Brian Gilmore

(1) Is advanced behavioral analysis considered a preventive type of therapy or procedure which is required to reimbursement in full under the ACA? [Would have to do more research, but behavioral, social, emotional screening is included as one of the ACA child preventive services. See here: https://downloads.aap.org/AAP/PDF/periodicity_schedule.pdf] (2) Is this therapy considered a mental health procedure subject to protection under the mental health parity requirements? [Would have to do more research here too, but this seems likely to be an impermissible NQTL. See Q/A-1 here: https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-39-final.pdf] (3) Is there any other reason that prohibits or precludes the client from adopting a minimum age requirement as a condition to being eligible for reimbursement for advanced behavioral analysis, whether or not required under the ACA? [It also seems risky under the ACA Age 26 mandate's uniformity requirement. You could argue it applies to all individuals regardless of whether they are children, but how employees/spouses won't be under age 16 so that is a difficult argument. See subparagraph (d): https://www.govinfo.gov/content/pkg/CFR-2024-title29-vol9/pdf/CFR-2024-title29-vol9-sec2590-715-2714.pdf]

Welcome to the wonderful world of COBRA/Medicare interaction. As a general rule, the key for anyone age 65+ losing active coverage is to enroll in Medicare asap for a whole host of reasons. Sounds like you've checked that box, kudos. Most of the time it is not economically rational to enroll in both Medicare and COBRA--typically it makes much more sense to instead use those funds to pay for Medigap coverage. But I take your point here that you want to continue to have access to specific providers here that are not available through Medicare. That could make sense. You definitely are going to be offered COBRA because you have a loss of coverage caused by termination of employment. That is a COBRA qualifying event regardless of your age and/or Medicare eligibility. Just keep in mind that you can lose your COBRA rights if you enroll in Medicare after your COBRA election. That doesn't appear to be the case here for you, so that's just a heads up. As to your specific questions--they are very plan/carrier specific so probably nobody here will be able to address them directly. On the more generic front, once you lose active coverage and have COBRA paired with Medicare, the coordination of benefits rules generally flip. That means Medicare will pay primary, COBRA will pay secondary. If the claim is submitted to Aetna in the standard manner by the provider, there should not be any action item for you here. They will coordinate with Medicare to determine responsibility--which in theory would be solely through Aetna's cost-sharing structure if the provider does not accept Medicare. There are some cases where you may have to submit a provider bill to the carrier to process a claim that is not handled through the standard channels, but I doubt that would come up often. I also doubt you would have to submit something from Medicare showing that the provider attempted to bill them and they denied it. This stuff will probably all be back-end administrative processes that you are not directly involved in. There's much more info here that may be helpful: 2025 Newfront Medicare for Employers Guide https://www.newfront.com/blog/the-medicare-form-cms-l564-for-employers https://www.newfront.com/blog/how-cobra-and-medicare-interact-for-retirees

What you're describing sounds like an LSA, which is a non-medical arrangement. By definition, an LSA cannot include §213(d) medical expenses--otherwise it would become a group health plan. The ACA does not apply to an arrangement like that. It would apply to group health plans like an HRA. More details: https://www.newfront.com/blog/lifestyle-spending-account-compliance-considerations Even if we were talking about an HRA, there is nothing in the ACA Age 26 mandate that requires direct reimbursement to the adult child. When an adult child is covered by a major medical plan, the reimbursements go directly to the provider. When an employee submits a child's medical expense through a health FSA, the reimbursement goes directly to the employee. Same deal with HRAs. More details: https://www.newfront.com/blog/aca-age-26-mandate-2 So really the response is nonsensical on many levels.

