Brian Gilmore

The standard ERISA disclosure rules provide that ERISA-required documents must be provided to participants in a manner that’s “reasonably calculated to ensure actual receipt” by the intended recipient. The DOL has a safe harbor under which plans will be deemed to meet this standard. This method is sometimes misunderstood as a requirement—it is not. It is merely the only guaranteed way to satisfy ERISA’s disclosure requirements by electronic media. The safe harbor generally requires either (a) the employee has work-related computer access that is integral to his or her job duties (i.e., employee works at a desk with a computer), or (b) the employee’s electronic affirmative consent to electronic disclosure. There are no specific penalties for failure to properly distribute these documents (unless there is a written request for the document, in which case the penalty is $110/day if the employer does not provide the document within 30 days of the request). However, the employer may not be able to enforce the written terms of the plan in a claim for benefits lawsuit if the plan documentation was not properly disclosed. There are many unfortunate cases where courts have come to this conclusion. Summary: If all of the company’s employees have work-related computer access that is integral to their job duties, it is clear that no authorization is required to distribute ERISA documents electronically. If there are employees who don’t meet this standard, the safer approach is to meet the DOL’s safe harbor by receiving their affirmative consent to electronic disclosure of ERISA documents. Here's a quick slide summary: Newfront Office Hours Webinar: ERISA for Employers

You could argue that might constitute a material modification if it changes how employees interact with claims processing or something else practical from a participant perspective. But even if it does, you don't need a stand-alone SMM to address it. For one, most OE materials are designed as an SMM for all changes taking effect for the upcoming plan year. If this is taking effect at the start of the new plan year, that information could just be included with those OE materials. Also, I assume this isn't going to result in a change to the SBC or a material reduction in covered health services. So there wouldn't be any urgency to the disclosure. Here's some template language I usually recommend including with OE materials to also address the SMM requirements for the upcoming plan year changes: This document serves as a Summary of Material Modifications (“SMM”) to the [ENTER PLAN NAME LISTED IN WRAP PLAN DOC/SPD AND FORM 5500] (“Plan”). This SMM summarizes changes to the Plan that are effective as of [DATE]. You should review this information carefully and share it with your covered dependents. Keep this information with your Summary Plan Description (“SPD”) for future reference. In the event of a conflict between the official Plan Document and this SMM, the SPD, or any other communication related to the Plan, the official Plan Document will govern.

You would have to comply with the mental health parity rules under the MHPAEA. Here's an overview: https://www.newfront.com/blog/the-caa-mental-health-parity-comparative-analysis-requirement

My only thought is to agree with your policy position. But I don't see how you avoid COBRA obligations given it's outside the first-aid exception. From a policy standpoint, there should be an exception for where the services provided at the on-site clinic are required for employees by law. We have an ERISA exemption for disability plans required by state law (i.e., statutory state disability requirements) under ERISA §4(b)(3) that could be extended in the same way: (b) The provisions of this title shall not apply to any employee benefit plan if— (1) such plan is a governmental plan (as defined in section 3(32); (2) such plan is a church plan (as defined in section 3(33) with respect to which no election has been made under section 410(d) of the Internal Revenue Code of 1986; (3) such plan is maintained solely for the purpose of complying with applicable workmen's compensation laws or unemployment compensation or disability insurance laws; (4) such plan is maintained outside of the United States primarily for the benefit of persons substantially all of whom are nonresident aliens; or (5) such plan is an excess benefit plan (as defined in section 3(36) and is unfunded.

Your broker can probably provide a basic Section 125 cafeteria plan POP-only template without charge. However, it will be hard to avoid the need to undergo NDT. I'm not aware of any cheaper alternative than the amount quoted as a way to take care of that testing. There is at least a safe harbor for POP-only arrangements (i.e., no health FSA or dependent care FSA) that streamlines the §125 NDT requirements by removing multiple components. Simple cafeteria plans actually are quite complex (primarily because of the employer contribution requirements) and therefore are close to nonexistent in practice. It may be a viable option if you are committed to not offering a FSA in the future--but most employer with a cafeteria plan do offer the FSAs. Here's a thread with more discussion:

It's not surrogacy. It's adoption like you would would adopt a child post-birth, but in this case adopting the child pre-birth in embryo form--typically from donated embryos created for IVF purposes but not being used by the biological parents. The embryo is implanted into the adoptive mother's uterus (like in traditional IVF), and the adoptive mother carries the embryo to birth. Here's a summary: https://consideringadoption.com/adopting/types-of-adoption/what-is-embryo-adoption/

First time I've run into the issue also, but I found a couple interesting posts discussing the issue from the adoption tax credit perspective here: https://embryoadoption.org/2020/04/adoption-tax-credit/ https://ttlc.intuit.com/community/tax-credits-deductions/discussion/can-we-claim-adoption-expenses-for-an-embryo-adoption/00/442400 In short, it seems like a very unsettled area with varying results depending on state, timing, etc. I would assume the Section 137 adoption assistance exclusion rules would generally follow the adoption tax credit rules for this purpose.

