News
Health plan “waivers” are a very important requirement to protect employers from liability.
What is a waiver and what does it do?
The waiver is a legal document that states the employee has been offered health coverage and is declining coverage. If an eligible employee does not complete a waiver form, thereby officially declining the offer of health coverage, they could later demand to be covered under the companies benefit plan. The health insurance company will not allow the employee to enroll until the next open enrollment period (without a special circumstance). This puts the possible liability for the employee’s health care costs on the employer.
Two Types of waivers:
- Legitimate waivers:
Employees who decline coverage because they have other coverage through an employer group of Medicare are counted as legitimate waivers. The most common legitimate waiver is someone who has coverage through their spouse’s employer’s plan.
Non-legitimate waivers:
- Non-legitimate waivers count as a non-participant in the employer group’s participation requirement with their insurance carrier. Most carriers (including CalCPA Health) require a 75% participation requirement.
Non-legitimate waivers are employees who decline coverage and do not have other group coverage or Medicare. Individual coverage, including individual coverage through Covered California or another ACA exchange, does not count as a legitimate waiver.
Managing Employee Benefit Plans – Employer Liability
DE-09
Why are employers required to submit a DE-09 and DE-09C?
All health insurance carriers require firms to submit their California quarterly payroll tax filing when they initially apply and once a year thereafter.
This requirement is to meet a number of regulatory and compliance issues. Basically, all employees listed on the DE-09 must be enrolled in a plan or waive coverage (or are not eligible if part-time, seasonal, etc.) Further, enrollees must appear on the DE-09 to show actively at work – W-2 status. For example, CalCPA Health must ensure that all participants are eligible and firms are properly size-classified, under various provisions of the California insurance code and the Affordable Care Act – or risk severe penalties.
Submitting the DE-09 also reduces our Participating Employers liability by identifying possible non-compliance issues ahead of the regulatory agencies.
(Note: Form DE-09C must be submitted quarterly along with form DE-09.)
An effective employee benefits communication strategy begins with developing a calendar:
- Record the date your organization needs to complete and submit annual open enrollment material to your insurance carriers
- Work backwards from the open enrollment due date to determine (and record on your calendar) dates to:
- Distribute open enrollment materials to employees
- Open enrollment meetings (if applicable)
- Make plan option choices at the firm level
- Premiums and plan choices
- Employee contribution rates
- Review renewal plans and rates; and if applicable
- Remember to include these dates on your calendar
- Update payroll system for open enrollment changes – employee contribution changes
- Note: this will save a lot of resources trying to retroactively correct payroll deductions and accumulators
- Any regulatory required notices. Whenever you run across a requirement, simply add it to your calendar.
- Employer reporting of 1094-C / 1095-C (if applicable)
- Update payroll system for open enrollment changes – employee contribution changes
Whether your firm uses a benefits broker or benefits consultant – develop your own calendar. Have your broker or consultant provide you with their version of the calendar and compare the two and modify each calendar to come to a consensus, final calendar. Provide your calendar to the executive or management team to obtain buy in and feedback to the schedule. Often it is firm’s partners, owners and executives that cause delays in benefit processes – many times because they were unaware of their required participation.
Update your calendar at any time during the year that you become aware of an addition or new requirement.
An excel spreadsheet works well for this type of calendar because you can add, change, delete and sort easily. After the calendar is developed, list each document for materials needed to complete the calendar entry. Then work backwards to determine and develop a start date and required completion date for each document or communication piece. For each communication indicate whether it is an email, direct mail, hand-out, payroll stuffer, web posting, etc. This will allow you to properly estimate lead times and distribution costs.
For each communication – have an employee that is not involved in benefit administration at your organization, review it to make sure it makes sense and if there is an action required by the employee (completing a form, making a decision) that is being communicated effectively. Often times, in benefit administration and health plan lingo, those of us that work with it all the time think it is second nature, but to many employees this is a very confusing foreign world.
In addition to your annual calendar, keep a check list of communication requirements for new hires and employment terminations.
- Only active, regular, full-time employees and owners (such as proprietors and partners) are considered Eligible Employees. Seasonal/temporary employees and 1099 employees are not eligible.
- Employees must work a minimum of either 20 or 30 hours per week to be considered full-time. Please refer to your most recent Renewal Packet or contact Banyan Administrators to confirm your company’s minimum hourly requirement for employees.
(Note: Employees must work 30 hours to be eligible for Life or LTD)
What forms need to be completed?
- Only the employee may fill in, or modify, information on the Employee Enrollment Form. Any changes to information must be initialed and dated by the employee. No alteration to preprinted material on the Employee Application is acceptable, and altered forms will be rejected.
- Provide the appropriate form(s) to the employee, based on your firms offerings:
- Medical with or without Dental and Vision
- Form A1: Medical/Dental/Vision Enrollment Form
- Dental and/or Vision
- Form A2 Delta Dental and/or Vision Service Enrollment Form
- Life and/or Long Term Disability
- Form A3: Group Term Life-LTD Enrollment Form, and
- Form A4: Group Life-LTD Health Statement (groups of 2-3 only)
When do forms need to be submitted to Banyan Administrators?
- Enrollment forms must be submitted to Banyan Administrators within 31 days of the Coverage Effective Date.
- The Coverage Effective Date is Determined by:
- Date of Hire: The date a permanent employee begins working full-time.
- Waiting Period: Refer to your most recent Renewal Packet or contact Banyan Administrators.
- First of the month following Date of Hire, or
- First of the month following 30 days of employment, or
- First of the month following 60 days of employment
- Example: A firm has a 30 day waiting period and hires an employee on July 7th. The Coverage Effective Date would be September 1st and the forms must be submitted by October 1st.
