatrician.Group health plans that require designation of a primary care provider mustprovide a notice to each plan participant describing the plan's requirementsregarding designation of a primary care provider and certain other rights ofthe participant or beneficiary.

Grandfathered plans are exempt from this requirement.

Effective for plan years beginning onor after Sept. 23, 2010.

The notice is required to be providedwhenever an SPD or other descriptionof plan benefits is provided to aparticipant or beneficiary.




All sizes


Preventive CareMandate

Group health plans must provide certain preventive services without imposingany cost-sharing, including copays, coinsurance or deductibles.

Coverage must be provided for:

(1) Evidence-based items or services with an A or B rating recommended bythe U.S. Preventive Services Task Force (USPSTF);

(2) Immunizations for routine use in children, adolescents or adultsrecommended by the Advisory Committee on Immunization Practices of theCenters for Disease Control and Prevention;

(3) Evidence-informed preventive care and screenings provided for in thecomprehensive guidelines supported by the Health Resources and ServicesAdministration (HRSA) for infants, children and adolescents; and

(4) Other evidence-informed preventive care and screenings for womenprovided for in comprehensive guidelines supported by HRSA.

The current list of required preventive services is available at www.healthcare.gov/center/regulations/prevention.html.It will be updated on an ongoing basis as the various agencies submitrecommendations and those recommendations are approved.

There are approximately nine (9) new recommendations for plan yearsbeginning Jan. 1, 2015.

Grandfathered plans are exempt from this requirement.

Preventive services at no cost sharingwere effective for plan years beginningon or after Sept. 23, 2010. However,recommendations from the variousagencies may have staggeredeffective dates. The recommendationsfrom the USPSTF are consideredissued on the last day of the month onwhich the task force publishes it.



All sizes


of 47

continues >



Pre-existing ConditionExclusion Prohibition

Group health plans may not include any pre-existing condition exclusions forany person, for plan years beginning on or after Jan. 1, 2014.

ERISA plan documents must be amended to reflect a plan design change.

ERISA requires either the SPD be revised to reflect plan changes or plansmust append an SMM to the existing SPD. Additionally, the General Notice ofPre-existing Condition Exclusion is no longer necessary for plans to include.

Effective for plan years beginning onor after Jan. 1, 2014.




All sizes


Rescission of Coverage Group health plans and insurers are prohibited from rescinding coverage forindividuals who are covered under the plan, except in cases of fraud orintentional misrepresentation. "Rescission" is defined as a cancellation ordiscontinuance of coverage that has retroactive effect.

A rescission of coverage triggers the requirement to provide a notice ofadverse benefit determination (see the section on Internal and ExternalAppeals for more details on this requirement).

Effective for plan years beginning onor after Sept. 23, 2010. Thirty days'advance written notice is requiredbefore coverage may be rescinded.




All sizes


Patient-centeredOutcomes Research(PCOR) Institute Fee

Health care reform requires PCOR fees to be paid to the IRS by healthinsurers and sponsors of self-insured health plans (including health FSA andHRAs) to fund research into the clinical effectiveness of medical treatments,procedures, drugs and other strategies. The fees will fund a new nonprofitcorporation called the Patient-centered Outcomes Research (PCOR)Institute.

The fee is reported and paid by filing IRS Form 720.

The PCOR fee applies to plan yearsending after Oct. 1, 2012, and beforeOct. 1, 2019. The fee is $1 percovered life for plan years endingbefore Oct. 1, 2013, and $2 percovered life for plan years ending afterOct. 1, 2013 and before Oct. 1, 2014.Notice 2014-56, released on Sept. 18,2014, sets the PCOR contribution at$2.08 for plan years that end on orafter Oct. 1, 2014 and before Oct. 1,2015. For plan years ending on orafter Oct. 1, 2015, the adjustedapplicable dollar amount will bepublished in future Internal RevenueBulletins.

The fees are expected to beassessed, collected and enforced inthe same manner as taxes underother IRC provisions.

All sizes


of 47

continues >



Notice of Exchange All employers subject to the Fair Labor Standards Act (FLSA)- and regardlessof whether they offer a group health plan- must provide information relatingto health insurance exchanges, which will include information about theconsequences of purchasing a qualified health plan through the exchange inlieu of employer-sponsored coverage.

The DOL provided two model exchange notices, each is available in Englishand Spanish, as well as in PDF format or in modifiable Word format. Onenotice is used for employers that do not offer a health plan and the other isused for employers that offer a health plan to some or all of their employees.Employers may use one of these model notices, as applicable, or a modifiedversion, provided the notice meets the content requirements.

The notice may be mailed via first class or distributed electronically inaccordance with the DOL's electronic disclosure requirements. Hand delivery,provided the employer can ensure all employees receive the notice, has beeninformally approved through discussions with the DOL.

Employers are required to provide thenotice to each new employee at thetime of hiring beginning Oct. 1, 2013.For 2014, the DOL will consider anotice to be provided at the time ofhiring if the notice is provided within14 days of an employee's start date.

With respect to employees who arecurrent employees before Oct. 1,2013, employers were required toprovide the notice no later than Oct. 1,2013. The notice is required to beprovided automatically, free of charge.

The regulations do not identify aspecific penalty for failing to complywith the notice requirement. The DOLclarified in a Sept. 2013 FAQ postedon the DOL website that no penaltyapplies for failure to distribute thenotice.

However, the DOL or plan participantsmay bring a civil action against anemployer for failure to comply.

All sizes


Form W-2 ReportingRequirement

Employers must report the "aggregate cost" of "applicable employer-sponsored coverage" on an employee's Form W-2. The aggregate costincludes amounts paid by both employers and employees, including allcontributions for the employee's spouse and dependents, and all amountsreported as income as a result of coverage (including the cost of coverage foran adult dependent over age 26 or for a domestic partner).

Applicable employer-sponsored coverage includes any group health plancoverage such as major medical, dental, vision, executive medical plans andemployee assistance programs, as well as contributions by an employer to ahealth FSA.

Applicable employer-sponsored coverage does not include:(1) Contributions by an employee to a health FSA through salary reductions;(2) Contributions to an HSA or Archer MSA;(3) Coverage under an HRA;(4) Non-coordinated coverage for a specific illness or disease;(5) Coverage under a HIPAA-excepted benefit, including stand-alone dentalor vision plans (but not on-site medical clinics);(6) Coverage for long-term care;(7) Multiemployer plans;(8) Self-insured group health plans not subject to COBRA (e.g., planssponsored by church organizations); and(9) Coverage provided under a government plan that provides coverageprimarily for members of the military and their families.

Self-insured church plans are exempt.

Large employers, defined as thosethat file 250 Forms W-2 or more, mustbegin reporting on Forms W-2 issuedin Jan. 2013 for the 2012 tax year. It isoptional for small employers, definedas those that file fewer than 250Forms W-2, to begin reporting at thissame time. There is currently atransition rule in place for these smallemployers that will not require them toreport the cost of health coverage untilfurther guidance is issued.

Failure to properly report the cost ofemployer-sponsored health coverageon Form W-2 may result in penaltiesof $200 per Form W-2, up to amaximum of $3 million.