There's no clear way to handle, but yes they should do something in that situation where it is clear employer error. I'm skeptical that occurred here, though. These are usually employee election mistakes. Here's some discussion if it was a clear employer error-- https://www.newfront.com/blog/correcting-missed-hsa-contributions Missed Employer HSA Contribution: Prior Year (Correction After 4/15) In some cases, employers will not discover the missed employer contribution until after the tax filing deadline (generally April 15) has already passed. This unfortunately means that the employer can no longer make the missed contribution attributable to the prior year (i.e., the year in which the employer missed the contribution). Employers will generally attempt to correct the missed contribution in this situation by simply making the HSA contribution attributable to the current year (i.e., the year of the corrective contribution). However, there are a couple of potential pitfalls to be aware of with this approach: If the employee is no longer HSA-eligible in the current year (e.g., the employee is no longer enrolled in the HDHP), the employer cannot make an HSA contribution for the current year. If the employee remains HSA-eligible in the current year, the extra contribution could cause the employee to either exceed the proportional contribution limit (e.g., if the employee loses HSA eligibility mid-year), or the statutory maximum contribution limit (e.g., if the employee had already set elections to reach the maximum amount for the current year and does not adjust them accordingly). Nonetheless, making the HSA contribution attributable to the current year is still typically the best option under the circumstances to address the missed contribution if the employee is still HSA-eligible and confirms an understanding of the applicable limits. If the employee had previously made an HSA contribution election designed to meet the statutory maximum, the employee will need to reduce that election going forward by the amount of the employer’s corrective contribution. Otherwise, the other reasonable alternative would be to provide standard taxable income in the amount of the missed contribution. If still HSA-eligible, the affected employee could choose to use that additional compensation to elect a higher pre-tax HSA contribution election in the current year, which would ultimately create essentially the equivalent result as the current year employer HSA contribution correction approach. Potential Complications: Employees who are no longer HSA-eligible in the current year (e.g., they are no longer enrolled in the HDHP) cannot receive a current year HSA contribution. In this case, employers should consider making the missed payment to the employee as standard taxable cash compensation. If the employee has terminated from employment, the HSA account with the employer’s designated custodian may no longer be open. Furthermore, it may be difficult for the employer to ascertain the former employee’s HSA-eligibility status in the current year. Accordingly, in this case employers should consider making the missed payment to the former employee as standard taxable cash compensation. Employees may argue that they should receive some form of lost earnings compensation for the duration of the failure. Although there are no specific rules addressing this (unlike, for example, the EPCRS lost earnings rules that apply in the 401(k) context), employers might consider accommodating such a request. If the additional amount is included in the HSA contribution, that will count toward the current year annual contribution limit, potentially requiring the employee to further reduce their HSA contribution election. If the employer reported the amount withheld as an HSA contribution on the prior year Form W-2 (Box 12, Code W), the employer would generally need to issue a corrected Form W-2c reflecting the actual amount of HSA contributions for the prior year.

There's no way to address the issue for prior years at this point. HSA contributions for a prior year cannot be made after 4/15. There's also no way to transfer an FSA to an HSA. So unfortunately it's a cautionary tale to keep on top of your paystub and benefits. Best you could hope for would be for the employer to provide an employer contribution to the HSA for 2025 as a corrective measure. However, the employer should not even consider that unless they truly made an error implementing your election (i.e., you actually elected HSA).

Unfortunately, at least some of the money is gone. The health FSA rules require forfeiture of unused amounts at the end of the end of the plan year (plus any associated grace period/run-out period). The only saving grace may be the carryover. If your plan has a carryover feature (many plans do, but not all), you should have carried over the max. That carryover limit was $640 from '24 to '25. Any excess would have been forfeited. More details: https://www.newfront.com/blog/fsa-experience-gains-from-forfeitures There's nothing prohibiting having a health FSA while covered by an HDHP. It simply blocks your HSA eligibility. So it's not necessarily an employer error. You would have to look at what you elected. If you actually elected the HSA (seems unlikely, but possible), that would be quite a situation because it would be too late to make HSA contributions for prior years. Slide summary: 2025 Newfront Section 125 Cafeteria Plans Guide

Assuming they had insured benefits during the plan year, I'd leave that "Insurance" box checked: https://www.dol.gov/sites/dolgov/files/ebsa/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-5500/2024-instructions.pdf

