UBA Partner Firms help employers stay one step ahead by answering their employee benefits compliance questions with timely and accurate answers.
4.24.25 | PCORI FEES FOR FSA
Q. Do groups need to file/pay PCORI fees if they offer an FSA? Do groups have to file twice if group benefits run on a calendar year but the renewal and FSA run on different months? For example, a May 1 level-funded group with a medical plan that runs on a calendar year that has an FSA that runs May 2025 through April 2026. Does the employer need to file twice?
A. In short, an FSA is not subject to the PCORI fee if it is an excepted benefit. This means the employer cannot contribute more than $500 to the FSA (unless it is structured as a match) and employees eligible for the FSA must be eligible for the company's group health plan. If the FSA meets these requirements, no PCORI fee is due.
In the second question, if the FSA is excepted, then no PCORI is needed, regardless of whether it operates on a different plan year. The level-funded plan will need to pay the PCORI fee.
If the employer had an HRA and a level-funded plan (i.e., two self-funded plans), or an FSA that is NOT excepted and a level-funded plan, two PCORI fees are due unless the two plans have the same employer-sponsor and operate on the same plan year.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
4.17.25 | COBRA FOR PREMIUM NON-PAYMENT DURING LEAVE
Q. An employer requires its employees to continue weekly payroll deductions for coverage while they are no leave. The employer offers a four-week grace period before coverage is terminated. If coverage is terminated due to premium non-payment, should the employee be offered COBRA?
A. No. Non-payment of premiums is not a qualifying event under COBRA. If an employee fails to timely pay the premiums as required by the plan and the employer's policy, coverage can be terminated and COBRA is not offered.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
4.10.25 | ELIGIBILITY FOR ACA MARKETPLACE SUBSIDY
Q. An employee has employee-only coverage on the company's ACA compliant medical plan. Can the employee's spouse and child buy individual medical coverage through the ACA marketplace, and if so, are they eligible for a subsidy since the employee's medical plan is ACA compliant? The spouse is not employed.
A. Previously, a family would not be eligible for marketplace subsidies if the employee's employer offered an affordable plan (just for the employee). This was called the "family glitch." Under the rules effective in 2022, if the employer's coverage is affordable for the employee but not the family, the family members can qualify for a subsidized plan on the marketplace. If the employer's plan is affordable for the entire family, no subsidies will be available for any family member.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
4.3.25 | FRONT-LOADING HSA CONTRIBUTIONS
Q. Is it possible to "front load" contributions to an HSA so that the employee is mostly funded within the first 3-4 months of the year and then reduce the contribution amount to top up the residual amount over the remaining 8-9 months? The enrollment system only allows even deductions throughout the year.
A. The employee should be able to front load HSA contributions. Under the cafeteria plan rules, employers must give employees the ability to change their HSA elections on a monthly basis. Employees can change their HSA contributions for any reason. HSA contributions through a cafeteria plan are not subject to normal restrictions that apply to other cafeteria plan elections.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
3.27.25 | ALE EMPLOYER CONTRIBUTIONS TOWARD SPOUSAL COVERAGE
Q. Is a group still compliant when it does not contribute the minimum affordability requirement toward Employee + Spouse, Employee + Child, and Employee + Family coverage? Could the employer just contribute a flat $100 or $200 toward those tiers?
A. Affordability under the ACA is based on employee-only coverage. As long as the employer offers employee-only coverage that is affordable, it does not matter that family coverage or Employee + Spouse/Child/Domestic Partner is not affordable.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
3.20.25 | ACA LOOKBACK MEASUREMENT PERIODS
Q. When counting employees, can a group use a 5-month measurement period, a 1-month administration period, and a 6-month stability period? Do the measurement and stability periods have to be the same?
A. Yes, a group could use a 5-month measurement period, followed by a 1-month administrative period and a 6-month stability period. While the administrative and stability periods usually match, the stability period cannot be less than 6 months, so this approach should work.
Typically, the stability period matches the measurement period, but it does not have to match as long as the stability period is at least the longer of 6 months or the length of the measurement period. For example, a group could not have a 6-month measurement period and a 12-month stability period.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
3.13.25 | EMPLOYEE AND SPOUSE HSA CONTRIBUTIONS
Q. Prior to their marriage, a couple who are both employed were enrolled in separate HDHP plans and were contributing to separate HSAs. Now that they are married, he has switched to an Employee + Spouse enrollment in the medical plan and she had waived enrollment as an employee. However, she just learned that deductions are still being made and contributed to her HSA. Can the couple continue with this plan structure?
