Insurnacegirl555
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Sorry, one last set of questions. If medical is terminated 12/31/24 due to reduction in hours and new plan year starts 1/1/25. Will employee get cobra open enrollment docs? Or only regular cobra enrollment docs? If they get regular cobra enrollment docs does it list all the open enrollment plans for them to choose from but just on regular enrollment paperwork? If they get open enrollment docs, does it say 60 days on it instead of the usual smaller open enrollment window since they must have the full 60 days to make elections as newly qualifying? Or, do they somehow get both docs in the mail separately? If they get both, what options are even listed on the regular cobra enrollment since its the new plan year that the coverage would be for so they technically can change plan types/coverage? If they only get open enrollment documents, how do they get alerted that they have 60 days to decide since Cobra open enrollment doesn't normally allow for 60 days in the paperwork? This is our first time having an employee who has lost coverage for hours reduction after the look back but we will likely have it happen many more times since we have a highly variable hour set of employees where dropping between over 30 and under 30 for the 1 year look back is not uncommon.
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If an active employee has medical coverage but does *not* qualify for coverage when its time for open enrollment, do they qualify for cobra offer? In this case, the business is using the ACA one year lookback measurement to determine eligibility and the variable rate employee dropped to around 20 hr/week so they will not qualify for 2025 coverage. But, they do have coverage currently. Should a Cobra offer be made effective 1/1/25 in this scenario? Or, is it not a qualifying event that they no longer qualify during open enrollment due to dropping under required number of hours?
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Did they end up getting charged a penalty after you sent the response? Or did they waive it?
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We are a large employer (over 200 employees but only 35 who are medical eligible- most employees are part time). Getting fully insured insurance with BCBS. Got quotes from BCBS for employees and they gave “non Medicare eligible” ratea and “Medicare eligible” rates on the same quote. Medicare eligible were much higher. I thought for large employers they couldn’t charge employees or employers more for being Medicare eligible? If they can charge employer more, does employer eat the cost difference since the employee can’t be charged differently based on age? If employer pays difference, if employee who is Medicare eligible chooses a buy up plan that would cost employer $500 a month for non Medicare employee but is $1200 above that for Medicare eligible employee does employer have to cover that extra $700 of the buy up plan option also? What about if middle of year employee turns 65 but they signed up for 1/1 annual coverage under non Medicare eligible rate? Will bcbs flag it at that point and bill employer for the difference? I can’t figure out why BCBS is quoting the Medicare eligible rate separately when everything online says employer and insurance has to offer same benefits at same price if employer has more than 20 employees. Thanks in advance for any insight!
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Thank you for responding in such detail! To clarify, does this mean you do *not* believe that failing to put in the SPD the item below is an issue? As long as the MLR rebates are handled in an approved manner within 3 months? My concern/question lies mostly in the potential issue of the needing to address how the rebates will be allocated right in the spd (in my interpretation, which of the approved ways will the potential refund be handled). Your belief is that it does *not* lose exemption for a small fully insured plan if they fail to put in their plan documents exactly how the MLR rebates will be handled? Just clarifying that I am following properly - thank you! (ii) Contributing participants are informed upon entry into the plan of the provisions of the plan concerning the allocation of refunds."
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" If your welfare plan (medical, dental, life insurance, disability, etc) has under 100 participants at the beginning of the year, you are exempt from filing Form 5500 if it is (a) unfunded, (b) fully insured, or (c) a combination of insured and unfunded. But wait, there’s more. The instructions to the 5500 toss in the following: "see 29CFR 2520.104-20." If you whip out your copy of the CFR, you will see an "and", as in "and for which, in the case of an insured plan—— (i) Refunds, to which contributing participants are entitled, are returned to them within three months of receipt by the employer or employee organization, and (ii) Contributing participants are informed upon entry into the plan of the provisions of the plan concerning the allocation of refunds." Based on the above rules for insured plans with under 100 participants being exempt from 5500 filing - has anyone run into someone getting fine for failure to file it they failed to address refund allocations? Did MLR requirements from the ACA address this enough that having the refund allocation detail in the SPD is unnecessary to still have the 5500 exemption? Has anyone ever had this issue come up post MLR/ACA as a road block to small fully insured plan exemption? I ask because I see many small insured plans that are not filing and do NOT have any reference to refunds or refund allocations. Some are claiming the MLR rules negate this since they dictate the refunds.
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I often read about IRS noticed for non-filing with large penalties - folks are instructed to immediately file the voluntary way and pay the nominal penalty. Then, send the proof of that to IRS for penalty to be waived. Everyone also says once the DOL sends notice of non-filing there is no way to get any penalty relief (which could easily get into the millions after a few years). I don't ever see anyone post that they received the DOL letter though. Does the IRS one always come first? or, does the DOL send some sort of gentle reminder that allows you to quickly do the voluntary program before their official letter? I ask because if you look at publicly available enforcement data online there are only a handful of businesses TOTAL each year that have penalties issues above 100k by DOL (like 5-10 total) yet there are millions of businesses that are subject to 5500 filings and MANY that are unaware of filing requirements for various reasons so have multiple years of non filing and are none the wiser. 1) do notices always come from IRS first? 2) Are the large penalties really only assessed if someone ignores letters that give them the chance to do the voluntary program? 3) Is there a reason every posting on here about non filing penalties references IRS notices as the ones they are getting and not DOL? 4) If DOL did an audit of a small plan and discovered 6 years of non filing, would they really assess millions in penalties? I ask because, while this is what they say they can do in documents, the metrics on their own enforcement site show this is not what is actually occuring. Most non filer penalties it shows are the 5-15k range. And, even those are not large in number,
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I understand penalty a and b calculations. I also see that b calculation will never be larger than a according to IRS guidance. If business has 59 Fte (so they are an ALE) but *only* 28 truly full time employees then they are shielded from both penalties, no? Because when you subtract the “free” 30 off penalty a they would be at $0. So, even if 4 people go and get PTC their penalty A would be $0 and their penalty B wouldn’t kick in because B can’t be bigger than A it says. So, anyone with 30 FT all year (or less) is protected from penalties, yes?