- If the Date of Hire is the first of the month, and the group has a Date of Hire waiting period, coverage will be effective on that date.
- Example: An employee hired July 1st would have coverage effective July 1st. An employee hired July 2nd would have coverage effective August 1st.
- If the form is not submitted within 31 days, the employee cannot enroll until the next Open Enrollment period, or until they have a qualifying life event.
What if an Eligible Employee does not want to enroll?
- Are they enrolled in another group health plan?
- If yes, the waiver is considered valid.
- The employee should complete the Coverage Declination section of the Enrollment Form for your records.
- If no, the waiver is invalid and affects your compliance with the Employee Participation requirement.
- At least 75% of eligible employees without valid waivers must enroll in Medical.
- 100% of eligible employees without valid waivers must enroll in Dental/Vision.
- Employees working 30 or more hours cannot waive Life or LTD.
- Spouse: the plan participant’s spouse under a legally valid marriage.
- Domestic partner: the plan participant’s domestic partner under a legally registered and valid domestic partnership.
- Child: the plan participant’s, spouse’s or domestic partner’s natural child, stepchild, or legally adopted child.
- Children are eligible up to the age of 26. Coverage ends on the first of the month following their 26th birthday.
- Disabled children of eligible employees who, with appropriate medical certification, are eligible for coverage up to any age, only if they were originally enrolled before turning 26.
What forms need to be completed?
- Form B1: Subscriber Change Request Form
When do the forms need to be submitted to Banyan Administrators?
- The Subscriber Change Request Form must be submitted to Banyan Administrators within 31 days of the Qualifying Event. Qualifying Events include marriage, divorce, birth, adoption, loss of other coverage, etc.
When is their coverage effective date?
- Coverage will become effective on the first of the month following the qualifying event.
- The one exception is the birth or adoption of a child. The coverage effective date will be the date of birth or adoption. If the date of birth is on or before the 15th, the rate change will be applied that month. If it is after the 15th, the rate change will be applied in the next coverage month.
How will the change be reflected on the premium invoice?
- The coverage tier is listed above the premium amount. E for employee only, ES for employee and spouse, EC for employee and child, ECN for employee and children, and F for family.
- Please note that invoices are generated a month before the due date. If a change form is submitted after the invoice is generated, the change will be reflected on the following invoice. For example, a change that is submitted on July 2nd will be reflected on the September invoice.
CalCPA Health is available to accounting firms in public practice or firms offering general financial services, both of which must be headquartered in the state of California.
To be eligible and retain such eligibility, more than 50% of all of the firm’s owners (principals, proprietors, partners, shareholders, or other owners) must be CPA members of CalCPA, or Associate members of CalCPA. All CPA owners must be members of CalCPA in good standing.
More than 50% of the group’s enrolled employees must reside in California.
Firms with one Eligible Employee:
If you are the only Eligible Employee (as defined on the next page), you are eligible to enroll in the CalCPA Health Vision and Dental plans.
If you would like to enroll in Medical coverage, Banyan can assist you in choosing and applying for an Individual plan through Anthem Blue Cross. Banyan would continue to be your point of contact for customer service inquiries.
Individuals must enroll during the Open Enrollment Period, or when there is a qualifying life event that creates a Special Enrollment Period. Individual Medical coverage cannot be obtained mid-year without a qualifying life event.
Employer Contribution Requirements:
An employer must contribute a minimum of 50% of the cost of employee’s medical premiums, and 100% of employee’s dental, vision, life or long term disability premiums. This does not include the cost for dependents. Payroll deduction is required for employee contributions that are withheld to pay premium costs. If an employer pays 100% of the premiums, 100% employee participation is required.
The Patient Protection and Affordable Care Act (ACA) was passed more than five years ago. Never has a piece of federal legislation been in the controversy spotlight for this length of time.
Typically, new federal and state laws require some tweaking before, during or after they are implemented. Fix-it bills can clarify the original intentions of lawmakers, correct mistakes and make the legislation practical to implement. In the ACA’s circumstance, be-cause of the high level of animosity surrounding the law’s fundamentals, significant fixes are not politically feasible. Read more
by Gregory M. Burke, CPA, MS (Tax)
The stated intent of the Patient Protection and Affordable Care Act (ACA) of 2010 was to increase health care insurance coverage with respect to the millions of uninsured Americans and control runaway health care costs. As part of the effort to meet these goals, the ACA enacted interrelated subsidy, penalty, and information reporting provisions. This article will focus on the information reporting provisions impacting “applicable large employers” in 2015. Read more
Four years after the passage of the Affordable care Act (ACA) there is still great debate on the law’s outcomes. How many uninsured will enroll? Will ACA create doctor shortages? Will death panels ration medical care? And the trillion dollar question: will the cost of health insurance go up, down or stay about the same?
Stay tuned to read the full article in the June issue of the CalCPA Magazine.
The Patient Protection and Affordable Care Act (ACA) is exceedingly vast. It deals with all aspects of the medical delivery system including insurance. Combine this with the numerous changes California is implementing and the result is tens of thousands of pages, comprising both federal and state regulations.
This book focuses on the key elements that affect California CPAs. Therefore, we will concentrate on those ACA regulations that are being adopted and implemented in California. And, while other states may have slightly different implementations, they will not be specifically addressed here.
Our intent is that you may use this book as a reference for the areas that are of particular interest to you, or those areas that expressly affect you. For example, if you are with a small firm and do not have any “large employer” clients, the large employer sections may be of less value to you than the information on small employers.