250+


of 47

continues >



Reinsurance Fee Beginning in 2014, each state that operates an exchange is required toestablish a temporary reinsurance program for the individual market, to whichhealth insurers and group health plans are required to contribute. Theprogram is temporary in nature, phasing out after 2016. The reinsuranceprogram shifts the risk of covering high expenses from the primary insurer toa reinsurer. For the first year of the program, the fee will be $63 per coveredlife, per year, payable annually. The fee decreases to $44 per covered life in2015, and $27 in 2016.

Self-funded, self-administered plans are exempt from this fee in 2015 and2016. Also, expatriate plans (both self- and fully insured) are exempt from thereinsurance fee for benefit years 2015 and 2016.

The fee is payable in two installments.The reinsurance component of the feewill be due at the beginning of thecalendar year following the year forwhich the fee is due. The remainder ofthe fee will be due at the end of thecalendar year following the year forwhich the fee is due. In practicalterms, this means that for the 2015benefit year, the payment may be splitinto two payments with $33 due byJan. 15, 2016 and $11 due Nov. 15,2016. For the 2016 benefit year, thepayment may be split into twopayments with $21.60 due by Jan. 15,2017 and $5.40 due Nov. 15, 2017.

Failure to comply will potentiallytrigger an excise tax of $100 per dayfor each individual for whom the failureapplies, if the failure is not correctedwithin 30 days of knowledge. The taxwould be self-reported on Form 8928.

All sizes


Health Insurance Tax(HIT)

Health care reform implemented the Health Insurance Tax (HIT) to help fundthe cost of PPACA implementation and exchanges. This fee applies to any"covered entity" engaged in the business of providing health insurance withrespect to U.S. citizens, residents and certain other persons present in theUS. Put simply, this fee only applies to insurers, and the regulationsspecifically exclude self-insured plans.

The HIT is meant to collect a specified amount of money per year - in 2014,the HIT must collect $8 billion. For 2015 and 2016 the amount is $11.3 billion,for 2017 the amount is $13.9 billion and for 2018 the amount is $14.3 billion.In 2019 and beyond, the amount will be adjusted for the rate of premiumgrowth.

The aggregate annual fee for insurers is apportioned among the variousinsurers based on a ratio designed to reflect market share of U.S. healthinsurance business, looking at the ratio of the insurer's net premiums to theaggregate net premiums of all insurers for the preceding calendar year.

The annual fee is payable by theinsurer by the annual due dateoutlined by the Secretary of theTreasury, but in no event later thanSeptember 30th of each calendar yearin which a fee must be paid. The firstfee, for the 2014 calendar year is dueby Sept. 30, 2015.

While this requirement applies toinsurers and not employers, thepenalty on a covered entity (insurer)for a failure to report by the due dateis $10,000 plus the lesser of (i) anamount equal to $1,000 times thenumber of days during which thefailure continues, or (ii) the amount ofthe fee for which the report wasrequired. The fee must be paid onnotice and demand in the samemanner as a tax under the IRS Code.

There is also an accuracy-relatedpenalty that may be assessed forunderreporting.

All sizes


of 47

continues >



90-day Waiting Periods Group health plans and insurers are prohibited from applying excessivewaiting periods- defined as a waiting period that exceeds 90 days. There isno size restriction on this requirement and therefore, the prohibition applies toall group health plans and insurers, regardless of the size of the employer orplan sponsor.

Employers may require that an individual complete a bona-fide orientationperiod before becoming eligible for coverage. The orientation period may bea maximum period of one month, after which the 90-day waiting period wouldbegin. The purpose of the waiting period is for the employer and employee toevaluate whether the employment situation is satisfactory for each party andfor orientation and training processes to take place. Note, however, that alarge employer would be at risk for a penalty under the employer mandate if itimposed a 30-day orientation and a 90-day waiting period on an employeewho works more than 30 hours.

State law may impose a more limited waiting period requirement.

This requirement is effective for planyears beginning on or after Jan. 1,2014.

Importantly, with respect to individualswho are in a waiting period forcoverage when the requirement goesinto effect, the waiting period can nolonger apply to the individual if it wouldexceed 90 days. For example, if aplan year is effective June 1, 2014,and an individual is on the 85th day ofa waiting period at that point, theemployer must permit the employee tobecome eligible for the plan on the91st day. All calendar days must becounted, including weekends andholidays.

Failure to comply will potentiallytrigger an excise tax of $100 per dayfor each individual for whom the failureapplies, if the failure is not correctedwithin 30 days of knowledge. The taxwould be self-reported on Form 8928.

All sizes


of 47

continues >



Women's PreventiveCare Services

Non-grandfathered group health plans must provide coverage for certainwomen’s preventive care services including contraceptive methods, well-women visits, screening for gestational diabetes and human papillomavirustesting. The requirement is part of the preventive services mandate, whichrequires coverage with no cost sharing to the participant.

Religiously affiliated nonprofit employers, such as schools or hospitals, whichdo not meet the definition of a church, may qualify for a delay related toproviding coverage for contraceptive services.

As a result of the U.S. Supreme Court decision in Burwell v. Hobby LobbyStores, on Aug. 22, 2014, HHS, the DOL and EBSA jointly released guidanceincorporating the Supreme Court’s decision into existing regulations. Theguidance includes an interim final rule, a new proposed rule applicable toclosely held for-profit entities and a new model notice.

The current regulations already provided for an accommodation process(using a self-certification form, EBSA Form 700) with respect to therequirement to offer contraceptive coverage for non-grandfathered employer-sponsored group health plans at zero cost sharing for those plans establishedand maintained by certain nonprofit religious employers, as well as those whoare religious-based institutions of higher education. The interim final ruleessentially allows for an alternative pathway so that participants may stillaccess coverage for the full range of FDA-approved contraceptives, asprescribed by a health care provider, without cost sharing. The nonprofitreligious employer will provide notice to HHS of their religious objection, andthen HHS and the DOL will notify insurers and TPAs so that enrollees mayreceive separate coverage for contraceptive services with no additional costto the enrollee or employer.

HHS also provided a model notice to be used by “eligible organizations” tonotify HHS of a religious objection to cover: 1) all contraceptive services, or 2)a subset of contraceptive services. The notice may also, but is not requiredto, be used by an eligible organization to provide updated information to HHS.

Finally, the agencies also issued a proposed rule soliciting comments on howthey might extend the same accommodations outlined above to closely held,for-profit entities (like Hobby Lobby). Under the proposed rule, the definitionof “eligible organization” would be expanded to include closely held for-profitentities that have a religious objection to providing coverage for some or all ofthe contraceptive services otherwise required to be covered. In themeantime, such employers can use either EBSA Form 700 or the modelnotice described above to notify their insurers and TPAs of their intent todecline offering all, or some, contraceptive coverage.

Employers who do not wish to cover 1) contraceptive services, or 2) a subsetof contraceptive services should work with legal counsel to ensurecompliance with these intense requirements.

A list of required covered services is available at www.hrsa.gov/womensguidelines

Effective for plan years beginning onor after Aug. 1, 2012. For certainreligiously affiliated nonprofitemployers, effective for plan yearsbeginning on or after Jan. 1, 2014.

If violation is not corrected within 30days of discovery, then employer mustself-report violation on IRS Form8928, and a civil penalty of $100 perday will be assessed. Governmentalplans are exempt from the $100 perday penalty under Section 4980D.