A. A husband and wife can each contribute to an HSA when they are enrolled in a family HDHP plan, however the maximum aggregate contributions of the husband and wife cannot exceed the family HSA maximum. The couple can continue like they are doing, as long as they don’t exceed to family maximum HSA contribution ($8,550 for 2025).
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
3.6.25 | DEPENDENT CARE FSA
Q. Can an employee still participate and receive reimbursements in the dependent care FSA if their spouse is a stay-at-home mom? Can they still contribute up to the $5,000 maximum as they are married and filing taxes jointly?
A. An employee cannot contribute to a dependent care FSA if the spouse is a stay-at-home mom. The only exceptions would be if the mom is actively searching for gainful employment, a full-time student, or physically/mentally incapable of self-care.
An employee who is married and filing jointly is limited to $5,000 per year in a dependent care FSA. But this is only available if the spouse is working or meets one of the limited exceptions above.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
2.27.25 | COBRA FOR SPOUSES EXCLUDED FROM PLAN
Q. If an employer limits coverage t only the employee and dependent children, will the spouse be eligible for COBRA?
A. No, the loss of coverage due to a plan design to exclude spouses would not trigger COBRA for the spouse. This is not a qualifying event under the COBRA rules.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
2.20.25 | AGGREGATE VS. EMBEDDED DEDUCTIBLE FOR AN HSA-COMPLIANT PLAN
Q. Can a plan have an embedded deductible on an HDHP/HSA and still be compliant with IRS regulations?
A. To be eligible to contribute to an HSA, an employee must be covered only by a high deductible health plan (HDHP). An HDHP is a plan with a minimum deductible for employee-only coverage of $1,650 and a deductible of $3,300 for family coverage in 2025.
With family coverage that uses an embedded deductible, the deductible for any family member cannot be lower than $3,300. This makes little sense with an HDHP that uses the lowest possible deductible, because the family deductible will be the same as the embedded individual deductible. It makes more sense for an HDHP that uses a higher deductible, like $6,000 for family coverage. There, you could have an embedded individual deductible of $3,300. In this case, the HDHP could pay out on claims of one family member over $3,300 before the family deductible of $6,000 is satisfied. But this only makes sense when the family deductible of the HDHP is set at something above the minimum $3,300.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
2.13.25 | PREMIUM-ONLY PLAN DOCUMENT FOR FLEXIBLE SPENDING ACCOUNT
Q. If an employer offers only a flexible spending account, is a premium-only plan (POP) document needed?
A. A premium-only document is a type of cafeteria plan under Section 125 of the Internal Revenue Code. It can be used when an employer only offers employees the ability to pay premiums on a pre-tax basis. It cannot be used for a flexible spending account. A POP plan is not appropriate in this case.
A flexible spending account can be offered under a cafeteria plan under Section 125 of the Internal Revenue Code. So, while a POP plan is not needed, the employer will need a cafeteria plan that allows for contributions to the flexible spending accounts.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
2.6.25 | SPOUSAL SURCHARGE
Q. If a client has a spousal surcharge, would that be considered pre-tax or post-tax?
A. Typically, a spousal surcharge is just treated as an additional premium that employees have to pay for family coverage. This premium would be eligible to be paid pre-tax, just like the other premiums, under the company's cafeteria plan.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
1.30.25 | ACA REPORTING FOR CONTROLLED GROUP
Q. Our client owns 80% or more of several companies and all are considered applicable large employers for ACA reporting purposes. Is each entity responsible for submitting its own Forms 1094-C and 1095-C?
A. You are correct. Each member of an applicable large employer controlled group is responsible for its own ACA reporting.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
1.23.25 | COBRA VS. DEDUCTIBLE
Q. If an employee moves to COBRA, will they start over with meeting their deductible and out-of-pocket expenses?
A. Because COBRA is just a continuation of the coverage an employee was on previously, the deductible and out-of-pocket expenses should not reset.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
1.16.25 | FMLA CHANGE – 60 DAYS NOTICE TO EMPLOYEES
Q. An employer group is changing its lookback method for Family and Medical Leave Act (FMLA) eligibility. Are they required to give employees 60 days notice of this change, and is there template language that must be used for the notice?
