Some of my clients have attended seminars that addressed various employee benefit issues, in particular, the consequences of legislation known as COBRA (Consolidated Omnibus Budget Reconciliation Act) and HIPAA (Health Insurance Portability and Accountability Act).
What they have learned is that ignorance of these laws will not absolve them from the huge penalties for non-compliance.
COBRA, very briefly, requires that employees who were covered by certain employee benefits must be offered continuation of those employee benefits (at the employee’s expense) when they terminate employment. Dependents who are no longer eligible for the employee benefit because of age, employee death or divorce must also be offered this continuation of employee benefits.
Employers subject to Federal COBRA regulations are those who employed 20 or more employees on an average business day in the proceeding calendar year. Part-time employees may be pro-rated, but full time employees not covered by the company’s employee benefits are included in the count.
Employers with between 2 and 19 employees are subject to Cal-COBRA, the California legislation to continue employee benefits.
The major difference between the two laws is that, with Federal COBRA, the employer is entirely responsible for notification, premium and administration of the former employee’s benefits. Cal-COBRA puts nearly all of the responsibility of administering the plan on the insurance carrier, though the employer must still notify the carrier of a person’s eligibility for Cal COBRA.
Employee Benefits affected by COBRA include (but are not limited to): Medical Insurance, Dental Insurance, Vision Insurance, Flexible Spending Accounts.
HIPAA has been continually expanded since its inception in 1996, most recently adding security and enforcement regulations. HIPAA requires employers with as few as two employees to communicate specific information regarding employee benefits.
This information includes (but is not limited to): eligibility, special circumstances, pre-existing limitations, plan descriptions, employee benefit changes and relevant information regarding the Newborns & Mothers’ Health Protection and Women’s Health Acts.
Additionally, whenever someone is terminated from employee benefits, the employer must send a certificate stating who was covered, what employee benefits they had, and the time period in which the former insured was covered under these employee benefits.
The IRS audits to determine compliance with these acts. Penalties can be dangerously large, and, as a result, firms have evolved to help employers become and remain compliant.
We work with a number of compliance-oriented firms, in addition to holding periodic seminars to ensure awareness of recent and relevant changes to employee benefit laws and regulations.
Other useful sources of information are COBRAAid (COBRAaid.com), Ceridian (Ceridian.com), and Advanced Benefits (advancedbenefitconsulting.com). The first two specialize in COBRA Compliance, the latter in HIPAA Compliance.
If you need any counseling on your employee benefits regulations, laws or compliance contact us immediately at 619-668-5200 or email info@teaguefs.com.