All sizes


of 47

continues >



Maximum Out-of-pocket(MOOP) Limit

For plan years beginning on or after Jan. 1, 2014, non-grandfathered planscould not have a maximum out-of-pocket (MOOP) that exceeds $6,350 forself-only coverage and $12,700 for family coverage (which is anything otherthan self-only coverage). These were the same limits that applied toqualifying HDHP plans.

For plan years beginning on or after Jan. 1, 2015, the limits no longer matchqualifying HDHP plans because the MOOP limit is now tied to the "premiumadjustment percentage"- the average annual change in health insurancepremiums. This means that the PPACA MOOP are $6,600 for self-onlycoverage and $13,200 for family coverage. The HDHP limits for 2015 planyears are $6,450 and $12,900 for self-only and family coverage, respectively.

Importantly, non-grandfathered plans that set the MOOP limit in accordancewith PPACA may end up disqualifying participants from establishing andcontributing to an HSA. For this reason, there have been informal commentsstating that setting the MOOP at the lower amount will allow participants toretain HSA eligibility.

Complicating this further, the MOOP maximum limits only apply to essentialhealth benefits provided in-network, while the HDHP limits generally includeall covered benefits payable under the terms of the plan.

Due for plan years beginning on orafter Jan. 1, 2014 and on an ongoingbasis. Does not apply tograndfathered plans.

There is no specific penalty fornoncompliance. However, the generalPPACA penalty would likely apply:$100 per day per individual.

All sizes


Coverage for ClinicalTrials

Group health plans and insurers may not deny qualified individuals coveragefor participating in a clinical trial, deny coverage for any related service oritems, or discriminate against the individual for such participation.

A "qualified individual" is one who has been approved to participate in aclinical trial for the treatment of cancer or other life-threatening condition andwho provides either physician or scientific recommendation for suchparticipation.

The clinical trial coveragerequirements apply for plan yearsbeginning on or after Jan. 1, 2014.

There does not appear to be a specificpenalty for non-compliance. However,the general PPACA penalty wouldlikely apply: $100 per day perindividual.

All sizes


of 47

continues >


Health Care Reform- 2015Item Description Due Date Penalty Employer Size

Employer Mandate PPACA requires that by Jan. 1, 2015, most employers must decide whetherto “pay or play” in the realm of employer-sponsored group health plans. OnFeb. 10, 2014, the final regulations announced an additional one-year delayfor employers with 50–99 FTEs so long as four conditions are satisfied.Therefore, employers with between 50-99 FTEs who satisfy the fourconditions, should plan to comply for the first plan year beginning on or afterJan. 1, 2016. Employers with 100+ employees must plan to comply for thefirst plan year beginning on or after Jan. 1, 2015.

An employer may be required to “pay” a penalty for failing to offer a grouphealth plan, providing unaffordable coverage or providing coverage thatprovides less than the minimum value requirement. The penalty would betriggered if one of the employer’s full-time employees obtained coveragethrough a health insurance exchange and qualified for a premium taxsubsidy.

Alternatively, an employer will not pay a penalty if it decides to “play” byoffering affordable, minimum value group health coverage for its employees(and their dependents). PPACA also refers to the “pay or play” requirementas “shared responsibility,” or "employer mandate," and employers need tounderstand the possible impact on plan designs, contribution strategies andworkforce planning.

Dependent Coverage and the Employer Mandate - IRC Section 4980Hrequires applicable large employers to offer “to its full-time employees (andtheir dependents) the opportunity to enroll in minimum essential coverageunder an eligible employer-sponsored plan.” In defining the term dependents,the final regulations largely adopted the proposed definition of an employee’schild (as defined in IRC Section 152(f)(1)), but excluded both foster childrenand stepchildren as well as a child who is not a U.S. citizen, unless that childis a resident of a country contiguous to the United States (or is within theexception for adopted children).

PPACA’s employer mandate appliesfor employers with 100+ FTEsbeginning Jan. 1, 2015. Therefore,beginning on Jan. 1, 2015, employersmust provide affordable minimumvalue coverage to all full-timeemployees working 30 hours or moreper week (and their dependents) (orrisk a penalty). There are special rulesfor employers with non-calendar yearplans, as well as employers withbetween 50-99 FTEs. Ask youradvisor for details.

Although effective in 2015, employerswith non-calendar year plans mayneed to adjust benefit offerings for theplan year beginning in 2014, since thatplan year will extend into 2015.

The employer mandate penaltyactually consists of two separatetaxes. Both taxes hinge on whether anemployer offers eligible employer-sponsored health coverage to full-timeemployees, but the nature of thepenalty will depend on the cost toemployees and the terms of coverage.The penalties are referred to as the“A” penalty and the “B” penalty,because of the subsections of theInternal Revenue Code (IRC) wherethey are located, IRC Section 4980H(a) and 4980H(b).

The “A” penalty generally applies toapplicable large employers notoffering coverage beginning Jan. 1,2015. Under this penalty, employersmay be assessed $2,000 peremployee, minus the first 30employees (80 employees in 2015) if:(1) The employer fails to offer“substantially all” its full-timeemployees the opportunity to enroll inminimum essential coverage AND (2)At least one full-time employee iscertified as having received a premiumtax credit.

The “B” penalty generally applies toapplicable large employer offeringsome level of substandard coveragebeginning Jan. 1, 2015. Under thispenalty, employers may be assessedthe lesser of the "A" penalty or the “B”penalty which is $3,000 for eachemployee who receives a premium taxcredit. The "B" penalty is assessed ifthe employer offers health coverage toat least 95 percent of its full-timeemployees (70 percent in 2015), but atleast one full-time employee receivesa premium tax credit to help pay forcoverage on an exchange, which mayoccur because (1) The employer didnot offer coverage to that employee;OR (2) The coverage the employeroffered that employee was eitherunaffordable to the employee or didnot provide minimum value.

50 or more


of 47

continues >


Health Care Reform- 2015 continuedItem Description Due Date Penalty Employer Size

Information Reportingunder Section 6055

Beginning in 2016, PPACA requires employers sponsoring self-insured grouphealth plans, regardless of size, to report certain plan coverage information tothe IRS and to provide statements to employees under IRS Code Section6055.

Employers only subject to Section 6055 (small self-insured employers) willneed to complete and submit Forms 1094-B and Form 1095-B. Employeesmust be provided with a copy of Form 1095-B or a substitute.

Employers subject to both Sections 6055 and 6056 (i.e., those with 50 ormore full-time employees (FTEs), including equivalents, that sponsor self-insured plans) may combine reporting into one by using Forms 1094-C andboth sections of Form 1095-C. Grandfathered plans must comply with the reporting requirements.

Generally, the Section 6055 reportingdue date mirrors the Form W-2 duedates. Specifically, employers mustfile their reports on or before Feb. 28(March 31, if filing electronically) of theyear following the calendar year towhich the reporting relates. However,for the first year (reporting on 2015calendar-year compliance), reportsare due Feb. 29, 2016 (because of theleap year), or March 31, 2016, if filingelectronically. This date appliesregardless of the plan year of theemployer-sponsored coverage (e.g.,reporting is due on those dates for2015 compliance even if the plan yearruns from May 1 through April 30).

In addition, like the Form W-2,employers must distribute employeestatements by Jan. 31 of the followingyear (i.e., Feb. 1, 2016, because Jan.31, 2016, is a Sunday) for 2015compliance — although employersmay apply for a 30-day limitedextension.

