Whenever an employer offers a group health plan, it's imperative to properly administer all of the health plan notices required under the DOL, PPACA, ERISA, COBRA and HIPAA. Failure to comply with these directives can lead to costly penalties.
So when it comes to your employee benefits communications this open enrollment season, how confident are you in providing your employees (and their dependents) with all of these legally-required notices in the time and manner in which the law specifies?
Savvy employers can generally minimize both the administrative burden and cost of sending these notices by simply including them with the health plan enrollment materials they distribute each year. Although yearly distribution is not required for most federally mandated health plan notices, employers should consider including some of them with enrollment materials anyway. Doing so may cure any previous failure to give the notice, and it demonstrates an employer’s good faith effort to apprise plan participants of their rights.
Here is a rundown of the notices you might wish to include in your open enrollment communication efforts. Note that these notices, in general, apply to all types of group health plans, including both fully-insured and self-funded group health insurance plans. That said, some of the requirements vary by the type of health plan offered as well as the size of your company.
Summary Plan Description (SPD)
One of the main documents you must provide employees, under ERISA, is a Summary Plan Description (SPD). This document must include specific information about what the plan covers, how it operates, how employees can take advantage of their benefits once they’ve enrolled, how they can file a claim, and finally, the process for appealing denied benefits.
This notice must be sent to each plan participant and to each beneficiary receiving benefits under the plan as follows: For existing plans, a new participant must receive a copy of the SPD within 90 days after becoming a participant, and a beneficiary must receive a copy within 90 days after first receiving benefits. For newly created plans, an SPD must be distributed to participants and beneficiaries within 120 days after the plan is first instituted. Additionally, a plan sponsor must provide an SPD within 30 days of it being requested by a plan participant.
When distributing an SPD, employers must take "measures reasonably calculated to ensure actual receipt of the material by plan participants and beneficiaries." For example, mailing them to each participant or beneficiary by first class mail is acceptable, but simply posting a copy in the break room or other area frequented by participants is not acceptable.
Summary of Benefits and Coverage (SBC) and Uniform Glossary
The Summary of Benefits and Coverage (SBC) seems, on the surface, very similar to the SPD. They are not the same document, however, and both need to be provided to your employees. Your SBC is a standardized, 4-page document which contains a short description of all of your benefits in plain language that is easy for anyone to understand. It's purpose is to provide individuals with standard information so they can compare medical plans. The Uniform Glossary provides definitions of commonly used terms in health insurance coverage such as "deductible" and co-payment". This notice must be sent to any participants who enroll or re-enroll during an open enrollment period or through a QLE (Qualifying Life Event).
An SBC may be provided in either paper or electronic format. It may be hand delivered or mailed. It may also be emailed or posted on the Internet after obtaining an employee's agreement to receive the SBC electronically. If posted on the internet, employees must be notified about where the SBC is posted and that the SBC is available in paper form, free of charge, upon request.
Summary of Material Modifications (SMM) and Notice of Modification
An SMM must be provided to every plan participant covered under the plan when "material modifications" have been made to a plan other than at the time of renewal. There are different types of changes that establish a material modification. Material modifications include amendment provisions that establish new benefits, take away existing benefits, narrow or expand the circumstances under which benefits are paid, and terminate the plan entirely. If the amendment changes the information required to be disclosed in an SPD or SBC, an SMM should be distributed.
An SMM notice is required to be provided to all plan participants, including those on COBRA, at least 60 days prior to the date that the health plan change will become effective. The delivery of the SMM must be in a manner that will result in actual receipt by the participant or beneficiary. U.S Department of Labor (DOL) regulations approve of distributing SMMs by first, second, or third class mail. SMMs can also be delivered by hand or electronically if the DOL’s electronic disclosure rules are be met.
The CHIPRA (Children's Health Insurance Program Reauthorization Act) notice informs employees of potential opportunities for group health plan premium assistance opportunities through Medicaid and the Children's Health Insurance Program (CHIP). This notice must be sent to all employees, regardless of their plan enrollment status, who reside in states in which the premium assistance is available.
This notice must be provided on an annual basis prior to the start of the plan year, and may be sent to employees along with health plan eligibility information and enrollment packets, open enrollment materials, or the plan’s SPD. It should appear as a separate notice to ensure that employees will become aware of the significance of the notice. The notice may also be sent by first class mail, or if furnished electronically, can be provided as long as the requirements of the DOL are satisfied.
