In any given year, our team receives hundreds of questions about mid-year benefit changes. Before the COVID-19 pandemic, our answers have followed the same approach: first, look at what your benefit plan says about whether and when mid-year changes are allowed, then look at your cafeteria plan to see if an employee can change their pre-tax election if the mid-year change in coverage results in a change in price.
This year, the answers are more complex as employers furlough employees and then bring them back, and as government agencies and insurance carriers have provided wave after wave of guidance that change the usual rules. In some cases, the guidance is optional and employers can choose whether or not they want to offer certain types of benefit flexibility to employees. In other cases, the guidance is mandatory, requiring that employers make changes to their usual practices.
Here are the top 3 questions we have received relating to health benefit enrollment in recent months:
As many employers bring employees back to work after a furlough, questions swirl around benefits that were lost due to loss of eligibility or, more typically, failure to pay.
Unfortunately, there is no one-size fits all answer. We recommend that employers first look at their benefit plans to see if there is any guiding language about returning to work after a leave of absence. If their benefit plans are silent (which is often the case), we recommend reaching out to the carrier or third-party administrator (TPA) to receive guidance about how they are administering enrollment after returning to work post-furlough. In our experience, this doesn’t usually end the inquiry because the carrier or TPA will often say “It’s up to the employer!”
So, what’s an employer to do if it truly is up to them? One option is to treat the returning employee as a “rehired” employee and apply your plan’s rehire rules. See this recent article on rehire clauses.
If the plan doesn’t have rehire rules, another option is to allow them to re-enroll in the plan effective the first day following their return to work. This is the approach we are seeing many employers take and as it favors employees, employers are unlikely to see pushback.
A more rigid approach would treat the employee as a new hire and apply a waiting period or require the employee to wait until open enrollment. We haven’t had many employers taking these more rigid approaches; most are letting their employees back on the plan shortly after they return from the furlough.
Pre-COVID-19, an employee enrolling under Health Insurance Portability and Accountability Act (HIPAA) special enrollment rules usually had 30 days in which to request enrollment, or 60 days in certain limited cases. However, due to COVID-19, those 30/60 day deadlines are now tolled for the duration of the “Outbreak Period,” which is the period beginning March 1, 2020 and ending 60 days after the announced end of the COVID-19 national emergency. Our earlier article introduced this extended deadline among others.
This means that if an employee has a HIPAA special enrollment event – e.g., getting married or having a baby – they can miss your plan’s deadline and still enroll later as long as they meet the extended deadline. For example, let’s say that the end of the COVID-national emergency is announced on December 31, 2020, which means the Outbreak Period lasts from March 1, 2020 through and including March 1, 2021. If someone has a HIPAA special enrollment event any time during that Outbreak Period, their window to elect HIPAA special enrollment doesn’t end until 30 days (or 60 days as the case may be) after March 1, 2021. So, in this example, an employee could get married today (July 20, 2020) and submit their HIPAA special enrollment application anytime on or before March 31, 2021 to add their spouse to coverage
Since HIPAA special enrollment typically is prospective (going forward only), this should be relatively straightforward to administer. Continuing the example above, even if the newly married employee waits to enroll their spouse until March 15, 2021, the spouse’s coverage would be activated April 1, 2021.
However, in the case of the birth of a child, HIPAA special enrollment is retroactive (going back) to the date of the baby’s birth, so theoretically retroactive enrollments beyond the usual 30 days could be required. Most parents try to get coverage for their newborns right away, so it will be unusual for an employee asks to retroactively enroll a child more than 30 days after the child’s birth. That said, it could happen. In the example above, let’s say an employee has a baby today (July 20, 2020) and waits until March 15, 2021 to submit a HIPAA special enrollment application to add the child to coverage. Technically, the plan would be required to retroactively enroll the child back to July 20, 2020, the date of birth. Again, this scenario is unlikely to happen assuming parents will seek coverage for their newborns as soon as possible.
Note: governmental employers are strongly encouraged, but not technically required, to offer the extended HIPAA special enrollment deadlines.
Pre-COVID-19, health insurance carriers typically only allowed mid-year enrollments if an individual had a HIPAA special enrollment event. However, during the COVID-19 pandemic many carriers are allowing mid-year enrollment for nearly any reason. Those carriers doing this typically provide a “window” of time in which these “mid-year-enrollment-for-any-reason” signups can take place and some carriers’ windows have already closed for the year.
Employers are not required to allow employees to enroll at any time during the window, even if the carrier would allow it. It’s optional. However, many employers are offering this option so that employees have coverage during the pandemic if they want it.
If an employer chooses to offer this mid-year enrollment option, the employer can also amend its cafeteria plan to allow employees to pay for that coverage on a pre-tax basis. Pre-COVID-19, if an employee enrolled in coverage mid-year, they could only elect to pay for that coverage on a pre-tax basis if they experienced a “qualifying event,” such as being a new hire, a HIPAA special enrollment event, or a change in other employer coverage, just to name a few. However, the IRS recently relaxed its cafeteria plan rules for 2020 to allow employers to, in turn, allow employees to pay for coverage gained mid-year on a pre-tax basis, even if no qualifying event occurred. See our earlier article on this topic for more information.
Sarah provides employer-focused guidance on human resource matters. With an emphasis on employee benefits and the Affordable Care Act, she distils the complexity of employment laws into understandable action items that meet a client’s business goals.
Sarah provides employer-focused guidance on human resource matters. With an emphasis on employee benefits and the Affordable Care Act, she distils the complexity of employment laws into understandable action items that meet a client’s business goals. During previous private practice experience, Sarah handled numerous complex benefit matters, including the transition of benefit plans in large corporate acquisitions, de-risking solutions in pension plans, contested health plan claims, DOL and IRS audits and the implementation of ACA-compliant health plan solutions. Sarah graduated from University of Wisconsin Law School, with a Bachelor of Arts degree from Grinnell College.
A recent survey by the Society for Human Resources Management (SHRM) reported 94% of leaders feel employee engagement is an important or very important workforce challenge. An engaged workforce increases operational income by over 19%, while a disengaged workforce can drain over 34% of an organizations’ operational income. Additional risks of low engagement can be seen in increased turnover, low customer satisfaction ratings and even increased employment litigation.
During the White House’s Summit on Working Families on June 24, 2014, President Obama indicated he was signing a presidential memorandum requiring every federal agency to address flexible work schedules and give employees the right to request such schedules. Absent what could be a dramatic increase in workplace flexibility for federal employees, it is undeniable that the demand for flexibility and work-life balance is on the rise.
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