Sorry about the layoffs. You can provide the COBRA election notice early and allow the termed employees to elect COBRA in advance. The timing rules are just outer deadlines, but nothing prevents doing this in advance. Those rules generally put the outer deadline at 44 days from the loss of coverage to provide the election notice, and 60 days from the date the notice is provided to elect COBRA. However, if you provide the election notice in advance of the loss of coverage, the employees will generally have 60 days from the loss of coverage (as opposed to date notice provided) to elect. So if you provided the election notice tomorrow (6/20), employees would generally still have 60 days from the 6/30 loss of coverage date to elect. Here's the cites for reference-- 29 CFR §2590.606-4: https://www.ecfr.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-L/part-2590/subpart-A/section-2590.606-4 (b) Notice of right to elect continuation coverage. ... (2) In the case of a plan with respect to which an employer of a covered employee is also the administrator of the plan, except as provided in paragraph (b)(3) of this section, if the employer is otherwise required to furnish a notice of a qualifying event to an administrator pursuant to §2590.606-2, the administrator shall furnish to each qualified beneficiary a notice meeting the requirements of paragraph (b)(4) of this section not later than 44 days after: (i) In the case of a plan that provides, with respect to the qualifying event, that continuation coverage and the applicable period for providing notice under section 606(a)(2) of the Act shall commence with the date of loss of coverage, the date on which a qualified beneficiary loses coverage under the plan due to the qualifying event; or (ii) In all other cases, the date on which the qualifying event occurred. Treas. Reg. §54.4980B-6: https://www.govinfo.gov/content/pkg/CFR-2012-title26-vol17/pdf/CFR-2012-title26-vol17-sec54-4980B-6.pdf Q-1. What is the election period and how long must it last? A-1. (a) A group health plan can condition the availability of COBRA continuation coverage upon the timely election of such coverage. An election of COBRA continuation coverage is a timely election if it is made during the election period. The election period must begin not later than the date the qualified beneficiary would lose coverage on account of the qualifying event. (See paragraph (c) of Q&A-1 of §54.4980B-4 for the meaning of lose coverage.) The election period must not end before the date that is 60 days after the later of— (1) The date the qualified beneficiary would lose coverage on account of the qualifying event; or (2) The date notice is provided to the qualified beneficiary of her or his right to elect COBRA continuation coverage.

Yes, I agree with that as the proportional HSA contribution limit for 2025 and the workaround to the proportional limit that would otherwise apply in 2026. More details: https://www.newfront.com/blog/the-hsa-contribution-rules-part-ii You should probably consult with a personal tax adviser for how to address prior years. Technically, the 6% excise for the excess/ineligible contributions accrues annually until you make a corrective distribution. IRS Publication 969: https://www.irs.gov/pub/irs-pdf/p969.pdf Excess contributions. You will have excess contributions if the contributions to your HSA for the year are greater than the limits discussed earlier. Excess contributions aren’t deductible. Excess contributions made by your employer are included in your gross income. If the excess contribution isn’t included in box 1 of Form W-2, you must report the excess as “Other income” on your tax return. Generally, you must pay a 6% excise tax on excess contributions. See Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, to figure the excise tax. The excise tax applies to each tax year the excess contribution remains in the account.

I don't see this as a concern. As you noted, employers have discretion to set the HSA contribution interval. With respect to the nondiscrimination issue you raised, the comparability rules are essentially a dead letter because they do not apply to employer contributions made through a cafeteria plan. The comparability regulations, cafeteria plan regulations, and other IRS guidance all make clear that employer contributions to an employee’s HSA are made “through a cafeteria plan” where employees may contribute to the HSA on a pre-tax basis through the cafeteria plan by salary reduction. Therefore, virtually all employer HSA contributions are subject to the §125 cafeteria plan nondiscrimination rules (rather than the §4980G comparability rules) because almost all employers permit employees to make pre-tax HSA contributions through payroll. It is relatively easy for employers to satisfy the Section 125 nondiscrimination rules. The primary requirement is that employers satisfy the “uniform election” component of the contributions and benefits test. This generally requires that employers provide at least as generous HSA contributions for non-highly compensated participants as made available for highly compensated participants. That "uniform election" test allows employers to categorize employee groups based on whether they are "similarly situated" to permit categories of participants with reasonable differences in plan benefits. I would consider it fair to treat new hires differently because they are not similarly situated to those who are employed/participating on the one-time HSA contribution date for the plan after OE. More discussion: https://www.newfront.com/blog/employer-hsa-contributions Here's a couple useful cites: Prop. 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)…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). Prop. Treas. Reg. §1.125-7(e)(2): (2) Similarly situated. In determining which participants are similarly situated, reasonable differences in plan benefits may be taken into account (for example, variations in plan benefits offered to employees working in different geographical locations or to employees with family coverage versus employee-only coverage).

