With most health plans, a fair amount of the administration is taken care of by the company, agent, or alliance that you have the insurance with. However, that does not mean that you're totally off the hook. You'll still have to perform some duties as an employer providing health benefits.
The life cycle of an employee's participation in a health benefit plan requires employers to participate at various levels to administer the plan, including enrolling employees and making changes as necessary, deducting premiums from the employee's wages and remitting them to the insurance company, acting as a liaison between employees and the insurer, as well as in some cases terminating benefits and extending COBRA coverage. In addition, employers are responsible for ensuring compliance with reporting and disclosure requirements.
Enrolling employees
Once an employee meets your eligibility requirements, you can provide either that the individual is enrolled automatically (by you) or that the individual has to take steps to enroll. If your enrollment process is not automatic, you should do the following:
- Provide the employee with clear information about the plan choices, including coverage levels and costs, and clearly specify in writing a deadline date and time by which that employee must enroll (usually no more than 31 days after they are eligible to enroll). Usually, the plan information will be provided by your insurance company for distribution to employees.
- Specify to the employee the consequences of not enrolling by the deadline.
Should you allow employees to opt out of the plan? If you want to make sure that your employees have coverage, you could impose a requirement that they either enroll at the minimum level or certify that they have coverage under another plan. However, if employees will have to contribute to the cost of the premium, you shouldn't force them to enroll. To protect yourself, you might ask them to give you written notification that they do not want coverage. By doing so, you'll have proof that you offered insurance in the event that an employee says that you didn't allow access to the health plan. This is particularly important because the enactment of the Patient Protection and Affordable Care Act and related legislation requires employers with 50 or more full-time employees (or a combination of full-time and part-time employees that is equivalent to 50 full-time employees) to offer adequate health coverage or be subject to assessment if their employees receive premium tax credits to buy their own insurance. This assessment is effective as of 2015 and is applied per each full-time employee.
Summary of benefits and coverage must be provided
For health coverage open enrollment periods beginning on September 23, 2012 and later, the Patient Protection and Affordable Care Act (ACA) requires group health plans and health insurers to provide a Summary of Benefits and Coverage (SBC). As the name implies, the purpose of an SBC is to summarize a health plan’s benefits and coverage in plain language and in a standardized format. Your responsibility, as well as the insurer’s, is to distribute a properly prepared SBC to your employees to help them understand, compare and evaluate their health insurance options.
You can satisfy the requirement of not only preparing but distributing the SBC through your insurer. One SBC meets the requirement for both the plan and the insurer. Arrange with your insurer to prepare the SBC and if possible, execute the distribution as well. While only one SBC is required, each party is individually responsible for the disclosure. Therefore, you will want to coordinate the SBC preparation and distribution with your insurer to make sure that this obligation is fulfilled using the proper channels and within the timing requirements.
If your plan is self-insured, generally, you are responsible for preparing the SBC. Even if you outsource your health benefits administration, you are ultimately the responsible party. Therefore, check with your administrator to be certain that the duties imposed by the ACA are being met in a timely fashion.
Content and format requirements. Rules issued by the Labor, Health and Human Services and Treasury Departments spell out the health care plan information that must be included in the SBC. Using a four-page format with no smaller than 12-point font, the SBC should contain a description of the coverage, including limits and exceptions and the following cost-sharing requirements:
- deductibles
- coinsurance
- copayments
SBCs provided for coverage for 2014 must include statements indicating whether or not the plan or insurance provides minimum essential coverage as required by the ACA and whether or not it meets minimum value requirements, so that the plan or insurance share of total allowed costs of benefits is at least 60 percent of those costs.
SBCs must also include coverage examples illustrating the differences between health plans. The current rules require the coverage examples to contain benefit information for two situations:
- having a baby (normal delivery)
- managing type 2 diabetes (routine maintenance of a well-controlled condition)
Future coverage examples will include additional scenarios based on consumer feedback.
Detailed compliance guidance, including SBC templates and completed sample SBCs is available on the Department of Labor’s website.
Uniform glossary requirement. A uniform glossary, a list of definitions explaining commonly used health insurance coverage terms developed by the Departments of Health and Human Services, Labor and the Treasury, must be referenced as available in the SBC. The following language is included in the SBC template:
”If you aren’t clear about any of the underlined terms used in this form, see the Glossary.
When and how to distribute the Summary. Employers are required to provide an SBC for the health care benefits you offer employees during open enrollment period. Your employees must have the required documents by the first day of open enrollment.
In addition to the open enrollment period, you’ll have to provide the appropriate documents to eligible new hires, during special enrollments and for certain changes in coverage.
If an employee requests plan information, you have seven business days from the request to provide the SBC and the uniform glossary. Note that if the documents are sent within seven business days of the request, even if they are not received until after the seven days have passed, you have properly complied with the time requirement.
