This is the eighth article in our Compliance 101 blog series where we use six questions to break down important compliance topics. Below you will learn more about the Annual Notices for Health & Welfare Plans. Read more below!
Who are required to provide annual notices for health & welfare plans?
- All employers regardless of size who sponsor a group health plan have a variety of notices they must share with employees either by a particular date, on an annual basis, or in connection with open enrollment.
What federal laws require employers to provide notices?
- Part 7 of Title I of the Employee Retirement Income Security Act (ERISA) includes disclosure requirements. If an employer is subject to ERISA, the requirements generally apply to group health plans with two or more participants who are current employees.
- If the employer is not subject to ERISA, if the coverage is insured, parallel provisions in the Public Health Service Act (PHSA) apply to health insurance coverage offered in connection with group health plans with as few as one employee who is a current participant under the plan.
- The Internal Revenue Code, Department of Labor and other federal agencies also have laws or regulations requiring notifications to be provided to plan participants for all employers.
Where does an employer obtain the required notices?
- If an employer’s benefits are fully insured, it is possible the carrier has provided many of the notices to participants or included them in their carrier materials (e.g. certificate of coverage). However, an employer will want to confirm with the carrier which notices were provided and will need to provide any notices not supplied by the carrier.
- If an employer’s benefits are self-insured or the carrier does not provide the notices, there are standard templates available from various government resources for example:
Why must an employer provide the notices?
- Employers sponsoring health plans not only must provide information to participants communicating their benefit plans, there are also potential penalties associated with not providing a notice when required under government regulations. e.g. willfully failing to provide an SBC is subject to a fine of not more than $1,128 per enrollee per failure.
- Employers should have a process (e.g. a checklist) to ensure they are distributing all legally
required notices to avoid potential penalty exposure. –
When must the notices be provided?
- There are various distribution times required depending on the specific notice. Some notices have an annual requirement and many employers choose to include them with their annual open enrollment materials. Other notices must be given to participants at different times (e.g. Exchange Notice). Our whitepaper: Special Delivery: Providing Participants with Required Disclosures provides a chart summarizing a number of the health plan federal notice requirements, outlining who it applies to, the action required and when.
How do required notices need to be distributed?
- Rules governing deliver methods differ. In general, the plan administrator must use a method that reasonably ensures actual receipt of the document(s).
- Paper delivery is the most straight forward option –
hand delivery to employees at their worksite
- Included in a mailed or hand-delivered paycheck envelope
- Insert in a company publication handed out to each employee
- First-class mail
- Second or Third Class mail if return/forwarding is included and address correction requested
- Electronic delivery may be used if the distribution method satisfies the DOL’s requirements. The DOL’s rules differ based on whether it’s a current employee who uses a computer in their day
to day jobs and accesses the employer’s electronic information system as part of their job duties, an employee who does not use computers in their day-to-day jobs, a former employee or non-employee (e.g. spouse). Additional details about the electronic distribution requirement is also found our whitepaper: Special Delivery: Providing Participants with Required Disclosures
Disclaimer: This blog was written by Michelle Turner, MBA, CEBS, Compliance Consultant, Alera Group Central Region. This blog post intends to provide general information regarding the status of, and/or potential concerns related to, current employer HR & benefits issues. This blog should not be construed as, nor is it intended to provide, legal advice. The opinions expressed herein are based upon the author’s experience as a Compliance Consultant and may not reflect the opinions of your counsel.
The information contained herein should be understood to be general insurance brokerage information only and does not constitute advice for any particular situation or fact pattern and cannot be relied upon as such. Statements concerning financial, regulatory or legal matters are based on general observations as an insurance broker and may not be relied upon as financial, regulatory or legal advice. This document is owned by Alera Group, Inc., and its contents may not be reproduced, in whole or in part, without the written permission of Alera Group, Inc.
This article was last reviewed and up to date as of 10/01/2020.