Providing a small business health insurance plan for your employees is one of the most rewarding, yet also challenging decisions you can make as a business owner.
It is gratifying to know that you are helping to provide health coverage for your employees and their dependents. And, you as an employer will also benefit from having a health plan in place.
But administering the plan also brings with it certain responsibilities.
The Employment Income Retirement Security Act (ERISA) sets the standards of conduct for those who manage an employee health benefit plan.
To meet their responsibilities as group health plan sponsors, employers need to understand what their responsibilities are.
Employers Required to Report Plan Activities
ERISA requires employers to provide plan information to employee participants and beneficiaries and submit reports to government agencies.
Informing Participants and Beneficiaries
The following documents must be submitted to participants and beneficiaries:
Summary of Material Modification (SMM) – informs participants and beneficiaries of material changes to the plan or to the information in the plan required to be in the SPD. The SMM or an updated SPD must be given automatically to participants within 210 days after the end of the plan year in which the material change was adopted.
However, if the changes to the plan or to the required information in the SPD result in a material reduction in covered services or benefits, then the SMM must be distributed 60 days from the date the changes were adopted. A material reduction is any plan change that eliminates benefits, reduces benefits payable, increases, premiums, deductibles, coinsurance or co-payments, reduces the service area covered by an HMO, or establishes new conditions or requirements (such as pre-authorization) for obtaining services and benefits.
Plans and insurance companies must provide the SBC to participants and beneficiaries with the plan’s enrollment or application materials, upon renewal or re-issuance of coverage, or within 90 days of special enrollment. The SBC and the Uniform Glossary also must be provided within 7 business days of a request.
Summary Annual Report (SAR) – outlines the financial information in the plan’s Annual Report, the Form 5500 and is provided annually to participants in plans who are required to file the Form 5500.
Other Health Plan Notices
There are other notices that employers are required to provide:
Women’s Health and Cancer Rights Act (WHCRA) Notices - Notice describing required benefits for mastectomy-related reconstructive surgery, prostheses, and treatment of physical complications of mastectomy.
Reporting to the Government
Form 5500 Annual Return/Report – This form reports information about the plan, its finances and its operation. This information is used by the Department of Labor, the Internal Revenue Service (IRS), other government agencies, organizations and the public. Participants and beneficiaries can receive a copy upon request from the plan.
Depending on the number of participants covered and plan design, there may be exemptions to the full filing requirements. A group health plan with fewer than 100 participants that is either fully insured or self-funded (or a combination of both) does not need to file an annual report. Plans with more than 100 participants that is either fully insured or self-funded (or a combination of both) can file a limited report.
Compliance with the Law
It is your responsibility to ensure that your company’s health plan complies with ERISA and all federal and state laws that affect group health plans. This includes COBRA, HIPAA, the Affordable Care Act and other health plan provisions.
It is important to have a broker who can explain your responsibilities and help keep you in compliance. If you feel that you may not have been meeting all of your responsibilities, now may be the time to consider looking for a new broker.
You can read more in our recent article, Top 4 Traits To Look For In A Small Business Health Insurance Broker.
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