A. If an employer changes methods for determining FMLA eligibility, the employer must give all employees at least 60 days advance notice of the proposed change. During this 60-day transition period, employees get the benefit of the eligibility method that provides the greatest benefit to the employee. For more information, see the Department of Labor FAQ on the topic. There is no template notice at this time. The employer can simply explain the change and provide contact information for employee questions.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
1.9.25 | FSA WITH HSA CONTRIBUTION RULES
Q. A covered employee is enrolled in an HDHP with family coverage and contributes to an HSA. The spouse contributes to an FSA with her employer. Is this allowed?
A. If the FSA is a general purpose FSA, the spouse's participation in the FSA will disqualify the employee from contributing to an HSA. A general purpose FSA is considered "other coverage" that provides benefits prior to the satisfaction of the HDHP for the spouse or the employee. The employee can participate in the HDHP; they just will not be able to contribute to an HSA if the spouse participates in a general purpose FSA.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
1.2.25 | REQUIREMENT TO ENROLL IN MEDICARE
Q. Is a 68-year-old employee of a four-employee subsidiary of a 45-employee company required to enroll in Medicare?
A. An employer cannot require an employee to enroll in Medicare. While employers with fewer than 20 employees are exempt from the Medicare Secondary Payer rules, this does not mean they can force a Medicare eligible employee to enroll in Medicare. It only means their health insurance plan can treat the employee “as if” they are enrolled in Medicare and pay on a secondary basis. A practical effect of such a provision in the employer’s plan is that the employee will enroll in Medicare. But it is important to note the employer cannot require the employee to enroll in Medicare.
The rules are different for employers with more than 20 employees. Employers with more than 20 employees cannot treat Medicare-eligible employees differently than other employees in the terms of health insurance. This means that Medicare-eligible employees have no incentive to enroll in Medicare if they don’t want to, and the employer cannot incentivize the Medicare-eligible employee to enroll in Medicare.
For measuring whether a company has 20 or more employees, you look at all employees within the same controlled group. If a 45-employee company owns all of a four-employee company, both companies will be deemed to have more than 20 employees for purposes of the Medicare Secondary Payer rules.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
12.26.24 | HSA CONTRIBUTION WHEN SPOUSE ENROLLED IN MEDICARE
Q. A company contributes $75 for individuals and $150 to families to its HSA. An employee and their spouse are enrolled in the company-sponsored HDHP. Their spouse is enrolled in Medicare Part A only. Can the employee still receive the family contribution from the employer if it is under the individual HSA maximum?
A. Yes, an employee can receive the "family" contribution from the employer even though the spouse is enrolled in Medicare. HSA eligibility is dependent on the employee's coverage and the employee NOT having coverage other than an HDHP.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
12.19.24 | HSA AND SPOUSAL COVERAGE
Q. An employee's spouse has family coverage under an HDHP and has an HSA, where contributions are deducted from his paycheck. Can the employee also have an HSA at work and have contributions deducted from their paycheck without being enrolled in the employer-sponsored HDHP, or will they have to enroll in that plan?
A. If the employee is enrolled in the spouse's family HDHP, the spouse can contribute to his HSA and the employee can contribute to their own HSA. The combined contributions cannot exceed the family HSA limit. (See the IRS training manual on HSA requirements.).
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
12.12.24 | PAID FAMILY LEAVE SUBJECT TO ERISA
Q. If an employer purchases a paid family leave policy in the private market to comply with a state mandate, would this be subject to ERISA?
A. While this is still a new area of the law, the consensus is that a paid family leave policy purchased to comply with a state mandate would be an ERISA plan.
Paid leave benefits are the types of benefits covered by ERISA's definition of a welfare plan. There are various arguments why a private paid family leave policy would be exempt from ERISA, however none of these are perfect arguments. For example, ERISA does not apply to an employer's payroll practices if the benefits are paid from the employer's general assets. An insurance policy would not be payable from the employer's general assets. There is also an exemption from ERISA for a private plan that is maintained "solely for the purpose of complying with applicable workmen's compensation laws or unemployment compensation or disability insurance laws." Paid family leave policies don't fit squarely inside this definition.
