As open enrollment approaches for the 2019 calendar year, below are some items employers may want to consider:
- Wellness program changes – Many employers change their wellness programs during open enrollment. This is a reminder that even small changes to a wellness program may have significant consequences. For example, if an employer increases wellness rewards, it may impact not only whether a program complies with the 30% test under HIPAA but it may also impact affordability under Code Section 4980H. Making changes to a wellness program structure may also create problems. For example, employers with tobacco surcharges might allow people to avoid surcharges by attesting that they do not use tobacco. However, if an employer decides to require a medical test to prove that somebody is tobacco-free, that may trigger additional compliance requirements under the ADA and GINA. Finally, employers may want to consider whether to take action in response to the ruling in the AARP v. EEOC case which vacates the 30% threshold under the ADA rules as of January 1, 2019. This case may impact wellness rewards for 2019. For more information on that case please see our May 17, 2018 blog “Wellness Rules Under the ADA – Will There Ever Be Certainty?”
- Summary of benefits and coverage (“SBCs”) – As a reminder, SBCs are required to be sent out during open enrollment, at initial or special enrollment, and upon request. Many employers fail to send out the SBC with their open enrollment materials. The purpose of the SBCs is to allow employees to easily compare the options offered under a medical plan. Failing to send out SBCs with open enrollment materials may also result in significant penalties. For more information on SBCs, please see our August 11, 2016 blog “Departments Finally Publish Updated SBC Template and Instructions.”
- Domestic partner benefits – In June 2015, the Supreme Court of the United States decided the Obergefell v. Hodges case, which legalized same-sex marriage in all 50 states. In response to that case, many employers that offered same-sex domestic partner benefits terminated those benefits. In 2017, the Human Rights Campaign announced that for employers to score a 100% on the Corporate Equality Index for 2019, they would have to offer domestic partner benefits to both same-sex and opposite-sex couples starting January 1, 2019. Furthermore, employers would have to announce, by September 1, 2018, that they will offer same-sex and opposite-sex domestic partner benefits effective January 1, 2019 in order to get the 100% score. Offering same-sex and opposite-sex domestic partner benefits may not only help an employer obtain a 100% score on the Corporate Equality Index, but it also may make hiring younger workers, and older workers who do not want to give up Social Security benefits, a little easier. Now is a good time to reconsider offering domestic partner benefits for 2019.
- Premium changes – Making premium changes may affect “affordability” under Code Section 4980H. In IRS Revenue Procedure 2018-34, the IRS announced the 2019 shared responsibility affordability percentage as being 9.86%. Based on the Federal Poverty Limit of $12,140 announced in January of 2018, for the 2019 calendar year, plans using the Federal Poverty Limit Safe Harbor to determine affordability may charge up to $99.75 per month for their lowest-cost employee-only coverage and have that coverage treated as affordable. This is up from just over $96 in 2018. Additionally, don’t forget that in calculating affordability under Code Section 4980H, employers are required to consider certain wellness rewards and other benefits.
- 95% coverage test under Section 4980H(a) applies for 2019 – In calendar year 2019, employers are required to again offer coverage to 95% of their full-time employees and their dependents or be subject to a penalty under Code Section 4980H(a). Large employers may want to comply with this 95% test for all months of 2019 if possible. For more information see our May 26, 2016 blog “When Anything Less than 95% is a Failing Grade: An Update on the Employer Shared Responsibility Penalties.”
- Association health plan – As set forth in our blog of June 21, 2018 “Association Health Plans – A New Frontier?” the Department of Labor published a final rule on June 21, 2018 that allows unrelated employers to participate in a single employer group health plan. Most large employers will probably not participate in association health plans, but small employers may find them an attractive option. The first fully insured association health plans take effect September 1, 2018. Employers interested in joining an association health plan may want to start shopping for a plan as soon as possible. The week of August 20, 2018, the Department of Labor published Association Health Plans – ERISA Compliance Assistance, a series of FAQs about association health plans.