The penalty is generally $200 perfailure per year, with a maximumpenalty of $3 million.

For 2015 reporting only (due in early2016), no reporting penalties will applywhere the employer is using good faithefforts to comply.

All sizes


of 47

continues >


Health Care Reform- 2015 continuedItem Description Due Date Penalty Employer Size

Informational Reportingunder Section 6056

Beginning in 2016, PPACA requires applicable large employers sponsoringgroup health plans to report certain plan coverage information to the IRS andto provide statements to employees. Applicable large employers includesthose with 50 or more FTEs (including equivalents), regardless of when theybecome subject to PPACA’s employer mandate.

Applicable large employers will need to complete and submit Forms 1094-Cand 1095-C (6056 section only). Employees must be provided with a copy ofForm 1095-C or a substitute.

Employers subject to both Sections 6055 and 6056 (i.e., those with 50 ormore full-time employees (FTEs), including equivalents, that sponsor self-insured plans) may combine reporting into one by using Forms 1094-C andboth sections of Form 1095-C.

Grandfathered plans must comply with the reporting requirements.

Generally, the Section 6056 reportingdue date mirrors the Form W-2 duedates. Specifically, employers mustfile their reports on or before Feb. 28(March 31, if filing electronically) of theyear following the calendar year towhich the reporting relates. However,for the first year (reporting on 2015calendar-year compliance), reportsare due Feb. 29, 2016 (because of theleap year), or March 31, 2016, if filingelectronically. This date appliesregardless of the plan year of theemployer-sponsored coverage (e.g.,reporting is due on those dates for2015 compliance even if the plan yearruns from May 1 through April 30).

In addition, like the Form W-2,employers must distribute employeestatements by Jan. 31 of the followingyear (i.e., Feb. 1, 2016, because Jan.31, 2016, is a Sunday) for 2015compliance — although employersmay apply for a 30-day limitedextension.

The penalty is generally $200 perfailure per year, with a maximumpenalty of $3 million.

For 2015 reporting only (due in early2016), no reporting penalties will applywhere the employer is using good faithefforts to comply.

50 or more


HIPAA PrivacyItem Description Due Date Penalty Employer Size

Privacy Policies andProcedures

Requires health plans to establish written privacy policies and procedures,which include a definition of protected health information (PHI), permitteduses and disclosures of PHI, authorization requirement for other uses anddisclosures, designation of privacy official and privacy contact, sanctions forviolations, privacy safeguards, complaints procedure, prohibition of retaliationand waiver of rights, documentation and record retention, establishment ofbusiness associate agreements.

Fully insured plans that do not have access to PHI need only to comply withprohibition policies. Effective March 26, 2013, must be updated to reflectprovisions of the Final HIPAA Omnibus rule, issued on Jan. 25, 2013.

To comply with the final rules, and in order to properly distribute the newmodel notice (see Notice of Privacy Practices), self-insured plan sponsorswould enter the requested information into the model and then distribute thenotice. This will also require an update to the employer's Privacy Policies andProcedures.

Employers must revisit and revisetheir Privacy Policies and Proceduresin accordance with the final rules bySept. 23, 2013.

Civil penalties range from $100 to$50,000 per violation. Criminalpenalties may also apply, including afine up to $250,000 and imprisonmentup to 10 years.

All sizes


of 47

continues >


HIPAA Privacy continuedItem Description Due Date Penalty Employer Size

Security Policies andProcedures

Requires health plans to establish written policies and procedures forcreating, receiving, maintaining and transmitting electronic PHI, maintain arecord of those activities, and amend business associate agreements asnecessary.

The security rule does not provide any special exceptions for fully insuredplans.

Effective March 26, 2013, must be updated to reflect provisions of the FinalHIPAA Omnibus rule, issued on Jan. 25, 2013.

Large plans (more than $5 million inreceipts) should have complied byApril 20, 2005; small plans by April 20,2006. Requirement is ongoing.

Civil penalties range from $100 to$50,000 per violation. Criminalpenalties may also apply including afine up to $250,000 and imprisonmentup to 10 years.

All sizes


Notice of PrivacyPractices

Requires group health plans to notify participants of their privacy rights, plan'sresponsibilities, privacy contact, effective date and the plan's permitted usesand disclosures of PHI and informing people of their individual rights. Fully-insured plans that do not have access to PHI do not need to comply.

Notices must be revised by Sept. 23, 2013 to reflect provisions of the finalHIPAA omnibus rule.

For Indian tribal plans, the law is not entirely clear whether HIPAA applies.Such plans should engage legal counsel to determine applicability.

Must be distributed to new enrollees"at the time of enrollment" and to allparticipants within 60 days of amaterial change. Once every threeyears, a notice must be distributednotifying participants that a notice isavailable, along with instructions forreceiving a copy.


All sizes


Breach Notifications Applies to covered entities and business associates. Covered entity mustnotify affected individuals in writing if their unsecured PHI has beenbreached. See "More Information" to learn about what information must beincluded in this notification.

Final regulations issued on Jan. 25, 2013 changed the definition of a “breach”of unsecured PHI. The new definition presumes there is a breach – andgenerally requires notification – unless a risk assessment demonstrates a lowprobability that PHI has been compromised. The risk assessment mustconsider at least the following factors: the nature of the PHI, the unauthorizedperson who received the disclosure, whether the PHI was actually acquiredor viewed, and the extent to which the risk has been mitigated.

If the breach affects more than 500 individuals in the same state orjurisdiction, the HHS secretary and prominent media outlets in the area mustalso be notified. Information involving breaches affecting fewer than 500 mustbe maintained in a log and reported to HHS annually.

If a business associate experiences a breach, they must contact the coveredentity with the information required to be included in the participant notice.

Notice must be sent to affectedindividual, media outlet, HHS orcovered entity without unreasonabledelay but no later than 60 daysfollowing the breach discovery date.The annual notification to HHS is duewithin 60 days following the end of thecalendar year.


All sizes


of 47

continues >


HIPAA Privacy continuedItem Description Due Date Penalty Employer Size

Business AssociateAgreement

Requires that health plans/covered entities enter into written agreements withbusiness associates to require the associates to appropriately use, discloseand safeguard PHI in its possession.

A “business associate” is a person or entity that performs certain functionsthat involve the use or disclosure of PHI on behalf of a covered entity.Examples of business associates include: a TPA that assists with claimsprocessing; an attorney whose legal services to a health plan involve accessto protected health information; a pharmacy benefits manager that managesa health plan’s pharmacist network; an insurance broker that assist withclaims disputes; subcontractors that create, receive, maintain or transmit PHIon behalf of another business associate.

A fully insured plan is not a covered entity and therefore is not required tocomply if the only information they receive/handle is summary healthinformation and enrollment information.

A business associate agreement must contain certain required provisionsspecifying the permitted uses and disclosures of PHI and assigningappropriate obligations and liabilities to the parties.

If the covered entity did not have anexisting agreement with the businessassociate in place prior to Jan. 25,2013, an agreement must be put inplace by the Sept. 23, 2013.