I would view this in the other direction--meaning the employer should take steps to immediately remove all §213(d) expenses from the LSA. And also look for a new LSA TPA for not flagging the issue! I suppose in theory you could offer COBRA for the LSA, but it is not clear how that would operate given (as you noted) there are health and non-health components to the plan. I think you could treat it like an EAP and make all types of benefits (including non-medical) available through COBRA, or try to segregate a medical-only component that is accessible through COBRA. I'm doubtful the TPA could do that, but in theory it could work. To me that would be the least of the concerns, though. Think of all the issues with the LSA that could not be readily addressed: ERISA plan doc/SPD HIPAA privacy/security PCORI fees §105(h) nondiscrimination ACA reporting ACA integration to satisfy market reform provisions HSA eligibility Multiple CAA potential issues So I would recommend against trying to shoehorn a COBRA approach into this, and instead reverse course on the medical benefit inclusion asap. More details: https://www.newfront.com/blog/lifestyle-spending-account-compliance-considerations Slide summary: 2025 Newfront Fringe Benefits for Employers Guide

Almost never. Pretty much all plans offer coverage to spouses/children (and sometimes domestic partners). But the ACA does not require offering coverage to a spouse (it requires only the full-time employee and children). So it can be done without penalty exposure.

These are often structured as spousal surcharges. As you noted Peter, they are close to unenforceable. It is nearly impossible to verify whether an employee’s spouse has access to other coverage. Without the teeth of any effective audit potential, these generally need to be run on the honor system—which can lead to employee fraud issues. More discussion: https://www.newfront.com/blog/conditional-offer-coverage-spouses-2 That's part of the reason spousal incentive HRAs (SIHRAs) have become a more popular alternative lately. That carrot of that approach is instead to reimburse employees for cost-sharing amounts incurred under the spouse's plan. I consider it a superior approach. More discussion: https://www.newfront.com/blog/ten-spousal-incentive-hra-compliance-considerations

I don't think you're missing anything. The IRS could always audit and find it, but it would be quite difficult because (as you said) there is no W-2 reporting of the health FSA. In theory it would have to involve review of paystubs or interaction with the employer to confirm. But as noted above, there are many aspects like this in tax liability where it would be difficult to discover the issue. A rolling 6% excise tax on the ineligible HSA contributions that could apply is also no joke.

No, that's a common plan design structure I've seen.

Offering health coverage to your employees and their standard dependents is of course a single employer plan. But at what point does the offering become a MEWA when offering to anyone else? For example, would it still be a single employer plan if it covered employee's neighbors? At some point there's line in the sand, we just don't know exactly where it is. For example, it's generally understood that offering coverage to a independent contractors would create a MEWA because they are not employees/dependents of the company. Is it really any different when covering an unrelated surrogate? It's hard to say. More discussion if you're interested: https://www.newfront.com/blog/addressing-employee-health-plan-exception-requests1 Here's the main cite: ERISA §3(40): (40) (A) The term “multiple employer welfare arrangement” means an employee welfare benefit plan, or any other arrangement (other than an employee welfare benefit plan), which is established or maintained for the purpose of offering or providing any benefit described in paragraph (1) to the employees of two or more employers (including one or more self-employed individuals), or to their beneficiaries... Here's a helpful reference: https://www.americanbar.org/content/dam/aba/events/employee_benefits/technicalsessions/2005_dol.pdf A follow-up question was asked regarding an arrangement offering or providing health benefits maintained by one employer and covering common law employees of the employer and several independent contractors. DoL staff indicated that they would generally read the reference to self-employed individuals in section 3(40) as resulting in such arrangements being MEWAs.

Interesting, that seems very MEWA-ish to me. But I don't doubt that you're right it occurs in the field. I just wonder what they're argument is for avoiding MEWA status. Making it taxable should have no relevance from a DOL/MEWA perspective. Have you asked any of these vendors their position on the issue?

Yeah for medical there are the ACA prohibition of rescission rules to grapple with. In short, those do not permit a retroactive termination of coverage unless the employer can show fraud or intentional misrepresentation of a material fact--plus the plan has to provide 30 days' advance written notice. There are some exceptions (e.g., late divorce notification, COBRA processing delays), but generally employers will avoid attempts to retro term medical in general because in most cases it's not permitted. Even where there is an argument the recission is permitted, it's a practical challenge to recover paid claims from an employee. State wage withholding law probably won't allow repayment through payroll without the employee's authorization, and without sending the employee to collections (always fun for employee relations) there's not a great way to recover when the employee ignores a demand for repayment. Most often this issue comes up where an employee loses eligibility (e.g., reduction in hours, termination of employment), but the employer mistakenly fails to timely process their termination of active coverage (and offer COBRA). The ACA prohibition of rescission rules are clear in that scenario that a retro term is not permitted. More discussion if you're interested: https://www.newfront.com/blog/terminated-employees-not-terminated-coverage-2

