Your small business offers employees health insurance, or a contribution toward employees' healthcare, and you want to ensure you are not making any expensive compliance mistakes. At the same time, you need to understand and address compliance quickly to avoid costly fees during an audit. Sound familiar? If so, this article will help.
Below is a concise summary of five common small business health benefit mistakes.
1. No Plan Documents
Did you know all ERISA-covered benefit plans, including group health plans and other welfare plans, must, by law, be administered in accordance with a written Plan Document? Plan Documents are formal, legal documents that define the parameters of the benefit program and contain certain specified provisions.
Regardless of if you offer health insurance coverage or a formal reimbursement plan toward personal insurance, formal Plan Documents are required.
2. No Summary of Plan Description (SPD)
ERISA also requires every [welfare] plan to have a Summary Plan Description (SPD) and to furnish copies to each Participant. To stay in compliance, ensure the SPD is updated and distributed to participants at the required times.
3. Discriminating in Favor of Highly Compensated Individuals
Third, IRS nondiscrimination rules state you must not discriminate in favor of highly compensated individuals (HCIs) with respect to eligibility to participate in the plan or benefits provided under the plan. Work with your health insurance broker or health benefits company to ensure your benefit plan is designed to pass nondiscrimination testing.
4. Violating HIPAA Medical Privacy
Group health benefit plans are governed by HIPAA Privacy Rules and a common mistake is violating these medical privacy rules. This is especially important for small businesses with a self-insured reimbursement or health insurance plan who may come into more regular contact with Protected Health Information (PHI).
To avoid this common mistake, contract with a third party processor to review all claims or reimbursement requests, so the employer does not come in regular contact with PHI.
5. Not Communicating Plan Changes or Eligibility
Did you know there are numerous communication requirements when you change plan or eligibility criteria? If not, you could be making this fifth common mistake.
For example, a Summary of Benefits and Coverage (SBC) must be provided to participants and beneficiaries prior to enrollment in the plan, at renewal of the plan, within 90 days of a special enrollment period, and within 7 business days of a written request.
Additionally, a Summary of Material Modification (SMM) must be provided to each participant covered under the plan when changes to the health plan occur at a time other than renewal, a change to the health benefits affects the content of the SBC, or if information is not reflected in the most recent SBC.
To avoid this common mistake, familiarize yourself - and your team - with the various required health plan notices (this free chart is a great place to start). And, work with an insurance or health benefits company that will help you easily manage and distribute these notices.
In addition to these five most common compliance mistakes, there are additional guidelines and requirements employers of all sizes must follow when offering health benefits. To help, here are additional resources:
- Are We Reimbursing Employees’ Health Insurance Correctly? [Free PDF Flow-Chart]
- 4 Obamacare Compliance Issues You Shouldn’t Ignore [Article]
- Health Plan Notice Requirements [Free PDF Chart]
As the landscape of small business health benefits changes, small business employers have new health insurance options to consider. And yet, the increasing compliance and reporting requirements may seem daunting. Use this checklist to understand five common compliance mistakes, and be well on your way to offering compliant health benefits.
What small business health benefits questions do you have? Leave a question below. We’d be happy to help answer.