While states likely did not consider the application of ERISA when they passed their paid family leave laws, the general consensus is that an insured policy providing paid family leave benefits would be subject to ERISA.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
12.5.24 | HSA FUNDS OUT OF COUNTRY
Q. Can you use HSA funds for medical expenses out of the U.S.?
A. Yes, HSAs can pay for medical expenses outside of the U.S. as long as the expenses are qualified medical expenses. There is no requirement that these expenses be incurred within the U.S. IRS Publication 502 contains the rules for qualified medical expenses.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
11.28.24 | HSA CONTRIBUTION LIMITS
Q. An employee and their spouse have individual HSA coverage with different employers. Can each employee contribute the maximum $4,300 in 2025 even though the total exceeds the family maximum of $8,550?
If an employee has single coverage with an employer and their spouse has family coverage including dependent children through a different employer, can the employee with single coverage contribute the full single contribution amount and the other spouse contribute the full family amount?
A. If each spouse has their own employee-only HDHP, they can each contribute the single limit of $4,300 to their own HSA (even though that is more than the family limit).
However, the result is different if one spouse has family coverage. If either spouse has family coverage, the spouses are limited to the family contribution limit (which can be split among the spouses’ HSAs).
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
11.21.24 | MEDICARE AS PRIMARY PAYER
Q. Can an employer require that Medicare be taken as the primary insurance policy once an employee reaches Medicare eligibility at age 65?
A. If the employer has fewer than 20 employees, most insurance policies will pay secondary to Medicare. This essentially requires employees eligible for Medicare to enroll, since the employer's plan will pay secondary regardless of whether the Medicare-eligible employee actually enrolls in Medicare. This is not an option for employers with 20 or more employees due to the Medicare Secondary Payer rules.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
11.14.24 | DIABETIC SUPPLIES AT NO COST ON HSA PLANS
Q. Can a self-insured plan offer diabetes supplies at no cost and with no deductible on qualified HDHP plans per the IRS regulations for HSAs?
A. Insulin is considered preventative and can be provided under an HDHP prior to satisfying the deductible. In addition, any dosage form (e.g., vial, pump, inhaler) of any different type of insulin is permitted. The IRS also expanded the types of acceptable insulin products to include continuous glucose monitors for people with diagnosed diabetes. IRS Notice 2019-45 includes some additional preventative care drugs permitted for people with diabetes.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
11.7.24 | ARE SHORT-TERM DISABILITY PLANS CONSIDERED ERISA PLANS?
Q. Do short-term disability (STD) and temporary disability (TDI) plans need to be included in the wrap Summary Plan Description (SPD) and Form 5500 filing? Should there be a distinction made between the two plans in the wrap SPD?
A. STD "plans" can be structured to be an ERISA plan or a payroll practice. Some employers like to treat STD plans as ERISA plans because of favorable protections afforded to employers by ERISA. If the employer treats the STD plan as an ERISA plan, it should be included in the company's wrap documentations.
Other employers prefer to avoid ERISA formalities (like a plan document and summary plan description) and choose to treat the STD "plan" as a mere payroll practice which is expressly exempt from ERISA. If the employer chooses to treat the STD benefit as a payroll practice, it should NOT be part of the company's wrap documentation.
State mandated disability programs typically require employers to pay into a state program and these are not administered by the employer. In that case, the mandated disability benefit is neither an ERISA plan or payroll practice. if a state requires that an employer maintain a disability benefit, then the employer will need to decide whether to treat it as an ERISA plan or payroll practice and document the benefit accordingly.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
10.31.24 | FSA vs. HSA
Q. A client's employees enrolled in the medical FSA, even though they are enrolled in the HDHP, and prefer to use the FSA instead of the company's HSA. Would contributions to an FSA disqualify the HDHP? Are there tax implications if the employee or employer contribute to the HSA?
