Category Archives: Employer Deadlines

Don’t Reimburse Employees For Individual Health Insurance

Thousands of small employers reimburse or “pay a little extra” to reimburse employees who purchase individual health insurance…However, beginning this month huge fines are possible…even for a small family business of 2 employees if you reimburse employees for individual health insurance.

“Illegal reimbursements can also take on more subtle forms e.g. paying a higher wage in exchange for declining health plan coverage. Some of these indirect arrangements are also illegal. If you think this affects your small company, here’s someone you can talk to for free. Time is running out.”

Tax Deductibility Is Not The Main Issue Here

This is true whether or not you take a tax deduction for reimbursing these premiums!  We are referencing the latest IRS bulletin addressing the subject: Basically, the IRS argues such arrangements create the existence of a group health insurance plan…and since individual plans are not compliant with the same ACA regulations that apply to group health insurance, IRS conclusion…you are sponsoring an illegal plan!  The penalties are punitive, to say the least (read further for details).

Expensive Mistake If You Reimburse Employees Improperly

I don’t think we can overstate this:  it’s a mind-blowing change of policy that negatively impacts smaller employers. Recently, MarketWatch did a good job of bringing this subject to mainstream media, in this article:

“Under an employer payment arrangement, the employer reimburses participating employees for premiums paid for their individual health insurance policies or pays the premiums directly on behalf of participating employees….The penalty for running afoul of the market reform restrictions is $100 per-employee per-day, which can amount to $36,500 per employee over the course of a full year. (from MarketWatch:  The full story)

If you think this affects your small company, don’t focus on the problem, focus on the solution: here’s someone you can talk to for free. Time is running out.

Don't Reimburse Employees For Individual Health Insurance

 

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Small Biz Employers With Kaiser Plans Have 5pm, August 30, 2013 Deadline

This is an important reminder that Employers with 1 to 50 employees who sponsor a California Kaiser Permanente Group Health Plan have until 5:00pm PST Friday August 30, 2013 to file the Kaiser-Early-Renewal-Intent-Form.

 What Is The Kaiser Intention To Renew Early Form?

Simply stated, this form (Kaiser Small Business Form No. 60141913 (August 2013) informs Kaiser that you want 35 more days to think about their offer to change your anniversary date.   There is no commitment on your part.  We recommend you submit the form, as it changes nothing in your current arrangement with Kaiser, but it does buy you until October 4, 2013 to think about their offer.

 Which Employers Should Consider An Early Renewal?

  • Employers with a Non-Grandfathered Kaiser small group plan
  • And contract renewal dates in the first half of the year
  • And who have not made a prior renewal date change in 2013.

 I have Submitted The Form Already, What Happens Next?

Over the next few days (until October 4th), you have the opportunity to decide if you want to go through with a contract anniversary date change.  If you wish to proceed, then you must file an additional form by October 4, 2013, titled the Kaiser-Early-Renewal-Confirmation-Form, which confirms your intent to renew early for December 1, 2013.

 What Is The Advantage To Changing My Renewal Date?

First, employers with Grandfathered plan status probably should not change their anniversary date, unless your advisor/broker has recommended it.  All other eligible employers would consider the following factors:

  • Is your existing RAF (risk adjustment factor) 1.1 or .90?
  • Is it important to delay your renewal to keep costs down?
  • Is it not worth the hassle to delay the inevitable?

Remember, there are additional important issues to consider, and Kaiser warns that a group will bear all responsibility for its decision to accept the offer for early renewal including but not limited to the group’s compliance with the ACA and ERISA (see related story)..

Talk with your broker for answers, or leave us a comment at the end of the article.

4 Actions Employers Must Complete By October 1, 2013

Employers Must Act Soon (deadlines apply to all future new hires):

[Employers also read Huge Penalties for Reimbursing employees for their Individual Health Insurance Policies]

  1. This Department of Labor (DOL) regulation may surprise small employers who do not yet offer employee healthcare coverage:  The requirement hits them, too. Basically, the DOL requires that employers with as few as one employee hand out a disclosure form, even for 1099 employees. Further, the DOL has adopted different notices for different employer situations.  Make sure you are using the correct notice: Read more here.
  2. COBRA Notices- Amend existing COBRA notices to include new Department of Labor required language for employer COBRA disclosures.  Your COBRA administrator or vendor should be updating this notices.
  3. Move the money:  It is time to allocate monies you received in July, on behalf of your employees i.e. the Medical Loss Ratio (MLR) rebates.  Can you keep the refund?  Read our article about this very question.
  4. Download and properly distribute Summary Benefit Coverage forms by the appropriate deadline.  For a quick reference, download a free PDF Summary of SBC Requirements, which outlines employer requirements and deadlines. Kaiser employers read a related article here.

As the individual marketplace continues to deteriorate, the small group market has gained a firmer footing, including stable PPO networks and easier participation rules with Kaiser and traditional PPO plans.  Is it time to review available small group plans?   Reserve your appointment early for Open Enrollment, which begins this November.  Find local assistance in San Jose, Santa Clara and the San Francisco bay area or via telephone, throughout Northern and Southern California..

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