Agree @MRestum has a reasonable position here, too. As I mentioned, there are positions all over the board on this issue. My point is that in both scenarios the employees can contribute the employee-share of the premium on a pre-tax basis through the cafeteria immediately upon having a premium to pay. When you're hired in the year shouldn't affect the analysis either way. Point here really is that in practice you'll almost never see an employer taking after-tax contributions for anything other than (non tax-dependent) domestic partner coverage. You'll also almost never see multiple cafeteria plans for the same employer (and I'm not sure that approach really works given the other aspects of the eligibility test that require nondiscriminatory classifications). And yet tons of employers have different waiting periods for different classes of employees. So this is really an academic discussion more than a practical one. I consider the contributions and benefits test component of the rules to be where the rubber hits the road in terms of practical issues surrounding the 125 NDT rules. That's the part of the rules requiring a “uniform election with respect to employer contributions.” This generally means (absent some limited exceptions) that all full-time non-HCP employees eligible for the same plan option as an HCP must be offered at least the same employer contribution amount that is available to the HCPs for that plan.

Same issue--the top hat plan would have to be account-based or an excepted benefit to permit offering it along with an ICHRA. Since I assume it's neither, the ICHRA pairing would be off the table.

Great question because different sources will take different positions on this one. My position would be that because both employee groups are eligible for the cafeteria plan (i.e., the ability to contribute the employee-share of the premium on a pre-tax basis) immediately upon becoming eligible for the underlying health plan, there is no violation of the Section 125 NDT requirements under §125(g)(3)(B)(i). In other words, they are both immediately eligible to contribute pre-tax upon becoming eligible for the health plan, and therefore they actually have the same condition of enrollment for cafeteria plan purposes. I don't view the 125 eligibility test as intended to look-through to the underlying health benefit components for which the POP is used to make employee pre-tax contributions. Otherwise, a huge percentage of employers would technically be violating the Section 125 eligibility test component of the NDT rules because it's so common to have different employee groups with different health plan eligibility conditions. My take is that there are other provisions designed to address the appropriate timing of offering coverage underlying the health plan, including the ACA employer mandate, the ACA 90-day waiting period rule, §105(h) for self-insured plans, the ACA nondiscrim rules for fully insured plans if they ever take effect, etc.

Both employer and employee contributions are included. Treas. Reg. §1.125-7(c)(2): (2) Benefit availability and benefit election. A cafeteria plan does not discriminate with respect to contributions and benefits if either qualified benefits and total benefits, or employer contributions allocable to statutory nontaxable benefits and employer contributions allocable to total benefits, do not discriminate in favor of highly compensated participants. A cafeteria plan must satisfy this paragraph (c) with respect to both benefit availability and benefit utilization. Thus, a plan must give each similarly situated participant a uniform opportunity to elect qualified benefits, and the actual election of qualified benefits through the plan must not be disproportionate by highly compensated participants (while other participants elect permitted taxable benefits). Qualified benefits are disproportionately elected by highly compensated participants if the aggregate qualified benefits elected by highly compensated participants, measured as a percentage of the aggregate compensation of highly compensated participants, exceed the aggregate qualified benefits elected by nonhighly compensated participants measured as a percentage of the aggregate compensation of nonhighly compensated participants. A plan must also give each similarly situated participant a uniform election with respect to employer contributions, and the actual election with respect to employer contributions for qualified benefits through the plan must not be disproportionate by highly compensated participants (while other participants elect to receive employer contributions as permitted taxable benefits). Employer contributions are disproportionately utilized by highly compensated participants if the aggregate contributions utilized by highly compensated participants, measured as a percentage of the aggregate compensation of highly compensated participants, exceed the aggregate contributions utilized by nonhighly compensated participants measured as a percentage of the aggregate compensation of nonhighly compensated participants.