If the covered entity does have anexisting agreement with the businessassociate in place prior to Jan. 25,2013, and does not “renew or modify”the agreement between March 26,2013 and Sept. 23, 2013, the coveredentity may take advantage of atransition rule and has until Sept. 22,2014 to amend the agreement tocomply with the final HIPAA rules. Theexisting agreement, however, musthave complied with prior versions ofthe HIPAA rules. If the covered entity does have anexisting agreement with the businessassociate in place prior to Jan. 25,2013, but “renews or modifies” theagreement between March 26, 2013and Sept. 23, 2013, the covered entitycannot take advantage of thetransition rule and was required toamend the agreement by Sept. 23,2013.


All sizes


of 47

continues >


HIPAA PortabilityItem Description Due Date Penalty Employer Size

Certificate of CreditableCoverage

Certifies prior group health plan creditable coverage. Must include issue date,individual's name/identification, and administrator name/address/telephonenumber.

This requirement is now phased out due to the prohibition on pre-existingconditions. However, proposed guidance indicated employers and insurersmust continue to provide this notice until Dec. 31, 2014.

The law is unclear on whether self-insured Indian Tribal plans are subject toHIPAA Portability provisions. Such plans should seek legal counsel.

Must be distributed to participant uponloss of coverage (time frame same asElection Notice); upon loss of COBRAcoverage ("as soon as practicable");upon request within two years of lossof coverage ("promptly").

Internal Revenue Service (IRS) mayassess a $100 per day penalty. Ifviolation is not corrected within 30days of discovery, then employer mustself-report violation on IRS Form 8928and a civil penalty of $100 per daywould be assessed.

HHS may impose a penalty of $100per failure to comply up to a maximumof $25,000 per year. If violation is notcorrected within 30 days of discovery,then employer must self-reportviolation on IRS Form 8928 and a civilpenalty of $100 per day would beassessed.

All sizes


Special EnrollmentRights

HIPAA requires group health plans to provide special enrollmentopportunities to certain employees, dependents and COBRA-qualifiedbeneficiaries. These opportunities are commonly known as HIPAA “specialenrollment rights” (SER). A HIPAA SER arises upon the occurrence of any ofthe following:

o A loss of eligibility under other coverage;o A loss of eligibility under Medicaid/CHIP;o Birth of a child;o Marriage of an employee;o Adoption (or placement for adoption) of a child with the employee; ando Gain of eligibility for CHIP premium assistance.

A special notice, the HIPAA special enrollment rights notice, notifies eligibleparticipants of special enrollment rights, including a description of specialenrollment events and enrollment procedures. The model language from DOLReg. Section 2590.701-6(c)(1) is available.


If a participant experiences one of thelisted events, they have a minimum of30 days (longer if the plan allows) tonotify the plan sponsor of the eventand request enrollment for themselvesand affected dependents in the plan.Two events, the loss of eligibility underMedicaid/CHIP and the gain ofeligibility CHIP premium assistanceallow 60 days to request enrollment.

A separate requirement, the noticemust be distributed to eligibleparticipants "at or before the time anemployee is initially offered theopportunity to enroll in a group healthplan." Should not be provided only tothose who enroll in the plan (such aswith the SPD) as this would not be asufficient distribution method.


All sizes


of 47

continues >


HIPAA Portability continuedItem Description Due Date Penalty Employer Size

General Notice of Pre-existing ConditionExclusion

Applies to a group health plan (or issuer) that imposes a pre-existingcondition exclusion. Must include the existence of any plan exclusion relatingto pre-existing conditions, the terms of the exclusion, right to provide proof ofcreditable coverage, right to request certificate of creditable coverage fromprior plan or issuer, contact name/address/telephone number, and statementthat current plan or issuer will assist in obtaining prior certificate, if necessary.

This requirement is now phased out due to the prohibition on pre-existingconditions.


Must be distributed to eligibleparticipants "as part of any writtenapplication materials distributed by theplan or issuer for enrollment." Ifenrollment materials are notdistributed, at the earliest datepossible following enrollment request.

Note that due to the prohibition on pre-existing condition exclusions, thisrequirement is obsolete for plan yearsbeginning on or after Jan. 1, 2014.


All sizes


Individual Notice of Pre-existing ConditionExclusion

Notifies participant of the length of time remaining after reducing themaximum exclusion period by the amount of time documented in a certificateof creditable coverage. Must include exclusion period remaining forparticipant, last day of period, source or basis of determination, right tosubmit additional creditable coverage, and description of any appealprocedures.

Does not apply to individuals under 19 years of age beginning in the planyears on or after Sept. 23, 2010, or individuals of all ages for plan yearsbeginning Jan. 1, 2014.

Due to the prohibition on pre-existing condition exclusions, this requirement isobsolete for plan years beginning on or after Jan. 1, 2014.


Must be distributed to participants whohave submitted a certificate ofcreditable coverage documenting lessthan the maximum exclusion period"by the earliest date following adetermination."

Due to the prohibition on pre-existingcondition exclusions, this requirementis obsolete for plan years beginning onor after Jan. 1, 2014.


All sizes


of 47

continues >



CHIPRA The Children's Health Insurance Program Reauthorization Act of 2009(CHIPRA) requires that a group health plan allow an employee or dependentto enroll in the plan within 60 days of the employee's Medicaid or CHIPcoverage being terminated or upon eligibility for employment assistanceunder Medicaid or CHIP.

In addition, employers that maintain a group health plan in a state thatprovides medical assistance or child health assistance under a stateMedicaid or state child health plan are required to provide the Employer CHIPNotice. The following states meet this standard: AL, AK, AZ, CO, FL, GA, ID,IN, IA, KS, KY, LA, ME, MA, MN, MO, MT, NE, NV, NH, NJ, NY, NC, ND, OK,OR, PA, RI, SC, SD, TX, UT, VT, VA, WA, WV, WI and WY.


Notices must be distributed annuallyon the first day of the plan year eachyear.

A model notice is available.

Civil penalties of up to $100 a day forfailure to comply with the new noticeand disclosure requirements may beassessed.

All sizes


of 47

continues >



Wellness ProgramRequirements

There are two types of wellness programs, those that base a reward onparticipation only, and those that base a reward on satisfying a healthstandard (health-contingent). If the program is only participation-based butprovides a reward such as a premium discount or reduction in copays ordeductibles, then the program must be available to all similarly situatedindividuals in order to comply with the HIPAA nondiscrimination requirements.

If the program bases the reward on satisfying a health standard- whetheractivity-only, or outcomes-based (such as not smoking or maintaining acertain cholesterol level), then the following five requirements must be met:

(1) The total reward must not exceed 30 percent of the cost of coverageunder the plan (up to 50 percent for rewards based on tobacco use) underPPACA.(2) The program must be reasonably designed to promote health and preventdisease.(3) The program must give eligible individuals the opportunity to qualify forthe reward at least once per year.(4) The reward must be available to all similarly situated individuals. Theprogram must allow a reasonable alternative standard for obtaining thereward to any individual for whom it is unreasonably difficult due to a medicalcondition (or if medically inadvisable) to satisfy the initial standard. Note thatpursuant to the final regulations released on June 3, 2013, a participant mustbe given the entire plan year to complete the alternative standard. Further, atthe point the employee completes the alternative standard, the employee isentitled to the full reward, which means that they receive the rewardretroactively back to the first day of the plan year.(5) The plan must provide a disclosure in all materials describing the terms ofthe program and the availability of a reasonable alternative standard in orderto obtain a reward. A model notice is provided.