A. There is no issue with an employee being enrolled in an HDHP and FSA, as long as the employee (or employer) does not contribute to an HSA. The existence of the FSA disqualifies the employee from making contributions to an HSA, but it does not impact the employer's HDHP.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
10.24.24 | SEVERANCE PAY AND HEALTH INSURANCE
Q. Can an employer offer to keep an employee insured under the medical policy under a severance arrangement?
A. Terminated employees are likely not eligible for continued coverage under the medical policy so this is not an option. However, if the employer is subject to COBRA, the employer can offer to pay COBRA premiums (or a portion) for the terminated employee under a severance arrangement. If the COBRA premiums are paid directly to the carrier, this part of the severance benefit should be tax-free.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
10.17.24 | RETENTION PERIOD FOR BENEFIT PROPOSALS AND QUOTES
Q. How long should an employer keep insurance benefits proposals and quotes?
A. ERISA has a six-year statute of limitations. Therefore, it's prudent to keep insurance quotes and proposals for at least six years to justify decisions made by the company within ERISA's statue of limitations.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
10.10.24 | FAMILY HSA CONTRIBUTION WHEN ONE MEMBER TURNS 65
Q. An employee in a group plan with fewer than 20 employees has employee plus spouse coverage and contributes the family maximum to an HSA. The spouse just turned 65 and has enrolled in Medicare but will remain on the group plan. Can the employee still contribute the family maximum to the HSA?
A. As long as the employee has family HDHP coverage, the employee will be able to contribute the family max to an HSA even though the spouse enrolls in Medicare. Eligibility to contribute is based on the employee (HSA account holder).
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
10.3.24 | SAR DISTRIBUTION TO FORMER PLAN PARTICIPANTS
Q. Is a health plan required to furnish the plan's 2023 Summary Annual Report (SAR) to former plan participants who are no longer covered (and did not elect COBRA coverage)? If so, would the "electronic consent" rule apply?
A. The plan should provide the 2023 Summary Annual Report to anyone who was a participant in the plan at that time. If the employee has left the company, the employer can no longer distribute the SAR electronically unless the employee provided a personal email and specifically consented to the distribution of the SAR in accordance with ERISA's electronic consent requirements.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
9.26.24 | LEVEL FUNDED PLANS AND PCORI FEE
Q. Are level funded health plans considered to be self-funded? Wold they be subject to pay the PCORI fee if they had an integrated HRA?
A. Yes, level funded plans are considered to be self-funded for ERISA and insurance purposes. Sponsors of level funded plans are responsible for the PCORI fees. Level funded plans and HRAs can be combined for PCORI fee purposes so that only one fee is paid if the HRA and level funded plan share the same plan yer and plan sponsor.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
9.19.24 | MEDICARE AND FSA
Q. Can an employee enrolled in Medicare contribute to a medical flexible spending account (FSA), or would it have to be a limited purpose FSA?
A. The employee can contribute to an FSA. It does not have to be a limited purpose FSA.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
9.12.24 | COBRA AFTER AGE 65
Q. If an employee retires and is eligible for Medicare, can the employee take COBRA for up to 36 months? We understood that COBRA eligibility was limited to 18 months for retirees.
A. If an employee retires and became entitled to Medicare within 18 months of retirement, the employee is entitled to 18 months of COBRA, but the employee's spouse and dependents are eligible for up to 36 months of COBRA from the date the employee became eligible for Medicare. This COBRA extension only applies to the spouse and dependents; it does not apply to the employee/retiree.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
9.5.24 | REIMBURSING HDHP DEDUCTIBLE
Q. Can a company buy a high deductible health plan (HDHP) and reimburse employees for their deductible using a health reimbursement arrangement (HRA)?
A. An HRA that covers the deductible on an HDHP will make the employee ineligible to contribute to a health savings account (HSA). The HRA would need to be a limited purpose HRA or post-deductible HRA if the employee wants to contribute to an HSA,
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
8.29.24 | NON-ERISA GROUPS AND ACA REPORTING
Q. Are church plans exempt from the ACA reporting 1094/1095 and 6055/6066 filing requirements? Are the plans required to file Form 5500 if they are fully insured with more than 100 employees?
A. Unless the church opts in to ERISA, the plan will be exempt from the 5500 requirement. However, church plans with at least 50 employees will be subject to ACA reporting on Forms 1094 and 1095.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
8.22.24 | COBRA FOR DOMESTIC PARTNERS
Q. Are there any situations in which a domestic partner can be eligible for COBRA?
A. No, a domestic partner is not entitled to COBRA coverage regardless of a qualifying event of the employee or upon the dissolution of the domestic partnership.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
8.15.24 | WELLNESS ROOM REQUIREMENTS
Q. What should an employer do to comply with the requirement of the Consolidated Appropriations Act that "Most employers are required to provide covered employees with space that is functional for pumping milk, shielded from view, free form intrusion, available as needed and not a bathroom?"