Understood. I still don't fully understand the facts here with how the loss of eligibility occurred per my note above, but I think I get enough of it to weigh in. I always advise that an ineligible individual has to be removed from the plan whenever notice is provided, even if notice is provided late. I do not advise that an employee has to continue paying the employee-share of the premium for an ineligible individual once removed from the plan. I view that as an ultra-purist reading of those §125 irrevocable election rules--and perhaps a violation of applicable state wage withholding law. So I would recommend moving this to the employee-only payment tier once the ineligible dependent is removed. Note that if I understand the scenario correctly, this isn't a HIPAA special enrollment timing window issue--that applied to the dependent's initial enrollment based on adoption or placement for adoption. This is a Section 125 cafeteria plan question you're raising on the employee's failure to timely make permitted election change event request based on a loss of dependent eligibility change in status even (presumably set at a 30-day window in the plan terms).

Interesting. I assume the child was placed for adoption with the employee, and that's why they were initially eligible? And then the employee ultimately did not go forward with the adoption? I haven't heard of this "nonsuit" concept you raise here. If that's correct, I would consider this similar to the issues we see with late notifications of divorce. The employee/dependent have 60 days to notify the plan of the loss of eligibility to preserve the dependent's COBRA rights. Confirm with the carrier, but generally the loss of coverage will be prospective. More details: https://www.newfront.com/blog/event-divorce-terminate-ex-spouse-2 Slide summary: 2025 Newfront COBRA for Employers Guide

Yes, HSAs are an individually-owned account and therefore can be opened outside of the employer relationship. There are plenty of HSA custodians out there willing to take your money, including many of the big name financial houses. That can be done without any employer involvement. As you noted, the employee will have to be enrolled in an HDHP and meet the other HSA eligibility requirements to establish and contribute to an HSA. Here's a detailed overview of the HSA eligibility rules: https://www.newfront.com/blog/the-hsa-eligibility-requirements-part-1 https://www.newfront.com/blog/the-hsa-eligibility-requirements-part-2 Here's a quick slide summary: 2025 Newfront Go All the Way with HSA Guide

Yes, what you're referring to is a spousal incentive HRA (SIHRA). These are a relatively new concept, but in the past couple years they have become an increasingly common employer offering. Lots more details here: https://www.newfront.com/blog/ten-spousal-incentive-hra-compliance-considerations Quick slide summary: 2025 Newfront Fringe Benefits for Employers Guide

Yeah I agree--COBRA would satisfy the A Penalty to offer MEC, but likely not the B Penalty to offer affordable coverage.

I would recommend correcting the tax situation for 2025 retro to 1/1 by recharacterizing the employee-share of the premium as after-tax, imputing income for the employer portion for the DP's coverage, and making any HRA reimbursements for the DP taxable. The employer had no reason to know of the issue for prior years at the time, so I would leave that as is--perhaps noting that it could be considered an individual income tax issue to address with the personal tax adviser. More details: https://www.newfront.com/blog/imputed-income-for-domestic-partner-health-coverage 2025 Newfront Health Benefits for Domestic Partners Guide

Agreed with Leevena. Look-Back Measurement Method Under the look-back measurement method, ongoing employees' status as full-time or part-time is based on the results of the prior-year measurement period. An employee who worked full-time in the prior measurement period will will retain full-time status through the end of the stability period. The stability period generally matches the plan year. So the employer would generally need to continue offering medical through the end of the plan year to avoid potential ACA employer mandate penalties. Monthly Measurement Method Under the monthly measurement method, each month stands for itself. Once the employee drops below 130 hours of service in a given calendar month, they lose full-time status. So the employer could drop the employee from coverage upon the first month the employee works part-time hours. If They're Unsure If they're not aware of which measurement method they are using to determine employees' full-time status, I recommend that they check with their ACA reporting vendor. The ACA reporting vendor will be reporting on employees' full-time status via one of those two methods on the Forms 1094-C and 1095-C. And if they're using the look-back measurement method, the vendor should have a dashboard to monitor the measurement/administrative/stability period determinations of full-time status. COBRA In either case of losing coverage at the end of the stability period or immediately upon working part-time, the loss of coverage will be a COBRA qualifying event. More details: The ACA Look-Back Measurement Method The ACA Monthly Measurement Method Loss of Health Plan Eligibility Caused by Move to Part-Time Work Slide summary: 2025 Newfront ACA Employer Mandate & ACA Reporting Guide