HIPAA Special Enrollment Rights Notice
HIPAA (The Health Insurance Portability and Accountability Act) offers eligible employees additional opportunities to enroll in a group health plan if they lose other coverage or experience certain life events, commonly referred to as Qualifying Life Events (QLEs). The law also prohibits discrimination against employees and their dependents based on any health factor they may have, including prior medical conditions, previous claims experience, and genetic information.
The Special Enrollment Rights Notice describes the group health plan’s special enrollment rules including the right to enroll within 30 days of the loss of other coverage or in the case of marriage, birth of a child, adoption, etc.
Employers must furnish this notice of Special Enrollment rights to eligible employees at or before the time they are first offered the opportunity to enroll. The special enrollment notice may be provided by including it with other benefit enrollment materials provided at the time of benefit enrollment eligibility. Even if an employer does not distribute written application materials, the special enrollment notice must be distributed at or before enrollment. In the absence of written enrollment materials, the general notice "must be provided by the earliest date following a request for enrollment that the plan, acting in a reasonable and prompt manner, can do so."
HIPAA Privacy Notice
HIPAA's Privacy Notice describes, in detail, how medical information about an employee or covered dependent may be used and disclosed, and how the covered plan participant can get access to that information.
If an employer sponsors a fully-funded group health plan and does not maintain or receive Protected Health Information (PHI) outside of enrollment or summary health information, it is exempt from having to issue this notice. (In that case, the insurance carrier issuing the policy is responsible for creating and distributing the notice to participants.) On the other hand, if an employer has a self-insured health plan or maintains or receives PHI other than enrollment or summary health information, it must comply with the notice requirements.
A single notice to a health plan’s named covered individual is effective for all dependents covered through that insured employee. This means that a separate notice of privacy practices does not need to be provided to each spouse or dependent covered under the plan. In addition to the general notice requirement, all covered entities must make the notice of privacy practices available to anyone who requests it (not just current enrollees).
The notice must be provided upon an individual's enrollment in the plan, within 60 days of a material change to the notice and on request by any person. In addition, every three years the employer or insurer must also notify individuals who are covered by the plan that the notice of privacy practices is available, including how to obtain the notice. Many covered entities simply send the notice of privacy practices at least every three years (assuming no material changes have been made), rather than send a notice that the notice of privacy practices is available.
If a covered entity maintains a website, the notice must be posted on that website (and the notice must be available electronically through the website). To meet the general notice requirements outlined above, the notice of privacy practices may be provided by e-mail, so long as the recipient has agreed to receive an electronic notice. In addition, the notice may be included with an SPD or with open enrollment materials (so long as either is distributed timely and properly). The notice may also be distributed by first-class, second-class or third-class mail.
Availability of Health Insurance Marketplaces Notice
Under the PPACA, employers covered by the Fair Labor Standards Act (FLSA) are required to provide a notice to employees about the health insurance marketplace/exchanges of the state(s) in which they operate. The notice must inform the employee:
- Of the existence of the marketplace/exchange including a description of the services provided by the marketplace, and the manner in which the employee may contact the marketplace to request assistance.
- That they may be eligible for a premium tax credit, under section 36B of the Internal Revenue Code, if the employee purchases a qualified health plan through the Marketplace. (This is only in cases where the employer plan's share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs.)
- That if they purchase a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.
Current employees must receive the notice in writing. New hires must receive the notice at the time of hire. The notice may be distributed electronically or by hard copy. There is no requirement to obtain an employee's signature; however, an employer may want to track delivery and receipt of the notice. Employers are not required to provide a separate notice to dependents or other individuals who are or may become eligible for coverage under the plan but who are not employees.
COBRA (Consolidated Omnibus Reconciliation Act) gives employees the right to take over and pay premiums to keep group health insurance they would otherwise lose in the event of a loss or job or qualifications for coverage (e.g. loss or hours). The law requires that each plan participant (and any covered spouse) be notified of their COBRA rights when coverage under any health plan begins (this is referred to as the initial COBRA notice).
Providing this initial notice can prevent certain COBRA administration problems. For example, COBRA allows a plan to require participants (or others) to provide timely notices of certain events, such as a divorce. DOL regulations stipulate, however, that plans cannot deny COBRA rights based on failure to provide notice of an event if the participant and his or her covered spouse have not received an explanation of this notice requirement in the notice required when coverage begins or in the SPD. In many cases, employers do not know (or do not have documentation showing) whether an individual received this explanation as required. To remedy those situations and to be certain that participants and spouses have the latest information on the conditions they must meet to obtain COBRA coverage, some employers send the initial COBRA notice to all participants (and their covered spouses) every year.