Yeah the Patriot Act/USA Freedom Act identity verification issues to establish the account would be the main concern (besides ensuring HDHP enrollment and no disqualifying coverage, as Mr. HSA noted). Same issues as any bank account. Forbes has a nice overview here: https://www.forbes.com/advisor/banking/non-us-citizen-open-bank-account/

If the employee loses eligibility for the medical plan from the reduction in hours, he would need to also lose eligibility for the health FSA. That would mean the health FSA election is automatically revoked and treated in the same manner as a terminated employee (i.e., standard run-out period, COBRA option if underspent). The footprint rule component of the health FSA excepted benefit status rules require that any employee eligible for the health FSA also be eligible for the major medical plan. As a practical matter, a health FSA could not survive as a non-excepted benefit in the ACA era. https://www.newfront.com/blog/aca-and-hipaa-excepted-benefits Common Excepted Benefit #3: Health FSA Health FSAs must qualify as an excepted benefit to avoid violating the ACA market reform provisions. The general requirements for a health FSA to be considered an excepted benefit are: The Footprint Rule: All employees eligible for the health FSA must also be eligible for the major medical plan; and The $500 Rule: Employer nonelective contributions to the health FSA cannot exceed $500. Under the footprint rule, all employees eligible for the health FSA must also be eligible for (regardless of enrollment in) the major medical plan. In other words, the health FSA eligibility “footprint” cannot be broader than the major medical plan’s eligibility “footprint.” ... 29 CFR §2590.732(c)(3): (3) Limited excepted benefits. ... (v) Health flexible spending arrangements. Benefits provided under a health flexible spending arrangement (as defined in section 106(c)(2) of the Internal Revenue Code) are excepted for a class of participants only if they satisfy the following two requirements— (A) Other group health plan coverage, not limited to excepted benefits, is made available for the year to the class of participants by reason of their employment; and (B) The arrangement is structured so that the maximum benefit payable to any participant in the class for a year cannot exceed two times the participant’s salary reduction election under the arrangement for the year (or, if greater, cannot exceed $500 plus the amount of the participant’s salary reduction election). For this purpose, any amount that an employee can elect to receive as taxable income but elects to apply to the health flexible spending arrangement is considered a salary reduction election (regardless of whether the amount is characterized as salary or as a credit under the arrangement). ... DOL Technical Release 2013-3: 2. Application of the Market Reforms to Certain Health FSAs Question 7: How do the market reforms apply to a health FSA that does not qualify as excepted benefits? Answer 7: The market reforms do not apply to a group health plan in relation to its provision of benefits that are excepted benefits. Health FSAs are group health plans but will be considered to provide only excepted benefits if the employer also makes available group health plan coverage that is not limited to excepted benefits and the health FSA is structured so that the maximum benefit payable to any participant cannot exceed two times the participant’s salary reduction election for the health FSA for the year (or, if greater, cannot exceed $500 plus the amount of the participant’s salary reduction election). See 26 C.F.R. §54.9831-1(c)(3)(v), 29 C.F.R. §2590.732(c)(3)(v), and 45 C.F.R. § 146.145(c)(3)(v). Therefore, a health FSA that is considered to provide only excepted benefits is not subject to the market reforms. If an employer provides a health FSA that does not qualify as excepted benefits, the health FSA generally is subject to the market reforms, including the preventive services requirements. Because a health FSA that is not excepted benefits is not integrated with a group health plan, it will fail to meet the preventive services requirements.

A lot of variables there, but to keep it simple: If the employee is working sufficient hours to be eligible for the health FSA, then active health FSA participation would continue. I don't see how the LTD benefits would be relevant here. I suppose you could have a cafeteria plan eligibility provision that stated employees otherwise eligible but receiving LTD benefits are excluded from health FSA participation, but I'm not sure why you would want to go there. LTD benefits won't be a permitted election change event. Any change in employment status that affects eligibility (e.g., loss of eligibility caused by reduction in hours to part-time ineligible status) will be a permitted election change event for those benefits affected.

