As employee benefit consultants, we see a myriad of compliance questions that arise in day-to-day benefit administration.
There are some issues that always seem to be a pain point for most employer groups. We’ve answered eight of these popular questions below.
For the full Q&A list, view the webinar playback, Employee Benefits Compliance Greatest Hits: Top 25 Compliance Questions.
Can an employer offer different benefits to different classes of employees?
- those employees are not similarly situated;
- the plan design does not discriminate in favor of highly compensated individuals (HCIs); and
- the distinction is consistent with the employer’s usual business practice.
Can an employer contribute different amounts to employees’ Health Savings Account (HSA)s?
Maybe. If an employer makes contributions to any employee’s HSA, the employer must make comparable contributions to the HSAs of all comparable participating employees. However, the HSA comparable contribution rule does not apply if the HSA is funded through the cafeteria plan. If funded through the cafeteria plan, HSA contributions are subject to the Section 125 nondiscrimination rules, and cannot discriminate in favor of HCI.
Can an employee have other non-high deductible health plan (HDHP) coverage with their HSA?
Maybe. Generally, an employee cannot have any other non-HDHP coverage and remain eligible to contribute to an HSA. However, there are exceptions to this rule such as dental and vision coverage, limited-purpose or post-deductible flexible spending account (FSA)s or health reimbursement arrangement (HRAs), accident, disability, and death insurance, or liabilities and fixed indemnity plans. Employers should exercise caution when paring an HSA with telemedicine or an on-site clinic.
Can an employee change from an FSA to an HSA mid-year?
Maybe. An employee will only be permitted to change from an FSA to an HSA mid-year if the FSA plan year and HSA plan year match. Otherwise, the employee is locked into his/her FSA election for the remainder of the plan year and ineligible to contribute to an HSA.
If the employee has a change in status, can he/she make a mid-year change?
Yes. To make a mid-year election change, the employee must experience one of the events identified under section 125, such as a change in employment, marital, or dependent status. Additionally, the change must be consistent with the event, the employer must include that event in its cafeteria plan document, and the employee must request the change within the time allotted in the cafeteria plan documents (usually 30 or 31 days).
Can an employee make a mid-year change with no change in status?
No. To make a mid-year change the employee must have a change in status. Common examples of impermissible changes are employees that can no longer afford coverage despite no change in the cost of coverage, or employees that missed the open enrollment deadline.
My client just went over 50 full-time equivalent employees. Do they need to offer coverage now?
No. If an employer has fewer than 50 full-time employees, including full-time equivalent employees, on average during the prior calendar year, the employer is not an applicable large employer for the current calendar year.
An employee went over 30 hours/week. Should the client offer coverage?
Maybe. If an applicable large employer uses the monthly measurement method, the employer determines each employee’s status as a full-time employee by counting the employee’s hours of service for each calendar month. If the employer uses the look-back measurement method, the employee’s benefits eligibility status is determined by average hours during the preceding measurement period.
Are you confident that your company is in compliance with the increasingly complex myriad of employee benefit laws and regulations? View the webinar playback, Employee Benefits Compliance Greatest Hits: Top 25 Compliance Questions here.