Posts Tagged ‘COBRA’

Know What Regulations To Consider For Your Corporate Wellness Plan

Thursday, August 22nd, 2013

The post below is a guest blog from Twyla Hutchins, RN, BSN, COHN-S who serves as Health Management Officer for CAI’s employee benefits partner, HCW Employee Benefit Services.

Twyla-HutchinsAs more companies add wellness programs to keep healthcare claim costs down, they should consider what compliance regulations need to be followed for successful program implementation. Otherwise, workplace wellness plan savings can vanish due to penalties resulting from a failure to follow the rules.

There are a few key rules to remember when setting up and monitoring a corporate wellness program that can reduce the likelihood of violations allegations for employers. Here is an overview of what to factor into an employee wellness program.

Americans with Disabilities Act (ADA)

The ADA prohibits employment discrimination against disabled individuals and limits the circumstances in which an employer may require physical examinations or answers to medical inquiries. For wellness plans to comply with ADA guidelines, voluntary medical exams and inquiries are permitted if:

  • Participation in the program is voluntary;
  • Information obtained is according to the confidentiality requirements of the ADA; and
  • Information obtained is not used to discriminate against an employee.

The gray area here is determining exactly how “voluntary” is defined, as the Equal Employment Opportunity Commission (EEOC), which oversees ADA complaints, has not issued formal guidance. However, if the wellness program requires an employee to complete a health risks assessment to become eligible for the group, the health plan would violate the ADA. Additionally, a wellness program that complies with HIPAA’s wellness regulation may not meet the requirement of the ADA.

COBRA

COBRA allows employees who lose their health benefits to choose to continue benefits provided by their group health plan for limited periods of time under certain circumstances. For wellness programs that provide physical examinations, cholesterol screenings, flu shots and similar benefits that qualify as medical care, these offerings can trigger the program to be a group health plan and thus incur COBRA responsibilities for participants.

Internal Revenue Code (IRC) Taxation

If you are offering incentives to reward employees who reach or surpass certain wellness plan goals, some may be considered taxable income, such as cash or gift cards. Other incentives may avoid taxation, including lower employee premium contributions, smaller deductibles for employees, and employer contributions to company savings and retirement accounts.

Incentives such as cash and prizes are considered taxable unless they qualify as “de minimis” in value by the Internal Revenue Service. As with the EEOC and the “voluntary” designation, what qualifies legally as “de minimis” is unclear, with amounts ranging from $10-$50 in gifts being offered by businesses with wellness programs that they believe fit this definition.

State Laws

North Carolina is one of 31 states with a lawful products protection law prohibiting discrimination against employees who use products such as tobacco outside the workplace. Employers can prohibit smoking on company property, however, as well as refuse to provide smoking breaks or other accommodations to smoking employees.

If an employer uses a wellness program that is part of an employee welfare benefit plan subject to the Employee Retirement Income Security Act (ERISA), then North Carolina’s lawful products law may be preempted. Employers that are considering charging tobacco users a higher premium for health insurance should be aware of these issues.

HIPAA

Rules for the Health Insurance Portability and Accountability Act of 1996 (HIPAA) require that, a group health plan may not discriminate against any individual or dependent because of a “health factor.” Health factors include health status, medical condition (including both mental and physical illness), claims experience, receipt of healthcare, medical history, genetic information, evidence of insurability, and disability. A group health plan may vary benefits, however, including premiums based on whether an individual has met the standards of the wellness program, if the wellness program itself meets certain requirements.

This is a tricky distinction to make, and the rules of what qualify continue to change. HCW is developing tools and a webinar to explain further the impact of HIPAA and its new rules that go into effect on Jan. 1, 2014. These items will be available in the near future.

Be cognizant of all these regulations and how they can affect your employee wellness program. If you need more immediate information on any of these considerations, contact HCW at (919) 403-1986 or visit us online.

Misclassifying Employees Can Have Unintended Consequences

Tuesday, February 14th, 2012

The post below is a guest blog from Joy Binkley who serves as the Principal, Health & Welfare Consultant for CAI’s employee benefits partner, Hill, Chesson & Woody.

The Internal Revenue Service (IRS) has announced a new, voluntary correction program that allows employers to reclassify employees who are currently misclassified as 1099 “independent contractors” when they should actually be reported as “W-2 paid” employees. Known as the Voluntary Classification Settlement Program (VCSP), employers who are not currently being examined by the IRS are allowed to eliminate years of past employment tax liabilities for “pennies on the dollar,” an amount equaling just greater than one percent of the wages paid to the reclassified workers for the past year.

