Benefit plan compliance: What veterinary employers need to know
Cory Friedman is VP of benefits consulting at Alera Group and leads Alera Veterinary, which has been the preferred provider of employee benefit services to the American Animal Hospital Association (AAHA) since 2009.
When it comes to benefit plan compliance, its often the case that you dont know what you dont know.
As smaller employers, many veterinary practices have been led to believe that certain requirements don't apply to them. Here, we break it down so you can ensure that your practice is adhering to all applicable laws.
Do you have an ERISA plan?
The first step is determining whether your benefits program is considered an ERISA plan. ERISA, or the Employee Retirement Income Security Act of 1974, is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for the individuals in these plans.
Determining exactly which plans are ERISA plans is complicated and is not determined by employer size. In some cases, even minimal employer involvement has led to a court's finding that an arrangement is an ERISA plan. Employers looking to provide benefits to employees without creating an ERISA plan should use extreme caution as they may create an ERISA plan inadvertently, subjecting it to ERISA rules.
An ERISA plan exists if the plan, fund or program is established or maintained by an employer, employee organization or both, for the purpose of providing specified benefits to participants and their beneficiaries.
Use this checklist to determine whether your benefit plan is an ERISA plan.
Plan, fund or program?
> Could a reasonable person:
- Determine what the arrangement's intended benefits are?
- Determine the class of beneficiaries?
- Determine the source of financing for the arrangement?
- Understand how to apply for or receive benefits under the arrangement?
Established or maintained?
- Did the employer intend to create a plan? Did the employer's actions suggest that it decided to extend benefits?
- Is the employer clearly involved in plan administration?
- Does the arrangement include ongoing administration?
- Is the arrangement an informal practice (payroll deduction), or is a funding mechanism (e.g. separate account or trust) present?
- Is there a written plan document?
- Are employees aware of the plan, and have they relied on its existence?
By an employer, employee organization or both?
> Is the arrangement offered by an employer or an employee organization?
For providing specified benefits?
> Does the arrangement provide participants and beneficiaries with benefits covered by ERISA as a welfare benefit plan? ERISA applies to the following common employee benefits, regardless of whether they are insured or self-funded:
- Medical, surgical or hospital care
- Dental or vision benefits
- Prescription drug benefits
- Group life insurance benefits
- Accidental death and dismemberment benefits
- Disability benefits, both short-term and long-term (if insured or funded other than as a payroll practice)
- Health reimbursement arrangements
- Health flexible spending arrangements
- Wellness programs (when medical care is provided)
> Does the arrangement cover benefits specifically exempt by ERISA? Under ERISA, welfare benefit plans do not include the following:
- Overtime and other premium pay
- Unfunded sick pay or paid medical leave programs (including short-term disability)
- Unfunded vacation, holiday or jury duty pay
- Adoption assistance plans
- Commuting benefits (transportation allowance, free parking or transit passes)
- Dependent care assistance
- Health savings accounts if the employer's involvement is limited and employee participation is voluntary
- Pet insurance
- Financial/retirement planning programs
- Health, fitness or exercise club memberships (if the program does not offer medical care)
- Liability or casualty insurance plans
- Professional development classes
- Unfunded scholarship programs
- Sporting event tickets or discounts
- Tuition reimbursement
- Unemployment compensation provided to comply with state law
- Workers' compensation benefits provided to comply with state law
To participants and their beneficiaries?
> Do employees receive benefits under the arrangement, or are the benefits received only by nonemployees? ERISA plans cover employees, former employees, union members and beneficiaries of any of these. A plan in which no employees participate is not an ERISA welfare benefit arrangement.
So you have an ERISA plan. Now what?
Federal law imposes numerous requirements on the group health coverage (and other benefits) that employers provide to their employees. Many federal compliance laws apply to all group health plans, regardless of the size of the sponsoring employer.
As employers grow, they must meet some additional requirements. Different federal regulations count employees using different methods. Unlike smaller employers, larger employers must comply with the rules and requirements of the Affordable Care Act's (ACA) employer shared responsibility, the ACA's Form W-2 reporting and the Family and Medical Leave Act (FMLA).
The following compliance overview provides a high-level checklist for employee benefit laws and is intended to give you a head start in determining whether your program is compliant. It is not all-encompassing, and you should always review compliance requirements with your insurance broker, attorney or accountant.
Are you complying with the following:
> No annual or lifetime dollar limits on essential health benefits (applies to all health plans)
> Out-of-pocket maximums do not exceed $7,900 for individual coverage and $15,800 for family coverage (applies to all non-grandfathered health plans; 2019 limit)
> Waiting period does not exceed 90 days (applies to all health plans)
> No pre-existing condition exclusions on any covered individuals (applies to all health plans)
> Must cover specific preventive care services without imposing cost-sharing requirements (applies to all non-grandfathered health plans)
> Health plans that provide dependent coverage must cover children up to age 26 (applies to all health plans)
> Health plan does not exclude dependents due to their dependent, marital or student status, or based on their residence, access to employer-sponsored health care or any other condition
> Employer does not reimburse any employees for individual coverage
> Employers with fewer than 50 employees have not carved out any essential health benefits
Plan documents. The plan administrator must provide copies of plan documents no later than 30 days after a written request.
> Do you have a plan document?
> Is your plan document a wrap document? (A document that includes required disclosures typically not found in other documents)
> If you have a wrap document, does it include information about additional ERISA plans, such as dental or vision insurance?
Summary plan description (SPD). The SPD is a summary of the plan document and must be provided to participants within 90 days of becoming covered by the plan. Some employers have a combination plan document/SPD, which should be marked clearly as a combination document.
> Do you have an SPD on file?
> Have you provided an SPD to plan participants?
> If your SPD is a combination plan document/SPD, is it clearly marked as such?
Form 5500. This form, which applies to administrators of plans with 100 or more participants, is used to ensure that employee benefit plans are operated and managed according to ERISA requirements. Unless an extension applies, Form 5500 must be filed by the last day of the seventh month following the end of the plan year.
> Do you have more than 100 participants on any group benefit plan?
> Did you file Form 5500 for the previous plan year?
> If no, have you filed for an extension?
Annual notice distribution. The laws governing employee benefit health and welfare plans require that certain notices be provided to employees annually. Those include the Children's Health Insurance Program Reauthorization Act, Medicare Part D Creditable Coverage Disclosures, Mental Health Parity and Addiction Equity Act, Newborns' and Mothers' Health Protection Act, Women's Health and Cancer Rights Act and Employer Notice about Health Insurance Exchanges (Marketplaces).
> Have you provided the required annual notices?
Section 125. A Section 125 (Cafeteria Plan) must be drafted to allow pretax premium payments through payroll deduction.
> Do you allow employees to pay for benefits pretax?
> Do you have a formal cafeteria or premium-only plan document?
> Do you have cafeteria plan election forms, salary reduction forms, reimbursement request forms and midyear election change forms?
COBRA. The Consolidated Omnibus Budget Reconciliation Act (COBRA) applies to employers that had at least 20 employees on more than 50% of the typical business days during the previous calendar year.
> Do you have 20 or more employees?
> Do you have a process in place to administer COBRA correctly?
FMLA. FMLA applies to all public agencies as well as private-sector employers with 50 or more employees in 20 or more work weeks in the current or preceding calendar year.
> Do you have 50 or more employees?
Cory Friedman is VP of benefits consulting at Alera Group and leads Alera Veterinary, which has been the American Animal Hospital Association's preferred provider of employee benefit services since 2009.