A copay is by definition a flat dollar amount. Coinsurance is the percentage based form of cost-sharing. Either one could be applied in any fashion post-deductible, and both would have to apply to the OOPM. The SBC glossary provides a good uniform set of definitions for health plan purposes: https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/laws/affordable-care-act/for-employers-and-advisers/sbc-uniform-glossary-of-coverage-and-medical-terms-new.pdf In this example, the IRS specifically recognizes the validity of a HDHP copay structure post-deductible: IRS Notice 2004-50: https://www.irs.gov/pub/irs-drop/n-04-50.pdf Q-21. Are amounts incurred by an individual for medical care before a health plan’s deductible is satisfied included in computing the plan's out-of-pocket expenses under section 223(c)(2)(A)? A-21. A health plan’s out-of-pocket limit includes the deductible, co-payments, and other amounts, but not premiums. Notice 2004-2, Q&A 3. Amounts incurred for noncovered benefits (including amounts in excess of UCR and financial penalties) also are not counted toward the deductible or the out-of-pocket limit. If a plan does not take copayments into account in determining if the deductible is satisfied, the copayments must still be taken into account in determining if the out-of-pocket maximum is exceeded. Example . In 2004, a health plan has a $1,000 deductible for self-only coverage. After the deductible is satisfied, the plan pays 100 percent of UCR for covered benefits. In addition, the plan pays 100 percent for preventive care, minus a $20 copayment per screening. The plan does not take into account copayments in determining if the $1,000 deductible has been satisfied. The copayments must be included in determining if the plan meets the out-of-pocket maximum. Unless the plan includes an express limit on out-of-pocket expenses taking into account the copayments, or limits the copayments to $4,000, the plan is not an HDHP.

After satisfying the required statutory minimum HDHP deductible, the plan can impose any form of cost-sharing and still maintain HDHP status. That could be a copay structure for Rx and/or regular services. The only limitation there is that all cost-sharing amounts (including a post-deductible copay) must count toward the HDHP's OOPM. IRS Notice 2004-50: https://www.irs.gov/pub/irs-drop/n-04-50.pdf Q-21. Are amounts incurred by an individual for medical care before a health plan’s deductible is satisfied included in computing the plan's out-of-pocket expenses under section 223(c)(2)(A)? A-21. A health plan’s out-of-pocket limit includes the deductible, co-payments, and other amounts, but not premiums. Notice 2004-2, Q&A 3. Amounts incurred for noncovered benefits (including amounts in excess of UCR and financial penalties) also are not counted toward the deductible or the out-of-pocket limit. If a plan does not take copayments into account in determining if the deductible is satisfied, the copayments must still be taken into account in determining if the out-of-pocket maximum is exceeded. Example . In 2004, a health plan has a $1,000 deductible for self-only coverage. After the deductible is satisfied, the plan pays 100 percent of UCR for covered benefits. In addition, the plan pays 100 percent for preventive care, minus a $20 copayment per screening. The plan does not take into account copayments in determining if the $1,000 deductible has been satisfied. The copayments must be included in determining if the plan meets the out-of-pocket maximum. Unless the plan includes an express limit on out-of-pocket expenses taking into account the copayments, or limits the copayments to $4,000, the plan is not an HDHP. https://www.newfront.com/blog/significant-hsa-contribution-limit-increase-for-2023

I read it to say that employers without a public website for the group health plan may satisfy the disclosure requirements by entering into a written agreement with the TPA to post the files on the TPA’s public website on behalf of the plan. More guidance to come, but that's at least addressing the biggest gap in the guidance previously. The files are for machines to read, so I wouldn't include them in the SPD. It's a way for big data orgs to mine for info on pricing structures that have previously been proprietary. It's not a employee tool. That one comes later starting in '23.

We just recently got a helpful technical clarification post from CMS that addresses the issue: https://www.cms.gov/healthplan-price-transparency/resources/technical-clarification Technical Clarification Questions and Answers Question #37: May a group health plan that does not have its own website satisfy the requirements of the TiC Final Rules with respect to posting the Allowed Amount file and the In-network Rate file on a public website of the plan, if the plan’s service provider posts the Allowed Amount file and the In-network rate file on its public website on behalf of the group health plan?(New 6/17/22) Answer #37: If a group health plan does not have a public website, the plan may satisfy the requirements for posting the Allowed Amount file and the In-Network file by entering into a written agreement under which a service provider (such as a TPA) posts the Allowed Amount file and the In-network Rate file on its public website on behalf of the plan. However, if a plan enters into an agreement under which a service provider agrees to post the Allowed Amount file and the In-network Rate file on its public website on behalf of the plan, and the service provider fails to do so, the plan violates these disclosure requirements. The Departments intend to follow up with the issuance of formal guidance soon.

I haven't, but it's still an open issue in my mind.

