Compliance Corner: FAQs

Assuming that the coverage is being paid for by the employee on a pre-tax basis, then no. Unfortunately, the financial status of the employee would not be a qualifying event.   Section 125 restricts the ability of an employee who has made a pre-tax election to make changes to that election in the middle of a plan year. Basically, an individual's election is irrevocable (unchangeable) during the plan year unless the individual experiences a recognized Section 125 midyear status change event

The short answer is probably not. Employers often cannot automatically cancel medical benefits just because the employee changes to a part-time position. The long answer, which we will explore, depends on factors such as employer size, the measurement method being used, and employee tenure. Employer Size As a refresher, the ACA’s employer mandate applies to employers with 50 or more employees (including part-time employees or full-time equivalent employees) in the previous calendar year. If the

Likely no. Employer STD policies are typically not sufficient to meet state PFML requirements. While STD policies are designed to provide income replacement for an employee’s own serious health condition, PFML programs provide income replacement for a much broader scope of leave reasons. Additionally, PFML program requirements are state-specific, and a basic STD plan typically will not satisfy each state’s unique requirements.   Statutory PFML programs generally apply to an employee who wo

No, the alternative method for distributing Form 1095-B and/or 1095-C only applies to federal reporting requirements. States with their own individual mandate reporting requirements (CA, DC, MA, NJ, and RI) have not extended similar relief at this time. Therefore, employers with employees subject to state individual mandate reporting requirements should continue distributing the required statements to employees. For more information on these state reporting requirements, please ask your broker

Provided you are HSA-eligible for the entire calendar year, you can contribute up to the applicable IRS annual family HSA contribution limit to an HSA. If you are 55 or older at year-end, you can also contribute an additional $1,000 catch-up contribution. Your domestic partner, if HSA-eligible, can also contribute the family maximum (and, if applicable, a catch-up contribution) to their own HSA. To review, to be eligible to make (or receive) HSA contributions, an individual must: Be covered by

As a refresher, beginning with the 2026 tax year, the maximum annual election for dependent care FSAs (often referred to as DCAPs) increased from $5,000 to $7,500 (or from $2,500 to $3,750 if married filing separately). This is an optional increase and employers are not required to utilize the increased amount. While the increase is welcomed by employees, employers need to be mindful of Section 129 nondiscrimination rules that apply to DCAPs. DCAPs often fail nondiscrimination testing because h

No, an increase in marketplace premiums, including a loss of a subsidy, will not create an allowable election change event for an employee to enroll in the employer plan midyear.   As a refresher, once the plan year begins, the only way to change a pre-tax election is if the employee or dependent experiences an allowable midyear election change event (often called qualifying life events or QLEs). A key component of these rules is that a change in eligibility needs to occur. Since individua

Employers should consider all the facts and circumstances surrounding the enrollment change request before taking any action. The timing of the request related to the plan year will influence what the employer may allow. Requested Change Before the Plan Year Begins Employers can allow election changes after open enrollment ends and before the coverage effective date (e.g., the new plan year). Employers should have a policy in place for how they will handle these requests. Allowing changes after

Yes! Generally, it is not advisable for an employer to offer group health coverage to independent contractors. However, before addressing the details of why health coverage should not be offered to independent contractors, it is important for an employer to ensure they have properly classified their workers as employees or independent contractors. Employers who utilize independent contractors should work closely with their employment counsel to ensure proper worker classification. At a high lev

As a refresher, age-banded rates are set by the carrier to cover a specific premium for each age group. These rates are applicable to the small group market, where size may vary based on state rating rules. In contrast, composite rates are set by the carrier based on demographics and will be consistent across enrollees, meaning rates will vary by enrollment tier but not age. We do not recommend that employers create composite rates where the carrier is billing on an age-banded basis. This is be

Spousal surcharges and carve-outs are becoming more popular as employers try to implement cost-saving methods in the face of rising renewal costs. Some employers implement a spousal surcharge, which sets out to deter enrollment of spouses by imposing higher spousal premiums, while others implement a spousal carve-out that renders spouses ineligible to enroll if certain conditions are met. Both of these strategies come with compliance concerns, and employers should work closely with their own le

In general, when maintaining group health plan records, an employer must consider ERISA, HIPAA, and ACA guidelines. Included below is a high-level overview of retention requirements related to these applicable federal laws. ERISA The recommendation is to maintain ERISA-related documents for eight years. Records required to be maintained under ERISA include documents such as vouchers, worksheets, receipts, applicable resolutions, claims records, plan documents, summary plan descriptions, copies