A. The Fair Labor Standards Act generally requires employers to provide a "place, other than a bathroom, that is shielded from view and free from intrusion from coworkers and the public" which may be used by a nursing mother. The room must be functional as a space for nursing employees (e.g., there should be a chair and table). A temporary space is allowed as long as it is shielded from view and free from intrusion and available to a nursing employee when needed. Visit the Department of Labor Wage and Hour Division FAQ for more information.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
8.8.24 | PCORI FEE PAID IN ERROR
Q. Our client was advised in error to pay their PCORI fee for last year under the assumption the group's plan was self-funded, however the group plan was, in fact, fully insured at the time. How should the client handle the over-payment?
A. If a plan sponsor overpaid the PCORI fee, it can file Form 720-X for an over-payment of a previously-filed PCORI liability. Form 720-X is available on IRS.gov.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
8.1.24 | HSA CATCH-UP CONTRIBUTIONS
Q. An employee and spouse are enrolled in an HSA qualified HDHP. Both are over 55 and they each want to participate in the catch-up contribution of $1,000. Can the employee contribute an additional $2,000 since both he and his wife are over 55? Or are they limited only $1,000?
A. If each spouse is over 55, they can each make a $1,000 catch-up contribution to their own HSA. One spouse cannot contribute $2,000 to their HSA on behalf of both spouses. The catch-up limit, just like the regular HSA limits, are prorated based on the number of months an individual is enrolled in an HDHP. There is a special rule that allows you to avoid pro-rating the contribution if the individual is in the HDHP for the last month of the year and agrees to be in the HDHP for the entire following year. Absent this special rule, the catch-up limit must be pro-rated based on the number of months the individual has HDHP coverage.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
7.25.24 | FSA ANNUAL LIMITS
Q. We have a group leaving a professional employer organization (PEO) effective June 30 and setting up a new flexible spending arrangement (FSA). Do the limits set by the IRS for an FSA plan reset for these members for their new July 1 - June 30 plan year? Or do members still need to account for their prior contributions in 2024 to ensure they do not have excess contributions?
A. The FSA annual limit is a plan year limit, so the contributions to the PEO’s FSA plan will not limit the employees’ ability to contribute to the maximum to their employer’s new FSA plan.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
7.18.24 | HEALTH INSURANCE WAITING PERIOD
Q. Is the following a legal waiting period? "Eligible employees may elect to begin health insurance benefits on the first day of the month after completing the ninety (90) day Orientation Period."
A. Yes, this can work. The ACA prohibits waiting periods longer than 90 days, but does permit orientation periods, as long as coverage is offered on the first day of the fourth full calendar month of employment. This means that an orientation period cannot be more than one month. This post by the Legal Information Institute includes some good examples that may be helpful.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
7.11.24 | MEDICARE AND HSA CONTRIBUTIONS
Q. An employee turns 65 in 2025 and is considering enrolling in Medicare. The employee is on an HSA-compatible plan with their 62-year-old spouse. Though the employee may be covered under Medicare next year and ineligible for a contribution in the HSA, could the spouse still make HSA contributions if they open their own account?
A. The employee's enrollment in Medicare will not impact the spouse's ability to contribute to an HSA, provided they are otherwise eligible (i.e., enrolled in an HDHP only).
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
7.4.24 | REQUIREMENT TO OFFER COBRA
Q. When is an employer required to offer COBRA?
A. An employer is required to offer COBRA in a calendar year if the employer had 20 or more full-time employees (including full-time equivalent employees) for more than half of the working days in the preceding calendar year. Part-time employees count as a fraction of a full-time employee depending on how much they work compared to a full-time employee. If a full-time employee works 40 hours per week, a part-time employee working 20 hours per week would be a .5 full-time equivalent (FTE) employee and a part-time employee working 16 hours per week would be a .4 FTE.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
6.27.24 | FORM 5500
Q. When does IRS Form 5500 need to be filed?
A. Form 5500 is needed when the plan has 100 or more participants at the start of the plan year. If the company utilizes a "wrap plan," which incorporates all welfare benefits (e.g., medical, dental, vision, life, AD&D), the wrap plan must file Form 5500 if any line of coverage has 100+ participants. If the company does not use a wrap plan and instead sponsors many separate ERISA plans, Form 5500 is only needed if the particular ERISA plan has 100+ participants at the start of the year.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
6.20.24 | CAFETERIA PLANS AND FINANCIAL HARDSHIP
Q. For small group clients that do not have to offer medical plans, should we discourage the use of a cafeteria plan for pre-tax premiums if they want to allow employees to drop the medical plan mid-year if they cannot afford it?
