Morgan

Thank you @Brian Gilmore and @EBECatty for your input. I searched for hours to find anything pointing to attribution in regards to an ALE calculation and couldn't find it. I will proceed in taking a conservative approach and just exclude the greater than 2% shareholders for this client. I have asked for their guidance and will share it if they have anything of substance.

We have a client that we have been treating like an ALE in 2025 because their average employee count for purposes of ACA was 51 in 2024. In that calculation we excluded both owners since they are Shareholders in the S corporation with a 2% or greater share. The owners each have Spouses and Children that work in the company as W2 Full-Time employees that were included in the calculation. We thought this was done correctly, but we just had a situation that is making us second guess our calculation. Another client of ours is approaching ALE status and is starting to forecast their employee count for the rest of the year. They are using a 3rd party Payroll/HR vendor that is telling them they can exclude the S-Corp owners and their family members due to Stock attribution rules. I can't seem to find anything that covers this. Has anyone else heard this?

Once again, Thank you very much Brian.

One other item that was brought up is whether or not the termination date of the Individual Policy has any effect on the effective date of the new group plan. My thought is no, since the termination of the individual plan isn't what triggered the special enrollment event. The loss of eligibility to participate in the ICHRA triggered the special enrollment event, so the effective date should be the first day following the last day in the month in which they were eligible for the ICHRA allowance?

Thanks as always Brian! I appreciate the response, very helpful. There are still so many people out there that have never heard of an ICHRA which makes these situation even more difficult to navigate.

Since ICHRAs are still so new, I keep running into issues that I haven't encountered before. My client just terminated an employee who had himself and his Spouse on an individual plan in which he was receiving a reimbursement for. Now that the ICHRA has been terminated the reimbursement is gone and the insurance is too expensive. They would like to join the Spouse's group plan, but the issue we are running into is that the group carrier is saying they need to produce a Loss of Coverage letter showing an involuntary loss of coverage. The Loss Of Coverage letter will show a Voluntary drop though. The ICHRA administrator has told us this is indeed a QLE, but I'm trying to determine if it just opens a SEP to purchase another IFP plan or allows them to enroll in a Group plan as well. This is all I could find: However, a loss of coverage due to a termination of employment or a reduction in the number of hours of employment generally is a loss of coverage due to a qualifying event. Thus, for example, an employee covered by an individual coverage HRA who, due to a reduction in hours, is moved to a class of employees who are not offered any group health coverage would have a right to COBRA or other group continuation coverage in the HRA, as would an individual who loses coverage under the HRA due to termination of employment. That HRA COBRA or other group continuation coverage would be conditioned on a timely election of COBRA or other group continuation coverage and payment of COBRA or other group continuation coverage premiums, as well as maintaining (or enrolling in) individual health insurance coverage.77 Alternatively, an employee who loses coverage under an individual coverage HRA for these reasons may qualify for an SEP to change his or her individual coverage either on- or off-Exchange.78 https://www.govinfo.gov/content/pkg/FR-2019-06-20/pdf/2019-12571.pdf Also I wasn't sure if the loss of an ICHRA could be considered a loss of employer contribution towards health coverage: An individual loses eligibility for coverage under a group health plan or other health insurance coverage (such as an employee and his/her dependents' loss of coverage under the spouse's plan) or when an employer terminates contributions toward health coverage; https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/hipaa-compliance.pdf

Thanks Peter & Brian for your insight! This is very helpful. Like you mentioned Brian, OCSS is going to be confused when they come across this scenario the first few times.

ICHRAs are brand new to me so I'm curious how an employer would comply with a National Medical Support Notice for an employee eligible to participate in an ICHRA. It's my understanding that ICHRAs are considered group health plans subject to ERISA requiring them to comply with a QMCSO. Anyone have experience with this? Any insight is greatly appreciated.

Thanks Brian! I really appreciate your insight. I felt like I was getting too creative as well with my argument about the Salaried EE-only employees being excluded from testing.

I have a situation around Nondiscrimination Rules for a Fully-Insured group with a section 125 plan. They have different employer contributions for Salary & Hourly employees in the same geographic location under the same EIN. The employer is Large Group so they have a 4 tiered composite rate structure and the contributions for the Salary & Hourly employees are below: Employer Contributions Hourly - EE 75%, ES 75%. EC 75%, FAM 75% Salary - EE 100%, ES 75%. EC 75%, FAM 75% The Hourly group doesn't have any HCPs and the Salary group has many HCPs so at first I thought this would be discriminatory since the contribution scheme favors the group with HCPs. My question is, Since the salary employees in the EE-Only tier are getting 100% of their benefits paid for would they be excluded as participants in the section 125 plan? If that group of EE-Only salaried employees is removed from testing then the remaining employees are all provided uniform employer contributions. Would this pass nondiscrimination testing? One concern I have is that a salary employee can be in the EE-Only Medical tier, but then have a Child they are covering on Dental in the EC tier and that pre-tax dental deduction would loop them back into the section 125 testing. Any guidance or thoughts would be greatly appreciated.

Hello, My client just recieved a NMSN for an employee on May 30th and the date on the NMSN in the top right corner is May 22nd (the date for which the letter was produced and sent I believe). The recieving department sent the notice to Human Reources (Also the Plan Administrator) in early June at which time the HR team deemed it was a legitimate notice. The earliest enrollment date would then be the first of the following month from my understanding, making the effective date 7/1? The Medical Carrier agreed that this effective date was properly determined, however the Dental & Vision carrier is saying that we have to make the benefits effective on 5/22 since that is the date on the NMSN. The Employer didn't even have the notice on 5/22 so this seems incorrect. Has anyone heard of a carrier doing this? Maybe it's an inexperienced employee at the carrier that we are dealing with or maybe I'm interpretting the NMSN instructions incorrectly. Any insight is greatly appreciated.