How do you properly distribute the SBC? Both paper and electronic methods are generally acceptable, with some limitations.
Tip: You are not required to provide the SBC separately—this means that you can include the SBC with other documents for your health benefits that you distribute as long as the SBC content is together and not buried within the materials. The SBC must be in a prominent, up-front position.
You may provide employees with the SBC documents by handing them out or through the mail.
An SBC may be provided electronically to employees covered under a plan if they have the ability to access electronic documents as part of the duties they perform. You should provide employees with paper or electronic notice that the SBC is available online and how to access it, and let them know that a free paper copy will be provided, upon request.
Employees may also opt to receive electronic delivery.
Generally, the SBC can be provided electronically to employees who are not already enrolled if the following conditions are met:
- the electronic format is a readily accessible one such as a PDF or Word document
- a paper SBC is provided upon request, free-of-charge
- if the SBC is posted on the Internet, the plan or issuer must give employees notice of the posting and the Internet address (email may be used to advise employees)
In addition, an SBC may be provided electronically to employees if they enroll in or renew their plan coverage online. Again, you must specify that a paper SBC is available upon request.
Providing the SBC in a language other than English. You may be required to provide the SBC in a language other than English if 10 percent or more of your county’s population is literate only in a different common language as determined by the U.S. Census Bureau’s American Community Survey. Currently, 177 U.S. counties (excluding Puerto Rico) meet this threshold, with the majority being literate only in Spanish.
Contact your insurer or administrator if you think that this requirement applies to your location.
Penalties for failing to provide the required documents What happens if you don’t provide eligible employees with a properly completed SBC in a timely manner? Group health plans “willfully” failing to provide the required information to employees can be fined up to $1,000 for each employee. However, the penalties will not be imposed on plans that are working diligently and in good faith to comply with the format and delivery requirements.
Warning: Don’t be lulled into complacency, thinking that you can be lax in complying with the new disclosure requirements. The fines can be steep, so you should at least make a good faith effort to comply with the rules. Contact your insurer, your benefits administrator, and/or consult with an employee benefits specialist for assistance.
Be aware that this is just an overview. More information, including sample completed SBCs in English and other languages, can be found on the government’s Center for Consumer Information and Insurance Oversight website.
Changes in coverage
Your insurance company may impose limitations on when you or your employees can make changes in the coverage. Often they will allow changes to be made only under certain circumstances known as family status changes or changes in work status. Family status changes include events like:
- marriage
- divorce
- death of a spouse or dependent
- birth or adoption of a child
Changes in work status include:
- a change in an employee's spouse's employment (e.g., being fired or getting a new job)
- a change in an employee's work hours (from full-time to part-time or vice versa)
- an unpaid leave of absence
When these events occur, your employees may want to add or remove family members from their coverage. Be sure you know up front when these changes will be permitted.
Acting as employee liaison
What should you do when employees have trouble getting claims paid, getting new insurance cards, or just don't like their doctors? Unless you want all your employees coming to you with their insurance problems, you should instruct them to contact the insurance company directly. Most insurance companies have a member services department that is designed to help employees with complaints and problems.
Encourage your employees to put in writing to the company any problems they are having if they are not resolved by member services or by your customer service representative or agent.
If, after contacting the member services people, the problem still exists, you can try mentioning it to your service representative or agent, if you have one. If all else fails and the problem warrants serious action, your employees can contact the state Department of Insurance to file a complaint.
As the employer, you can attempt to assist your employees, but don't get caught in the middle. Recognize when the employees' problems and concerns are valid and take steps to assist them when possible. If, however, an employee demands coverage for a treatment that is clearly not specified in the policy or if the employee did not follow the rules for obtaining coverage under a plan, for instance, there is little you will be able to do.
Employers' role in terminating benefits
When an employee is terminated or leaves your employ, you may have to do all or some of the following:
- terminate the employee's benefits coverage
- provide the employee with a certificate of coverage
- offer to extend the employee's health benefits under COBRA (this is only required of employers with 20 or more employees)
Generally, the insurance company will terminate coverage at the end of the month, not in between, to make premium remittance easier. Some have a policy that, if an employee leaves before the 15th of the month, they will waive premiums for that month; for those employees who are terminated after the 15th of the month, the whole month's premium will be due. Be sure to know your insurer's policy on this.
Example: If William has health benefits with you and quits work on August 7th, the insurance company will discontinue his coverage at the end of August. You are required to pay for that month.
If you paid for coverage in advance (i.e., August premiums in July), you can stop deducting health premiums from Willams's checks. If you pay month by month, you may have to make the payment for the whole month despite the fact that William has left, and that includes deducting enough from William's last check to cover his premiums for the whole month.
Terminating benefits is generally a simple process. The insurer will usually provide you with a form or procedure for terminating the coverage of an employee.