OneDigital Benefits Compliance Consulting

ISSUED 3/20/19

Does your benefits broker approach benefits as one-size-fits-all?

Today’s labor pool  is comprised of 5 distinct  generations, each  presenting unique challenges, and perspectives for employers that have not existed in the past  for a singular  workforce.  Because each  group possesses a very different approach to employment and employee benefits, having a fresh approach

to your benefits strategy will not only keep you in the game within your industry but help you win high- performing talent over your competitors.

The 5 Generations Working Alongside Each Other in Today’s Workforce:

Based  on their generation, workers often  have particular characteristics and needs that employer should  be mindful of when organizing their employees plan design and administration. Here are the top  5 benefits con- cerns to look out for in your multigenerational workforce:

1.   Health Reimbursement Arrangements (HRAs)

Whether reviewing  the results  of an aging employee population and their spouses or taking into consider- ation younger employees who place  less value on employer-provided health coverage, employers often  find themselves in a position of seeking avenues to lower their healthcare spend. One  solution  that arises is to

limit or forego a group health plan in favor of reimbursing employees, their spouses, or retirees for health cov- erage obtained through another source. The Affordable Care Act (ACA), however, prohibits an employer from reimbursing individual premiums, but exceptions are made in limited situations:

•    Spousal HRA: The employee must be covered on the spouse’s group health plan for the employer to re- imburse the cost of being covered by the spouse’s plan.

•    Medicare HRA: For small employers for which the employer plays secondary to Medicare, the employer can reimburse all or part of the cost of Medicare-related coverage.

•    Retiree  HRA: The employer can reimburse all or part of the individual or Medicare-related costs  for former employees eligible  as retirees.

•    Qualified Small Employer  HRA: If the employer is not an applicable large  employer (ALE) or ALE member and does not offer a health plan, it can reimburse individual premiums up to a limit.

2.   Value-Add  Benefits

To round  out a total rewards  strategy, employers may seek to implement certain  value-add benefits intended to target specific aspects of a multigenerational workforce,  such as telemedicine, employee assistance pro- grams  (EAP), wellness programs, and various supplemental or voluntary benefits. While these benefits may seem cost-effective and straightforward, it is important to remember that these plans often  come with not-

so-simple compliance obligations that are frequently overlooked. For example, many of these plans have to comply with ERISA, HIPAA, the ACA, COBRA, and IRS regulations for Health Savings Accounts (HSAs).

3.   Mid-Year Election  Changes

With each  generation comes certain  everyday  life changes, such as marriage, divorce,  the birth of a child, changes in employment, changes in dependent custody, and the opportunity to transition to other coverage such as Medicare or a spouse’s health plan. When an employer receives a request for a mid-year  election change, it is essential to confirm that:

•   the event  is covered under the employer’s Section  125 plan document;

•   the employee requests the change within the required notice period;

•   the change requested is consistent with the event  that occurred; and

•   the employee provides documentation supporting the requested change.

4.   Medicare-Eligible Population

The Medicare Secondary Payer rules outline  certain  protections for Medicare-eligible employees, the most stringent of which is the prohibition of financial and any other incentives for Medicare-eligible employees to forego the employer’s group health plan in favor of Medicare. If the employer is the primary payer,  it should be mindful of common errors under the Medicare Secondary Payer rules, such as offering benefits or perks in

exchange for Medicare-eligible employees foregoing the group health plan or offering and paying  for a Medi- care Supplement Plan.

5.   Nondiscrimination

The most  common benefits compliance issue to arise with a multigenerational workforce  occurs  when an em- ployer seeks  to vary its benefits for different groups of employees. Most notably, attempts to reward  seniority may create nondiscrimination issues despite the employees being distinct  groups of employees that are not similarly situated under HIPAA. Compliance with the HIPAA nondiscrimination rules does not guarantee com- pliance with other nondiscrimination requirements under Section  105(h) for self-insured plans and Section  125 for cafeteria plans.

Under the Section  105(h) and Section  125 nondiscrimination rules, an employer is prohibited from discrimi- nating  in favor of highly compensated individuals. Accordingly,  when designing a plan with different eligibility provisions, benefits restrictions, or costs,  it is critical to assess whether to plan design based on class differenti- ations  complies with all benefits nondiscrimination rules.

Being aware of the unique generational differences, characteristics and needs of your employees is critical when creating a benefits plan. Make sure you’re aware of the challenges and compliance concerns when designing your plan to avoid headaches while ensuring your benefits are as valuable and applicable to your employees as possible. Our team of compliance experts is hosting a webinar  to explain more  about tailoring your plan design to suit the needs of your multigenerational workforce.