A. If you avoid using a cafeteria plan to allow employees to pay for medical premiums, the downside is that the employees must pay for the premiums on an after-tax basis. The upside is you avoid all of the Section 125 rules that generally require elections be irrevocable for the year, unless there is a qualifying life event (and insurance being too expensive is not a qualifying life event). So a good solution for employers that want to offer employees maximum flexibility is to allow them to pay premiums on an after-tax basis.
If giving employees the choice between pre-tax (through a cafeteria plan) or after-tax premiums is too confusing or administratively complex, the employer could choose NOT to offer a cafeteria plan and make all premiums be paid on an after-tax basis. Of course, if the employer does not think the financial hardship issue will occur too frequently, offering a cafeteria plan makes the most financial sense for the employees and the employer.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
6.13.24 | OFFERING COBRA TO FORMER SPOUSE DROPPED FROM HEALTH PLAN
Q. An enrolled employee's divorce was finalized on 3/25/24. She dropped her spouse from coverage effective 1/1/24 and elected Employee + Children coverage only. Was the divorce a qualifying event that would allow the ex-husband to elect COBRA coverage? Was the employee allowed to drop her spouse during 1/1 open enrollment but prior to the divorce being finalized?
A. Typically, COBRA is only offered to employees and dependents on the health plan at the time of the qualifying event. Since the former spouse was not on the health plan at the time of the divorce, the normal rule is that the former spouse is not offered COBRA.
However, the IRS says that if someone is dropped from coverage in anticipation of a divorce, and then the divorce occurs, that individual must be offered COBRA from the date of divorce (not the date they were dropped from the plan). See IRS Revenue Ruling 2002-88 for the official guidance.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
6.6.24 | COVERAGE FOR STEPCHILD
Q. Can an employee add their stepchild to their insurance plan?
A. The employee can add a stepchild under the age of 26, regardless of whether the employee is the guardian. The ACA prohibits conditioning eligibility on the residence of the child, tax dependent status, or financial dependency. The only thing that matters is that the person is a child (which includes a biological child, stepchild, adopted child, and foster child) and is under age 26.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
5.30.24 | RxDC REPORTING PENALTIES
Q. We have a client that never filed their 2022 plan year D1 and P2 files (assuming the carrier filed the D2-D8). Was the $100-a-day penalty in place for this filing in 2023?
A. There was penalty relief for 2020 and 2021, but I am not aware of any penalty relief for 2022 filings. The penalty is found in Internal Revenue Code Section 4980D. The good faith relief came from the Departments of Labor, Health and Human Services and Treasury in the form of FAQ 56 issued on December 23, 2022.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
5.23.24 | W-2 REPORTING
Q. A large employer client's wellness program reimburses $75 to employees who meet two minimum requirements each quarter. Should this HRA benefit be included in the employer's W-2 reporting in column DD? The employer will reimburse the last $500/$1,000 of deductible/out of pocket expenses.
A. Employers have the option to report HRA contributions in Box 12, code DD. If the employer charges a COBRA premium for people to keep their wellness benefit after a qualifying event, then they must include the wellness incentive in Box 12, code DD. It is optional if the employer does not charge a COBRA premium for the wellness benefit. The IRS provides a helpful chart. Note that the wellness incentive itself may be taxable compensation and, if so, reported on the W-2 as taxable compensation.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
5.16.24 | HEALTH COVERAGE FOR NEWBORNS
Q. I have seen a reference to newborns being “automatically covered” by the mother’s health plan for 30 days after the date of birth, but I can’t find a source. The closest I can find are the HIPAA special enrollment rules allowing coverage retroactive to date of birth, but the employee has to actually enroll the child. Can you clarify the rules?