Self-insured church plans are exempt. The law is unclear on whether IndianTribal plans are subject to HIPAA Portability provisions. Such plans shouldseek legal counsel.

Final regulations issued June 3, 2013,are applicable for group health plansand health insurance issuers providinggroup health plans, includinggrandfathered plans, for plan or policyyears starting on or after Jan. 1, 2014.

Wellness program materials andemployee communications should bereviewed annually. In addition, if thewellness program is connected withthe health plan (e.g., the rewardrelates to health plan premiums orother benefits, such as a reduction inpremiums or an HRA/HSAcontribution), the plan documents ofthe health plan must describe thewellness program's effect on the plan.Plan documents should be incompliance by the first day of the planyear.

HHS may impose a penalty of $100per failure to comply up to a maximumof $25,000 per year. If violation is notcorrected within 30 days of discovery,then employer must self-reportviolation on IRS Form 8928, and a civilpenalty of $100 per day would beassessed. Finally, the DOL may bringa civil action to enforce HIPAAportability requirements.

All sizes


of 47

continues >



HIPAANondiscriminationRules for Eligibility andBenefits

Group health plans are prohibited from discriminating in terms of eligibility,benefits, and contributions based on health status, which would includeclaims experience, medical condition, and disability. Specific practices thatare prohibited by HIPAA are nonconfinement clauses, impermissible source-of-injury restrictions and impermissible actively-at-work clauses.

HIPAA also permits an employer to provide different benefits to differentgroups of similarly situated employees or dependents, so long as the benefitsare uniformly available to all similarly situated individuals. The followinggroups may be treated as distinct groups of similarly situated individuals:

(1) Groups of participants (employees or former employees) based on a bonafide employment-based classification;

(2) Participants as a separate group from beneficiaries (spouses anddependent children; or

(3) Groups of beneficiaries based on employment classification of or type ofrelationship to the participant

Examples of bona fide employment-based classifications include: Full-time/part-time; occupation; date of hire; geographic location; membership in acollective bargaining agreement; length of service; and current/formeremployee.

Note that self-insured church plans that have been in existence since July1997 may qualify for a limited exemption.

Note also that for self-insured Indian tribal plans, the law is unclear as towhether the HIPAA portability rules apply. Such plans should seek outsidecounsel regarding applicability.

Compliance requirements areongoing. Testing should be performedthroughout the plan year so that by theend of the plan year (when a penaltywould be assessed) the plan is incompliance.


All sizes


Medicare/TRICAREItem Description Due Date Penalty Employer Size

Medicare Part DDisclosure Notice toCMS

Applies to group health plans and individual health insurance policies thatoffer prescription drug coverage to Medicare eligible individuals. Entities thatare contracted directly with Medicare as a Part D plan are exempt. Plan mustdisclose to CMS whether the plan's prescription drug coverage is creditableor non-creditable.

The online notification must becompleted annually within 60 days ofbeginning of plan year; within 30 daysof prescription drug plan termination;and within 30 days of a change in thecreditable coverage status.

No specific penalties have yet beenannounced. However, an employerwho is claiming the retiree drugsubsidy would no longer be eligible forthe subsidy.

All sizes


of 47

continues >


Medicare/TRICARE continuedItem Description Due Date Penalty Employer Size

Medicare Part DDisclosure Notice toEligible Individuals

Applies to group health plans and individual health insurance policies thatoffer prescription drug coverage to Medicare eligible individuals. Entities thatare contracted directly with Medicare as a Part D plan are exempt. Noticemust be sent to Medicare Part D eligible individuals. Notice must include thedetermination of whether the plan's prescription drug coverage is creditableor non-creditable, the definition of creditable coverage, an explanation of whycreditable coverage is important, an explanation of the individual's right tonotice, and an explanation of benefit plan provisions that affect Medicare PartD eligible individuals. If the coverage is non-creditable, must also include astatement that an individual can generally only enroll in Medicare Part Dduring open enrollment of each year. Both a Creditable Coverage ModelNotice and Non-creditable Coverage Model Notice are available.

There are six due dates associatedwith this requirement:

(1) On an annual basis prior to Oct.15th;(2) Prior to an individual's InitialEnrollment Period for Medicare PartD;(3) Prior to a Medicare eligibleindividual's effective date with theplan;(4) Upon a change to the plan'screditable coverage status;(5) Upon the prescription drug plan'stermination; and6) Upon request.

No specific penalties have yet beenannounced. However, an employerwho is claiming the retiree drugsubsidy would no longer be eligible forthe subsidy.

All sizes


Medicare Section 111Reporting

Applies to group health plans, including HRAs. However, health FSAs, HSAsand stand-alone vision, dental and prescription plans are exempt. There aretwo exceptions:

o Small plans sponsored by employers with fewer than 20 employees needonly report those receiving a kidney transplant or kidney dialysis.o Plans with less than $5,000 annual benefit maximum are exempt, whichwas a change from the lower threshold of $1,000, effective Oct. 3, 2011.

The reporting assists CMS in determining coordination of benefitresponsibilities between the group health plan and Medicare. TheResponsible Reporting Entity (RRE) is the insurer for fully insured plan, theTPA for self-insured plan and the plan administrator for self-insured plan thatself-administers. Information to be reported includes the Social Securitynumber (or Medicare Health Insurance Claim Number), gender, name anddate of birth of certain active covered individuals.

Information must be reported to CMSon a quarterly basis according to theschedule CMS provides uponregistration in the system.

RRE shall be subject to civil moneypenalty of $1,000 per day perindividual not reported.

All sizes


of 47

continues >


Medicare/TRICARE continuedItem Description Due Date Penalty Employer Size

Medicare Prohibitions Employers with 20 or more employees are prohibited from:

(1) Providing financial or other incentives for a Medicare-eligible employeenot to enroll (or to terminate enrollment) under a group health plan whichwould be a primary plan due to age-based Medicare entitlement; and(2) "Taking into account" age-based Medicare entitlement in a manner thatresults in depriving a Medicare-eligible employee of the opportunity to elect toparticipate in the group health plan to the same extent as similarly situatedemployees who are not Medicare eligible.

There are no express notice requirements. However, SPDs must discloseinformation regarding when a group health plan pays primary or secondary toMedicare.

Note that this prohibition applies to disability-based Medicare entitlementwhen the employer size is 100 or more.

The final regulations, as amended in73 Fed. Reg. 9679, were effectiveMarch 24, 2008.

Potential civil penalty of up to $5,000for each violation. Medicare alsoauthorizes the federal government tocollect the amount that Medicare paidas primary payer or the amount thatshould have been paid under thegroup health plan. If legal action isbrought to collect, double damagesmay be assessed. The IRS may alsoimpose an excise tax of 25 percent onemployers with nonconforming plans.

20+


TRICARE Prohibitions Employers are prohibited from engaging in certain activities with respect toemployees who are eligible for coverage under TRICARE. In particular,employers are prohibited from:

(1) Providing financial or other incentives for a TRICARE-eligible employeenot to enroll (or to terminate enrollment) under a group health plan; and(2) Depriving a TRICARE-eligible employee of the opportunity to elect toparticipate in the group health plan in the same manner and to the sameextent as similarly situated employees who are not TRICARE eligible.

There are no express notice requirements. However, SPDs must discloseinformation regarding when a group health plan pays primary or secondary toTRICARE.

