Q&A: Why Employee Benefits Management Matters More Than Ever
Employee benefits are increasingly playing a crucial role in organizations’ business strategies, particularly when it comes to elements such as employee recruiting and retention. So we sat down with Karen McLeese, VP of Employee Benefits Regulatory Affairs for CBIZ to discuss the regulatory impacts of COVID-19 on companies’ employees, benefits and bottom lines.
Here are the highlights of our Q&A session.
- As “creative” as benefits plans can get, there are compliance issues to be aware of, more so now than ever with all of the regulatory changes made in response to COVID-19. So what should business decision makers understand?
There have been several COVID-19-related compounding developments that are complicating employee benefits management and compliance. For one, there are several significant employer- and employee-related laws that went into effect for 2020 that could have a bearing on 2021, including:
- Families First Coronavirus Response Act (FFCRA)
- Coronavirus Aid, Relief and Economic Security (CARES) Act
- COVID testing leave laws
- Emergency paid sick leave
- Emergency family leave
- State and local leave laws (some emergency, some permanent)
- Temporary relaxation of cafeteria plan elections, changes, rules
- Outbreak period disregarded for COBRA, HIPAA and other elections
These laws have provided opportunity and angst for employers. There is the issue of first-dollar coverage for coronavirus testing, which was implemented immediately. There will be first-dollar coverage of vaccines. Layoffs and furloughs also have effects on benefits. For example, continuation of benefits is contingent on whether an employee is terminated or furloughed.
- Sounds like a lot has changed. I can imagine that companies might struggle to keep up with it all, but I also suspect that it’s pretty critical for them to do so. Can you tell us a little about why it’s so important to be on top of these changes?
It's imperative that business owners and leadership teams stay on top of all of these things because, first of all, it's necessary. If an employer does not comply with the terms and conditions of their plans and policies, there’s the risk of litigation, as well as the risk of audits from various agencies, including the Department of Labor (DOL), IRS, Treasury, EEOC, OSHA, etc. Most importantly, it’s simply the right thing to do for your employees – your business’ most essential asset.
- Ok, so I get it; it’s clearly important to stay aware of these compliance issues, but the big question is “How?” Do you have any tips or guidance you can give to our listeners about how they can stay on top of compliance, particularly in 2021?
My number one piece of advice is to know what your plan or policy says. We don’t have them to decorate our bookshelves; they must be treated as living, working documents. Second, you want to understand and keep up with the ever-changing legal standards and best practices that exist. And there are a number of ways to do that:
- Regularly check (bookmark) websites for updated standards, including DOL, Treasury, IRS, OSHA and the CDC, as well as state and local departments of health and other governing agencies.
- Get involved with and follow industry associations.
- Attend virtual trainings, conferences and seminars.
- Designate a compliance officer.
- Ask experts.
- A lot of these changes are coming at the same time as a busy time of year for benefits – open enrollment. What ramifications do things like remote work and legislative updates have for enrollment?
One thing I haven't mentioned yet is the issue of layoffs or furloughs over the course of this year, which impacts hours worked and compensation, both of which may in turn impact an individual's eligibility with any type of coverage, but particularly health coverage. Employers who are subject to employer shared responsibility (employers with 50+ employees) have to determine who is a full-time employee and who is not for purposes of reporting. That reporting is important because it determines whether an employer could be at risk for a potential penalty if coverage is not offered to full-time employees. As a reminder, the Affordable Care Act does not define who is eligible for health coverage nor does it require that an employer offer health coverage. However, it does put an employer who employs 50+ employees at risk if coverage isn't offered to full-time employees.
So what does that mean for what’s happened in 2020? If an employee had reduced hours in 2020 and the employer is using a look-back method to determine full-time status and if the employer's health plan reflects a similar definition, employers could find that employees who would otherwise be eligible for health coverage are not eligible because they didn't work sufficient hours in the look-back period. Some employers may be thinking, “but I want that person to be eligible for health coverage because they’re a full-time employee.” In that case, the employer may need to think about amending its definition of eligibility or health coverage for this year. Some health plans don't use the look-back methodology for determining eligibility for health coverage; they use a more traditional definition of regularly scheduled to work X. So they may not be as impacted with regard to what happened in 2020. And what actually may work in the employer's favor is that they may have fewer people to put down as full time when they fill out their IRS employer shared responsibility forms in 2022 because people wouldn't have qualified as full time for the 2021 year.
It's also important to remember other plans – retirement plans, life insurance, disability, etc. The eligibility language and the benefit levels may be impacted by compensation.
For more Q&A with Karen on this topic, listen to the full podcast, “Why Employee Benefits Management Matters More Than Ever.”
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