A. The “automatically enrolled” references are misleading. An employee must affirmatively elect to have a newborn covered. HIPAA gives an employee a special enrollment window in which to ask for coverage, and the law provides that if you elect coverage for the newborn within 30 days, coverage will automatically go back to the date of birth. However, the employee must affirmatively enroll the newborn. If the employee does not enroll the newborn in a timely manner, there is no coverage for the newborn at all (including the first 30 days of the newborn’s life).
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
5.9.24 | PCORI FEE DISCREPANCY
Q. I understand that the PCORI fee for plans that ended in December 2023 is $3.22 (up from $3.00 in 2022). However, the current IRS Form 720 states that the fee should be $3.00 for that period. Should the client pay the $3.22 rate or the $3.00 rate listed on the IRS form?
A. It often takes the IRS many months to update the IRS Form 720s. For plan years ending between October and December 2023, the 2023 PCORI fee is $3.22 and it is due July 2024. If the client is using the current Form 720 for a plan year that ended between October and December 2023, they should use the $3.22 rate regardless of what the form says. Form 720 is a quarterly form, but the PCORI fee only needs to be filed and paid annually by July 31.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
5.2.24 | MEDICARE, SPOUSE EXCLUSIONS
Q. Can an employer exclude Medicare eligible employees (age 65+)) or spouses form medical coverage?
A. An employer could only do this if the employer has fewer than 20 employees AND none of the excluded spouses are eligible for Medicare as a result of End Stage Renal Disease (ESRD). If any of the spouses have ESRD, or if the employer has more than 20 employees, this type of exclusion would violate the Medicare Secondary Payer Statute. The group could possibly do a spousal exclusion for ALL spouses, but could not limit it just to Medicare-eligible spouses.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
4.25.24 | DEPENDENT CARE FSA CONTRIBUTIONS
Q. Can an employee stop their Dependent Care FSA contributions mid-year as they realized their spouse was contributing as well and they would reach the annual maximum before the end of the year?
A. Yes, the employee can stop dependent care elections mid-year to avoid exceeding the maximum limit. The IRS suggests that the employer obtain some documentation from the employee demonstrating that the spouse also elected to contribute to their DCFSA and that the mid-year change is needed to avoid contributing more than permitted. Note that employers do not have to permit employees to change their elections, but most do.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
4.18.24 | CALCULATING COBRA HRA RATES
Q. What is the best way to calculate COBRA rates for an HRA?
A. The best way to determine the HRA COBRA rate is for the group to see what the HRA reimbursed on a per employee/family basis for each of the last three years. For example, if the HRA, on average, reimbursed $600 for single employees and $1,200 for families, the monthly COBRA premiums could be set at $50 for single and $100 for family (plus the 2% COBRA surcharge). If the group has access to an actuary (unlikely), they could also work with the actuary to set the COBRA rates. But assuming no free actuarial services are available, I recommend focusing on the historical cost of the HR in setting future COBRA premiums..
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
4.11.24 | QUALIFYING EVENT
Q. If an enrolled employee's dependent loses coverage and needs to enroll under the employee, is that an opportunity to switch medical plans and carriers, or are they restricted to their current plan?
A. The employee can enroll the dependent in any plan option offered by the employee’s employer. This is a HIPAA special enrollment right and the right extends to any benefit plan option, even if the employee was not previously on that option.
Here is an example from the HIPAA special enrollment regulations:
Facts. Individual A works for Employer X. X maintains a group health plan with two benefit packages—an HMO option and an indemnity option. Self-only and family coverage are available under both options. A enrolls for self-only coverage in the HMO option. A's spouse works for Employer Y and was enrolled for self-only coverage under Y's plan at the time coverage was offered under X's plan. Then, A's spouse loses coverage under Y's plan. A requests special enrollment for A and A's spouse under the plan's indemnity option.
Conclusion. In this example, because A's spouse satisfies the conditions for special enrollment under paragraph (a)(2)(ii) of this section, both A and A's spouse can enroll in either benefit package under X's plan. Therefore, if A requests enrollment in accordance with the requirements of this section, the plan must allow A and A's spouse to enroll in the indemnity option.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
4.4.24 | WAITING PERIOD VS. ORIENTATION PERIOD
Q. My under-50-employees client has an orientation period for their employees, after which they offer medical benefits. What are the key differences between an orientation period and a waiting period?
A. The ACA permits a bona fide orientation period of one month before the 90-day waiting period limitation kicks in. These rules apply to employers of any size offering a group health plan.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
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