Sorry--I missed that you were in an HSA previously. Yes, that's not a problem. You will not be HSA-eligible (i.e., able to make or receive HSA contributions) when enrolled in the general purpose health FSA. But it sounds like you're not going to be in an HDHP anyway, so not an issue. You will have a proportional HSA contribution limit of 6/12 (1/2) of the standard individual or family limit. You can elect up to the full $2,850 limit in the health FSA for the remainder of the plan year without affecting that prior period of HSA eligibility. The health FSA is only disqualifying coverage for HSA purposes going forward because you will not be able to incur reimbursable FSA claims prior to enrollment (i.e., your health FSA coverage is prospective). More details: https://www.newfront.com/blog/hsa-interaction-health-fsa-2 https://www.newfront.com/blog/the-hsa-proportional-contribution-limit 2022 Newfront Go All the Way with HSA Guide

We had a good discussion going on whether the addition of abortion-related travel coverage to the health plan would qualify as a Section 125 cafeteria plan permitted election change event. Now it seems to have dropped from the forum. Any idea why?

The short answer is yes, you may make a full new $2,850 health FSA election with the new employer's plan (as long as the two employers are unrelated). The health FSA plan year salary reduction contribution limit is tied to each employer. It's not an individual limit. Full details: https://www.newfront.com/blog/health-fsa-salary-reduction-contribution-limit-2 New Hires: Unlimited Health FSA Elections Among Multiple Employers Employees can contribute up to $2,850 (2022) to the health FSA with as many unrelated employers as they are employed by. So employees with two unrelated employers in the same year may contribute the max to both employer’s plans—even though the annual total may exceed $2,850 (2022). This is because the health FSA $2,850 (2022) salary reduction contribution limit is merely a plan year maximum. It’s not an individual maximum. Employees can therefore make full $2,850 (2022) elections to multiple health FSA plans in the same year. (Note that this is different from the dependent care FSA, which imposes an individual calendar year maximum. The dependent care FSA rules limit total calendar year contributions to $5,000 (or $2,500 if married filing separately) over all employers combined.) ... IRS Notice 2012-40: https://www.irs.gov/irb/2012-26_IRB All employers that are treated as a single employer under § 414(b), (c), or (m), relating to controlled groups and affiliated service groups, are treated as a single employer for purposes of the $2,500 limit. If an employee participates in multiple cafeteria plans offering health FSAs maintained by members of a controlled group or affiliated service group, the employee’s total health FSA salary reduction contributions under all of the cafeteria plans are limited to $2,500 (as indexed for inflation). Section 125(g)(4). However, an employee employed by two or more employers that are not members of the same controlled group may elect up to $2,500 (as indexed for inflation) under each employer’s health FSA.

My position is that they need to be part of the same §414 controlled group as a parent-subsidiary or brother-sister to avoid MEWA status. I read that DOL guidance to state that ASG status is not enough to be treated as a single employer and therefore avoid MEWA status. Here's that guidance: https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/information-letters/05-24-2004 Trades or businesses with less than a 25 percent ownership interest thus are not under "common control" for purposes of section 3(40) of ERISA, and, therefore, are not a single employer for purposes of determining whether their plan provides benefits to the employees of two or more employers under section 3(40). It is our understanding that "affiliated service group" status within the meaning of section 414(m) of the Code may be based upon an interest of less than 25 percent. Accordingly, "affiliated service group status" under section 414(m) of the Code would not, in and of itself, support a conclusion that a group of two or more trades or businesses would be a single employer for purposes of section 3(40) of ERISA. Here are the materials I've put out on the issue: https://www.newfront.com/blog/adding-a-new-ein-to-the-health-plan Newfront Office Hours Webinar: M&A for H&W Employee Benefit Plans

@Ryan Moulder has a really good post on this topic here: https://accord-aca.com/articles/amended-needed-for-form-w-2-affordability-safe-harbor

Thanks for the nice comments, Jaeded. I think the LSA constructive receipt issue here is a classic industry norm vs. technically correct conundrum with no right answer in how best to approach it. But as a TPA, I'm not sure your client needs to have the answer. The TPA isn't taxing the benefit--that's the employer's role. It seems to me the TPA can present both alternatives and let the employer choose. The TPA will be performing the same administrative functions regardless. The taxing reimbursement approach that is by far the most common in practice but still somewhat aggressive. Or the taxing amounts made available that is probably the way the IRS would view it, but out of step with employee expectations and industry standards. Then leave it up to the employer and their advisors to make the determination based on risk tolerance, etc. Here's how I've tried to present the issue in a balanced way: Newfront Office Hours Webinar: Fringe Benefits for Employers