The final regulations were effective onJune 18, 2010, and compliance isongoing.

Potential civil penalty of up to $5,000for each violation. Remedies forviolation also include remedies underthe Federal Claims Collection Act.TRICARE also authorizes the federalgovernment to collect reasonablecharges from a third-party payer.

20+


of 47

continues >


NondiscriminationItem Description Due Date Penalty Employer Size

Section 105(h)NondiscriminationTesting

Self-insured and non-grandfathered fully insured group health plans may notdiscriminate on eligibility or benefits in favor of highly compensatedindividuals (HCIs). An HCI is an individual who is:

(1) One of the five highest-paid officers;(2) A shareholder who owns more than 10 percent of the value of stock of theemployer's stock; or(3) Among the highest-paid 25 percent of all employees (other thanexcludable employees who aren't participants).

Section 105(h) establishes two nondiscrimination tests-the Eligibility Test andthe Benefits Test. To pass the Eligibility Test, a plan must benefit one of thefollowing:

(1) 70 percent or more of all nonexcludable employees;(2) 80 percent or more of all nonexcludable employees who are eligible tobenefit, if 70 percent or more of all nonexcludable employees areeligible to participate under the plan; or(3) A nondiscriminatory classification of employees (a bona fide businessclass and a sufficient ratio of benefiting non-HCIs to benefiting HCIs).

Under the Benefits Test, all benefits provided to the HCIs who areparticipating in the plan must be provided to all other participants.

Note that for fully insured Indian Tribal plans, the law is unclear whether thesection 105(h) nondiscrimination rules apply. Such plans should seek legalcounsel regarding applicability.

Self-insured Plans: Compliancerequirements are ongoing. Testingshould be performed throughout theyear, and completed by the last day ofthe plan year to ensure plancompliance.

Non-grandfathered fully insured: IRSNotice 2011-1 that compliance withthe rules will not be required for fullyinsured plans until the agencies haveissued regulations or other guidanceregarding the rules.

Non-grandfathered fully insured:excise taxes or civil money penaltiesof $100 per day per individualdiscriminated against.

Self-insured: If a self-insured medicalplan fails to pass either test, thefavorable tax treatment for the HCIswill be lost. HCIs will lose their taxexclusions and will be taxed on their"excess reimbursements" from theplan.

All sizes


Cafeteria Plan, HealthFSA and DCAPNondiscriminationTesting

See Cafeteria Plans for a more detailed explanation regarding these requiredtests.

See Cafeteria Plans for a moredetailed explanation regarding duedates.

See Cafeteria Plans for a moredetailed explanation regarding penaltyinformation.

All sizes


of 47

continues >


Nondiscrimination continuedItem Description Due Date Penalty Employer Size

Genetic InformationNondiscrimination Act(GINA)

The Genetic Information Nondiscrimination Act of 2008 (GINA) consists oftwo principal Titles: Title I (the health insurance provisions) and Title II (theemployment nondiscrimination requirements).

Generally, GINA restricts the use of genetic information in connection withhealth coverage and employment. The employment nondiscriminationrequirements prohibit employers from discriminating against any employeewith respect to the compensation, terms, conditions or privileges ofemployment on the basis of "genetic information." The health insuranceprovisions prohibit group health plans from using genetic information to doany of the following: adjusting group premium or contribution amounts on thebasis of genetic information; requesting or requiring an individual or anindividual's family members to undergo genetic testing; or requesting,requiring or purchasing genetic information for underwriting or enrollmentpurposes.

Employers are required to post a notice explaining the provisions of GINA:"Equal Employment Opportunity is the Law."

In addition, Final HIPAA regulations published on Jan. 25, 2013 prohibithealth plans from using or disclosing genetic information for underwriting orenrollment purposes.

Compliance requirements areongoing. Final regulations becameeffective Jan. 10, 2011.

Violations of the health insuranceprovisions of Title I are subject toenforcement under ERISA, the PHSAand the IRC.

Remedies available for violations ofGINA's Title II provisions includecertain compensatory and punitivedamages, reasonable attorney's feesand injunctive relief.

15 or more


HIPAANondiscrimination

See HIPAA for a more detailed explanation regarding these requirements. See HIPAA for a more detailedexplanation regarding due dates.

See HIPAA for a more detailedexplanation regarding penaltyinformation.

All sizes


TaxationItem Description Due Date Penalty Employer Size

Taxation of Group TermLife Insurance

Applies to employers who directly or indirectly provide group term lifeinsurance. An individual is subject to Social Security and Medicare taxes onthe cost of the coverage that exceeds $50,000. An employer is considered toindirectly provide coverage if they arrange for the payment of premiums andone employee pays less than the rate indicated on the IRS Premium Tableand one employee pays more than the rate indicated on the Premium Table.

The cost of the excess coverageshould be included in the grossincome of the employee for thetaxable year in which the coveragewas provided. Thus, complianceshould be reviewed by the end of theplan year.

Failure to properly report income andtaxation may result in IRS action.

All sizes


of 47

continues >


Taxation continuedItem Description Due Date Penalty Employer Size

Taxation of Same-sexBenefits

On June 26, 2013, the Supreme Court ruled in United States v. Windsor thatSection 3 of the 1996 Defense of Marriage Act ("DOMA") is unconstitutional.Section 3 of DOMA prohibited the U.S. government from conferring anyfederal benefits to same-sex couples who were married in any jurisdiction.DOMA's limitations on the definitions of "marriage" and "spouse" affected amyriad of federal laws, including the IRC, ERISA, COBRA, and HIPAA, andthus deprived same-sex couples legally married under the laws of certainstates of certain legal protections and preferred tax treatment under spousalretirement and health care benefits. The Court's ruling means this differentialtreatment of opposite-sex and same-sex married couples is not permissible inany state that allows or recognizes same-sex marriages.

Windsor did not address Section 2 of DOMA which declares states andterritories of the United States have the right to deny recognition of same-sexmarriages that originated in other states or territories.

Importantly, Windsor did not discuss treatment of same-sex domesticpartnerships or civil union partners. Therefore, in the absence of additionalguidance, benefits provided to same-sex domestic partners and civil unionpartners remain taxable.

On Aug. 29, 2013, the IRS issuedRevenue Ruling 2013-72, addressingsame-sex marriages for federal taxpurposes. For employers, the rulingmeans that the tax advantages ofcoverage for employer-sponsoredhealth insurance and other benefits isnow available to a same-sex spouseon the same basis as an opposite-sexspouse. Employers that werepreviously providing coverage tosame-sex spouses may immediatelystop imputing federal tax relating tothat coverage (although state taxesmay still apply).

As to same-sex domestic partners orcivil unions, employers shouldcontinue to impute income on thevalue of employer-sponsoredinsurance coverage when the partnerdoes not qualify as the employee'sfederal tax dependent. More aboutqualifications for tax dependency maybe reviewed at the links below.

Compliance should be reviewed bythe end of the plan year.

Failure to impute income for same-sexdomestic partners or civil unions mayresult in the plan's loss of tax-qualifiedstatus and tax penalties for theindividuals (since they would begetting tax advantages that they werenot qualified for). In addition, anemployer's failure to properly reportincome and taxation may result in IRSaction, and additional action may betaken at the State level.