Medicare Part D Creditable (or Non-Creditable) Coverage Notice
This annual notice must be provided to any participant (employee or dependent) who has coverage under Medicare Part A or coverage under Medicare Part B and who lives in the service area of a Medicare Part D prescription drug plan. While employers usually know whether an employee is eligible for Medicare, employers often do not have this information regarding dependents. As a result, providing the notice to all participants ensures compliance.
Note that this notice should be provided by October 15. This is because the notice must be provided before the Medicare Part D annual election period, which begins on October 15 each year. If the SPD is reissued each year, the notice can be included in the SPD. Otherwise, a separate notice should be included in your annual open enrollment and new-hire materials.
Grandfathered Plan Status Notice
Plans that were in effect prior to the enactment of the PPACA are exempt from some of the insurance market reforms under the ACA, so long as they retain “grandfathered plan” status. One of the requirements to retain grandfathered plan status is including certain disclosures in SPDs and other plan materials (such as annual open enrollment materials) provided to participants describing the plan’s benefits. The disclosure must state that the plan is grandfathered and must provide contact information for questions and complaints.
Internal Claims and Appeals and External Reviews Notice
The Patient Protection and Affordable Care Act (ACA) requires group health plans and health insurers to implement an “effective” process for appeals of coverage determinations and claims, including an internal claims appeal process and employee notification.
The appeals process must include, at a minimum, the following: an established internal claims appeal process; a notice to participants, in a “culturally and linguistically appropriate manner,” of available internal and external appeals processes, including the availability of assistance with the appeals processes; and a provision allowing an enrollee to review his or her file, to present evidence and testimony as part of the appeals process, and to receive continued coverage during the appeals process.
Women's Health & Cancer Rights Act of 1998 Notice
The WHCRA (Women’s Health and Cancer Rights Act of 1998) requires group health plans to make certain benefits
available to participants who have undergone a mastectomy. In particular, a plan must offer mastectomy
patients benefits for:
- All stages of reconstruction of the breast on which the mastectomy was performed
- Surgery and reconstruction of the other breast to produce a symmetrical appearance
- Treatment of physical complications of the mastectomy, including lymphedema
The WHCRA requires annual distribution of a notice to all participants and beneficiaries in a group medical plan advising them of their rights to post-mastectomy breast reconstruction. If the SPD is reissued each year, the notice can be included in the SPD. Otherwise, a separate notice should be included in your annual open enrollment and new-hire materials.
Go Above and Beyond: Make Sure Employees Understand Their Benefits
It's one thing to maintain compliance by meeting all of your legal documentation requirements; that’s simply what’s expected of you as a responsible employer. However, it is equally important to make sure all of this information is easy to understand and accessible for your employees. This goes beyond merely adhering to legal standards, and shows that you care about your workers and their access to health care.
In this regard, we strongly encourage you to work with a benefits broker who offers communications expertise as a core competency. For this very reason, the JP Griffin Group specializes in human behavioral insights, social sciences and behavioral economics to promote evidence-based practices and solutions to heighten employee understanding and engagement of these complex topics.
A small sampling of these services and solutions include:
- Utilization of unique communication styles and mediums to reach both the technically-challenged as well as the digitally native
- Utilization of unique communication styles and mediums to reach multi-cultural, multi-generation and geo-graphically dispersed workforces
- Deployment of disruptive and attention-grabbing presentation techniques to more fully engage audiences
- Design of inviting yet comprehensive benefit collateral with aesthetically-pleasing layouts and easy-to-read copy
- The use of metaphors, analogies and rich examples to aid in the understanding on complex benefit topics
- Deployment of decision tools and side-by-side comparisons to aid in the decision making/benefit selection process
DISCLAIMER: Always Check With an Attorney
Before sending out any relevant benefit documents, be sure to take the time to have them reviewed by an attorney, to ensure that they are compliant and contain all necessary information. This is an easy step to overlook, but it is actually the most important, because it can save you from major legal hassles down the road. Be sure to find out what you need to do in order to be a compliant communicator.
The JP Griffin Group - An Invaluable Resource
If you are looking for some advice prior to contacting an attorney and have a tough HR or benefits issue that you need some help with, contact us. We're equipped with vast HR knowledge and experience to help you navigate these tricky situations, and have powerful resources available to help with your circumstances.
Furthermore, we encourage you to reach out if you simply need access to sample notices or templates. We'd love to share our approach to these compliance obligations with you.