Do you ever lie awake at night worrying that an audit of your employee benefits program might reveal some costly compliance oversight? If so, then this article is for you.
Small business owners already have a lot on their plate, even without the additional headache of keeping up with the constantly changing climate of the health insurance industry and the implications of the Affordable Care Act.
Here are some tips to help you avoid the most common mistakes small business owners make with relation to their health benefits.
1. Not having plan documents
All ERISA-covered benefit plans (which includes group health plans) are required by law to be administered according to a written Plan Document. These formal, legal documents lay out the parameters of the program and all its provisions. Regardless of whether you offer health insurance coverage or just a reimbursement plan for employees to purchase their own, a formal Plan Document is a must.
2. Not having a Summary of Plan Description
Sorry to sound like a broken record, but ERISA also mandates that every plan have a Summary Plan Description (SPD) and that each participant gets a copy. This form educates employees and their beneficiaries on topics like plan benefits, eligibility, and how to enroll.
3. Discriminating in favor of highly compensated individuals
IRS rules say you can’t discriminate in favor of highly compensated individuals (HCIs) when it comes to eligibility for benefit plans. It’s important to make sure your benefit plan can pass any nondiscrimination testing.
4. Violating HIPAA rules
Group health plans are governed by the same HIPAA Privacy Rules as doctors and hospitals. So, make sure you’re careful with any Protected Health Information (PHI) like you might find on a claim or reimbursement request.
5. Not communicating plan changes
When it comes to changing benefits plans or eligibility requirements, communication is key. Not only does it eliminate confusion, you’re required to provide a Summary of Benefits and Coverage (SBC) to participants before they enroll, when the plan renews, within 90 days of any special enrollment period, and within 7 business days following a written request. If changes are made other than at renewal time, you must also provide a Summary of Material Modification (SMM).
If that sounds like a lot of paperwork to keep up with (and it is), this chart might prove helpful. If it all still sounds clear as mud, contact Sequoyah Group to see how we can help.