Federal law does not require an employer to provide benefits to employees. However, if an employer chooses to offer employee benefits, it must comply with many legal requirements. Benefits compliance can often be challenging as the requirements are complex and ever changing. NFP provides resources that will help you understand what legal requirements apply to your company's benefit plans and what you need to do to be in compliance.
COBRA – The Consolidated Omnibus Budget Reconciliation Act (COBRA) was passed in 1986 to provide certain former employees, retirees, spouses, former spouses and dependent children the right to temporary continuation of health coverage at group rates.
ERISA – The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that governs employee health and pension plans in the private industry. By establishing standards and requirements with which the plan sponsors must comply, ERISA strives to protect the participants of those plans.
HIPAA – The Health Insurance Portability and Accountability Act of 1996 (HIPAA) places certain requirements on group health plan sponsors and insurers in the areas of portability and privacy/security.
FMLA – The Family and Medical Leave Act of 1993 (FMLA) provides certain employees with up to 12 work weeks of unpaid, job-protected leave a year, and requires group health benefits to be maintained during the leave as if the employees continued work instead of taking leave. HR managers often name FMLA issues as their top headache.
Medicare Part D – Group health plans and individual health insurance policies that offer prescription drug coverage to Medicare-eligible individuals must comply with the following requirements:
Form 5500 – Certain employee benefit plans subject to ERISA are required to file an annual report with the federal government. The Form 5500 and its related schedules satisfy that requirement.
Cafeteria Plans – An Internal Revenue Code Section 125 Cafeteria Plan is a method of allowing employees to pay for qualified benefits on a pre-tax basis. In its simplest form, it is a premium only plan, which allows employees to pay for health insurance premiums before tax. In its most complicated form, an employer may offer employees flex credits to select among various benefits or a cash-out option.
Reimbursement Accounts – The following arrangements are available in a group environment to reimburse employees and dependents for qualified medical expenses.
Flexible Spending Arrangement (FSA) – A Flexible Spending Arrangement (FSA) is typically funded by pre-tax employee contributions through a Section 125 Cafeteria Plan. An employer may also choose to contribute to employee accounts.
Health Savings Account (HSA) – A Health Savings Account (HSA) may be funded by either employee or employer contributions, or both. Employee contributions may be paid pre-tax through a Section 125 Cafeteria Plan or post-tax. Post-tax contributions would be eligible as an above-the-line deduction on the individual's personal tax return.
Health Reimbursement Arrangement (HRA) – A Health Reimbursement Arrangement (HRA) is funded completely by employer contributions. An HRA may not be funded directly or indirectly by employee contributions.
Retirement Plans – Employer-sponsored retirement plans have become a necessity for any employer looking for a competitive advantage when hiring new staff, and a valuable way to reward profitability and hard work. Read More >>
In some cases, an employer-sponsored retirement plan may be the only financial investment an employee makes in their future. Retirement plans allow eligible employees to reduce their immediate take-home salary through pre-tax contributions through a variety of retirement plan options. The employee gets the benefit of reducing taxable income today, while allowing the contributions to grow tax-deferred in a personal retirement account until they are ready to retire. The recent addition of a Roth provision to selected retirement plans also allows the contributions to be made after-tax. This is a desirable feature for younger, more highly paid individuals. Retirement plans can be very affordable to administer and are usually a valuable recruiting tool to attract the best employees, since employers can reward employees by providing a match or profit sharing contribution. Retirement Plans are governed by ERISA, the Employee Retirement Income Security Act of 1974, and are subject to review and guidance by both the Internal Revenue Service and Department of Labor. A Form 5500 is required to be filed annually, and plans are usually subject to annual nondiscrimination testing. Contact your advisor for resources to help you administer and maintain your retirement plan to ensure compliance.
401(k) – Easily the most popular retirement plan, a 401(k) plan can be implemented by companies of all sizes, from sole proprietors and self-employed individuals to large, publically traded firms. 401(k) plans can be customized to include a wide variety of employer contributions, such as a match or profit-sharing contributions.
403(b) – A 403(b) plan functions in much of the same manner as a 401(k) plan, with the exception of who is able to participate in the plan. A 403(b) plan designed for employees of public schools, employees of certain tax-exempt organizations through IRS Code 501(c)(3), and certain ministers. The investments in a 403(b) plan are generally in the form of annuity contracts or mutual funds.
Federal Mandates – NFP Benefits Compliance resources work to stay on top of current federal mandates and provide details and guidance as information is made available.