For health and welfare benefits, employers will want to consider the compliance and contractual impacts to their plan. From a compliance perspective, it all starts with control groups and eligible employees. This impacts traditional regulatory issues such as COBRA, HIPAA, ERISA, FMLA and discrimination testing. When you add in the additional impact of healthcare reform, employers will need to consider the implications on provisions that apply to varying sizes of groups, such as “Pay or Play,” tax credits and medical loss ratios.

Of course, there is also the issue of repercussions that might be felt from employees that were previously misclassified and, as a result, were denied benefits.

From a contractual perspective, employers should be aware of the requirements the insurers or reinsurers impose. This might mean a re-rating of coverage if there are material adjustments to the covered population. With clearer definitions of employees and control groups, employers may want to tighten up their eligibility monitoring to prohibit unreported carve outs. As can be seen, all of this impacts more than just tax withholdings.

To read the expanded article, feel free to view our Eyes on Benefits monthly newsletter.

Lack of Attention to Extended Leave Policies Can Be Costly

Thursday, October 27th, 2011

The post below is a guest blog from Jenn Hargiss who serves as a Client Coordinator for CAI’s employee benefits partner Hill, Chesson & Woody.

You offer a more generous leave policy than the Federal requirements of the Family Medical Leave Act (FMLA).  Big deal, right?  While this may not sound like anything unreasonable, does your health insurance carrier or reinsurance (stop-loss) vendor agree with your decision to allow employees to continue coverage outside of COBRA under your company health plan for an extended period of time?

Medical Insurance Carriers and reinsurance carriers follow strict federal guidelines, especially with FMLA and COBRA.  If an employer allows an extended leave period, including health plan coverage continuation (Non-COBRA) after the 12-week (or 26 week) FMLA maximum has been exhausted, then the employer loses the protection of the group health plan and reinsurance policies.  In essence, the employer just became fully self-funded; paying all the medical claims incurred under the terms of the medical plan after FMLA was exhausted for each individual.  Ouch! 

If claims are incurred, an employer may end up with many very large, unbudgeted claims and legal expenses.  Plus, an untimely offering of COBRA continuation after the fact may not satisfy the health insurance or reinsurance carrier contract provisions and certainly opens up the employer for expensive COBRA rights violations.

Take action to avoid finding your company in an unfavorable legal and financial position:

  1.  No policy is a bad policy.  What is the company policy?  Understand when health benefits are supposed to end to avoid a dispute should the employee not return to work at the end of the leave.  Not only should the health contracts be reviewed, but also dental, vision, life and disability.
  2. Check your policies, procedures, and handbooks.   Make sure the company is not making promises to continue coverage that doesn’t coordinate with the health insurance and reinsurance contracts.  Make it clear when coverage ends and when COBRA coverage will begin.
  3. Negotiate with the health insurance or reinsurance carrier to amend the contract and add the appropriate language around continuation of coverage after exhausting FMLA if the policy is more generous than Federal Regulations require.
  4. Review contracts annually.  Make sure when changing carriers, the policy is submitted for approval and the new contract is updated with the appropriate language.

Employment and Labor Law Update Helps Employers Be Informed and Protected

Tuesday, May 4th, 2010

The past year has been marked by major changes in employment law and intense regulatory enforcement efforts, including:

Government agencies will be stepping up their enforcement activities even more in 2010.  Consider:

  • U.S. Department of Labor budget includes $25 million and the addition of 100 enforcement personnel to identify and penalize employers who improperly misclassify employees as independent contractors.
  • U.S.D.O.L. budget includes a $67 million increase for worker protection agencies, including $14 million more to OSHA to add 60 enforcement staff and conduct 9 percent more inspections.
  • The EEOC budget includes an $18 million increase that will be used in part to hire 100 new investigators.  Those additions come on top of the EEOC’s 2009 expansion.
  • OSHA has announced that they plan to increase the average fine for a serious violation from $1,000 to $3,000-$4,000.
  • The U.S.D.O.L. Wage and Hour Division launched its “We Can Help” campaign earlier this year.  It essentially presents any employee who is unhappy with their pay with a forum for a nothing-to-lose wage complaint that can be submitted online or through a hotline.

In addition, the number of wage and hour lawsuits filed by employees against employers increased by 44 percent in 2009 over 2008, healthcare reform passed and President Obama recently appointed Craig Becker and Mark Pearce to the National Labor Relations Board, tilting the board very much in a pro-labor way.

To help North Carolina employers understand what these developments mean and how they will ultimately be affected, CAI is hosting its annual Employment and Labor Law Update on May 12 and13, 2010 at the McKimmon Center in Raleigh.  CAI experts and experienced attorneys from Ogletree Deakins will discuss all of the recent changes and help companies understand what they need to worry about now and what they can move down the priority list.

For additional information, please go to www.capital.org/lawupdate.

If you are participating in the conference and would like to tweet your thoughts, we invite you to do so using the hashtag #10ELLU.

Photo Credit: CAI