Annual Notice Requirements for Employer Group Health Plans for 2018
Many group health plans use a calendar year based plan year. As a result, autumn is a common time for group health plans to hold their annual open enrollment periods. The annual open enrollment period is a convenient time for employers to satisfy their annual participant notice obligations. To aid employers with this process, here is a summary of these annual participant notice requirements:
Women’s Health and Cancer Rights Act (“WHCRA”)
Each year participants must receive a summary of a health plan’s coverage for mastectomies and breast reconstructive services. If the SPD is reissued each year, the notice can be included in the SPD. Otherwise, a separate notice should be included in the plan’s annual open enrollment materials.
Medicare Part D Notice of Creditable or Non-Creditable Coverage
This annual notice must be provided to any participant (employee or dependent) who has coverage under Medicare Parts A or B, and who lives in the service area of a Medicare Part D prescription drug plan. While employers usually know whether an employee is eligible for Medicare, employers often do not have this information regarding dependents. As a result, providing the notice to all participants ensures compliance. Notice should be provided by October 15. (This is because the notice must be provided before the Medicare Part D annual election period, which begins on October 15 each year.) Again, if the SPD is reissued each year, the notice can be included in the SPD. Otherwise, a separate notice should be included in the plan’s annual open enrollment materials.
HIPAA Notice of Privacy Practices
Participants must be notified at least once every three years that they may receive a copy of the HIPAA notice of privacy practices. Alternatively, the notice can be reissued at least once every three years. An easy way to comply with this requirement is to notify participants annually, during open enrollment, that they may request a new copy of the notice, free of charge.
Children’s Health Insurance Program Reauthorization Act (“CHIPRA”)
Since 2009, special enrollment rights to immediately enroll in an employer’s group health plan arise if an individual becomes eligible for a state premium assistance subsidy under Medicaid or CHIP. The subsidy helps low income individuals pay for employer coverage, transferring them from government-sponsored health programs to employer group health plans. While most states offer premium assistance subsidies, Michigan is one of the few that does not. CHIPRA imposes a notice requirement on employers who maintain group health plans with participants residing in one or more states providing a premium assistance subsidy. The notice must be provided annually to all employees residing in each premium assistance subsidy state, including employees not enrolled in the plan. Model notice language, which is periodically updated, is available on the Department of Labor’s website and includes contact information for each state offering a premium assistance subsidy. If you have participants living outside of Michigan, you may be required to comply with this notice obligation. Before distributing the notice each year you should check the Department of Labor’s website for any updates to the model notice (available here: http://www.dol.gov/ebsa/pdf/chipmodelnotice.pdf).
Summary of Benefits and Coverage
The Affordable Care Act (“ACA”) added a new participant notice requirement known as the Summary of Benefits and Coverage (“SBC”). The purpose of the SBC is to provide certain information in a prescribed format to participants in an employer’s group health plan so they can easily compare the information to other plans that they may be eligible for, including the coverages offered on the Marketplace. In April 2016, the Departments of Labor, HHS and Treasury issued revised final SBC regulations along with an updated template (and related documents, such as the instructions and uniform glossary). Most notably, the SBC template was shortened to 5 pages (2½ pages front and back) from 8 pages (4 pages front and back). Also, another coverage example related to coverage of a “simple fracture” was added. This new SBC template must be used in all annual open enrollment periods that begin on or after April 1, 2017.
Notice Regarding Grandfathered Plan Status
Plans that were in effect prior to the enactment of the ACA are exempt from some of the insurance market reforms under the ACA so long as they retain “grandfathered plan” status. One of the requirements to retain grandfathered plan status is including certain disclosures in SPDs and other plan materials (such as annual open enrollment materials) provided to participants describing the plan’s benefits. The disclosure must state that the plan is grandfathered and must provide contact information for questions and complaints. Model notice language is available on the Department of Labor’s website.
Since Congressional Republicans were unable to repeal the ACA (and their window to do so using the reconciliation process ends on September 30, 2017), employers and plans sponsors should begin preparing for the reporting requirements under Sections 6055 and 6056 of the Internal Revenue Code (“Code”).
Under Section 6055 of the Code, employer-sponsors of self-funded group health plans must report certain information to the IRS and “responsible individuals” enrolled in the self-funded group health plan.
Under Section 6056 of the Code, “applicable large employers” (generally, employers who employed at least 50 full-time employees, including full-time equivalent employees, in the previous calendar year) must report certain information to the IRS and full-time employees about the employer’s offer of group health coverage.
Applicable large employers who sponsor self-funded group health plans must comply with the reporting requirements under Sections 6055 and 6056 on a combined basis.
If you have any questions regarding the annually required participant notices, please contact the author or any member of the Employee Benefits Practice Group.