Sadly, one of your employees has decided to move on for a new opportunity. Now that they have left, you have no further responsibilities for benefit plan notices, right? Nope, there are still several required notices for which you are responsible.
REQUIREMENTS & RECOMMENDATIONS
- COBRA Election Notice –This is sent to all medical, dental, vision care plan, Health Care FSA, and/or HRA, participants – employees, spouses, and children. Timing depends on whether there is a separate plan administrator. Note: this applies to losses of coverage while employed as well.
- Notice of Unavailability of COBRA – If for any reason the qualified beneficiary is not eligible for COBRA this notice must be sent within 14 days of being notified of the event. For example, if a former employee notifies you that their divorce is final, then you must send the Notice of Unavailability to the spouse.
- Notice of Early Termination of COBRA – Sent as soon as practicable following the determination that coverage will termination early. Typically, this would be sent for such events as failure to pay premiums, coverage under another plan or coverage under Medicare.
- Life insurance conversion/portability notice – if you offer group life insurance and/or Accidental Death & Dismemberment insurance, covered employees, spouse and children must be offered the opportunity to convert or port to employee-owned coverage within 30 days of the date of termination.
Oddly, there is no requirement for employers/administrators to send monthly invoices to COBRA beneficiaries. However, it is a good idea to send them as it helps prevent a lot of drama in the event the beneficiary is terminated for failure to pay.
Although the person is no longer employed, you may also need to send the certain documents while they are covered under COBRA. These include: SAR, SMM, Summary of Material Reduction in Covered Benefits or Services, SBC, SBC Notice of Modification, and possibly an SPD, depending on timing and circumstances.
Compliance is hard and willful failure to comply with reporting and disclosure requirements can result in financial penalties. For example, willful failure to provide a:
- CHIPRA notice can result in up to a $119/day penalty for each violation.
- COBRA notices can result in penalties from both DOL and IRS of up to $110/day and $100/day respectively (capped at $200 if multiple qualified beneficiaries).
- SBC can result in a penalty of $1,176/day.
- Forms 1094 and 1095 can result in a $270 penalty per statement/return.
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These are not insignificant penalties and compliance issues can put you on the DOL or IRS radar.
Trinity HR Consulting can help you with a compliance review to help ensure that you are meeting your obligations for these as well as other reporting and disclosure requirements. As well, if you need assistance with developing any of these notices, communicating with employees or carriers about the notices, or developing checklists, Trinity HR Consulting can help.
- Email me at KathleenSholinsky@TrinityHR.net or Trinity at info@TrinityHR.net
- Visit our website at www.TrinityHR.net
- Call us at 865.905.1762 or Toll Free at 877.228.6810
Author: Kathleen Sholinsky, Senior Consultant
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