All sizes


Other Federal MandatesItem Description Due Date Penalty Employer Size

HSA Notice toEmployees RegardingEmployer Contributions

Applies to employers who make a contribution to employee HSAs and whohave participants who have not established an HSA by Dec. 31. EmployerHSA contributions made under a Section 125 Cafeteria Plan are exempt.Must include a statement that each HSA-eligible employee will receive acomparable employer contribution if by the last day of the following February,the employee's HSA is established and the employee notifies the employer ofthe account. A model notice is available.

Employer must provide to all HSAeligible participants (or only those whohave not timely established an HSA)no earlier than 90 days before theemployer's first HSA contribution forthe calendar year and no later thanJan. 15 of the following calendar year.

May result in failure of the HSAcomparability rules, which carry apenalty of 35 percent excise tax forthe employer on all calendar yearemployer contributions.

All sizes


of 47

continues >


Other Federal Mandates continuedItem Description Due Date Penalty Employer Size

Mental Health Parity andAddiction Equity Act(MHPAEA)

Applies to group health plans that provide coverage for mental health andsubstance use disorders (MH/SUD). Requires that coverage for MH/SUDbenefits be in parity with the coverage provided for medical/surgical benefits.In order for MH/SUD benefits to be considered in parity with medical/surgicalbenefits, they cannot be given financial requirements or quantitativetreatment limitations that are more restrictive than those given to substantiallyall medical/surgical benefits in the same classification. Financial requirementsinclude deductibles, copayments, coinsurance, and out of pocket maximums.Types of quantitative treatments are annual, episode, and lifetime day andvisit limits. MH/SUD benefits must also be in parity with medical/surgicalbenefits when it comes to nonquantitative treatment limitations, such asmedical management standards, formulary design, and standards forprovider admission to participate in-network.

Plans sponsored by employers with 50 or fewer employees were originallyexempt from MHPAEA. However, under health care reform, if an employer isproviding coverage through a group policy purchased in the small groupmarket for policy years beginning on or after Jan. 1, 2014, that group policymust include an essential health benefits package. To meet this requirement,a group policy must provide coverage for ten different categories of benefits,including coverage for “mental health and substance abuse disorder services,including behavioral health treatment.” The inclusion of these mental healthbenefits in a group policy will trigger the MHPAEA requirements, since theMH/SUD benefits would be offered in addition to medical/surgical benefits.However, small grandfathered plans (which don’t require essential healthbenefits) and self-funded group health plans (which are subject to ERISAbecause of preemption) may still qualify for a small employer exemption.

Note that non-federal self-insured governmental plans may opt out of theMHPAEA requirements.

Note also that the law is unclear whether Indian tribal plans are subject to theMHPAEA requirements. Such plans should engage legal counsel regardingapplicability.

MHPAEA is effective for plan yearsbeginning on or after Oct. 3, 2009.

If violation is not corrected within 30days of discovery, then employer mustself-report violation on IRS Form 8928and a civil penalty of $100 per daywould be assessed.

All sizes


Newborns' and Mothers'Health Protection Act(NMHPA)

Self-insured group health plans must provide coverage for a minimum stay of48 hours for hospital stays related to childbirth. Coverage for the hospital stayof a vaginal delivery must be no less than 48 hours and 96 hours for acesarean section. Fully insured plans would be subject to any applicablestate laws. Model language is available.

Note that non-federal, self-insured governmental plans may opt out of theNMHPA requirements.

Also note that for Indian tribal plans, the law is unclear as to whether suchplans are subject to the NMHPA requirements. Such plans should seek legalcounsel regarding applicability.

Must be disclosed in SPD. Employersshould review SPDs by the first day ofthe plan year to ensure that SPDsinclude proper NMHPA disclosurelanguage.

Legal action may be brought byparticipant and an ERISA $110 perday fine may be assessed. If violationis not corrected within 30 days ofdiscovery, then employer must self-report violation on IRS Form 8928 anda civil penalty of $100 per day wouldbe assessed.

All sizes


of 47

continues >


Other Federal Mandates continuedItem Description Due Date Penalty Employer Size

Qualified Medical ChildSupport Order (QMCSO)

Requires that a group health plan establish written procedures fordetermining the qualification of a Medical Child Support Order (MCSO).When an order is received, it identifies a child of a plan eligible participantand the child's (alternate recipient's) right to receive benefits under a grouphealth plan. The plan administrator must respond to the issuing stateauthority with the determination of whether the order is qualified and ifcoverage is available. If so, the administrator must take appropriate action toenroll the child in benefits and must respond to the state authority with thecoverage effective date, description of coverage and any action necessaryfrom alternate recipient.

Also note that DOL guidance provides that where a plan does not offerdependent-only coverage, the plan must enroll both the dependent child andthe eligible employee if the employee was not previously enrolled in the plan.However, the expiration of the period of coverage required by the order doesnot give the employee a right to disenroll from the plan.

Plan administrator must respond tostate authority within 40 days ofreceiving order; employer mustforward to administrator or responddirectly to state authority within 20days. A copy of the determinationshould also be provided to theemployee/participant.

Plan documents and SPDs should bereviewed by the first day of the planyear to ensure that its writtenprocedures for determining thequalification of an MCSO are properlydescribed.

Legal action may be brought byalternate recipient or state authority.

All sizes


Uniformed ServicesEmployment andReemployment RightsAct (USERRA)

Applies to all employers regardless of size. Employees absent from work dueto uniformed service must be offered the option to continue, at their ownexpense, group health coverage for a period up to 24 months. For periods ofleave of 30 days or less, employer must continue to pay normal share ofpremiums.

Employer must post or distribute toemployees a notice of the Act'sprovisions. Notices should be postedby first day of plan year, and plandocuments, policies and proceduresand employee handbooks should bereviewed for compliance by first day ofplan year.

Legal action may be brought byemployee or DOL.

All sizes


Women's Health andCancer Rights Act(WHCRA)

Requires group health plans that provide medical and surgical mastectomybenefits to notify participants that the plan provides certain benefits forreconstructive surgery, surgery and reconstruction of the other breast toproduce a symmetrical appearance, prostheses and physical complications.Model language for both enrollment and annual notice is available.

For self-insured church plans and for Indian tribal plans, the law is unclear asto whether WHCRA applies. Such plans should seek legal counsel regardingapplicability.

Non-federal, self-insured governmental plans may opt out of the WHCRArequirements.

Must be distributed to participantsupon enrollment and annually.Compliance should be reviewed priorto the beginning of the plan year.

Legal action may be brought byparticipant and an ERISA $110 perday fine may be assessed.

All sizes


of 47

This material was created by National Financial Partners Corp., (NFP), its subsidiaries or affiliates for distribution by their registered representatives, investment advisor representatives, and/or agents. This material was created to provide accurate and reliable information on the subjects covered. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Neither NFP Advisor Services, LLC nor Benefits Partners offer legal or tax services.

Securities and Investment Advisory Services may be offered through NFP Advisor Services, LLC, (NFPAS) member FINRA/SIPC. Benefit Partners is a platform of NFP Insurance Services, Inc. (NFPISI), an affiliate of NFPAS. NFPAS is affiliated with NFP. NFPAS is not affiliated with the firm branded on this material.

Presented by:

Presented to:

Compliance Checklist for Group Health Plans

Name DateSignature

Name DateSignature

138793 Copyright © 2015. All rights reserved.

Page 47 of 47