Sarah Borders, CEBS January 5, 2024 5 min read

End-of-Year Reminders for January 1 Plan Years

As 2023 has drawn to a close, we wanted to provide employers a list of some of the most important compliance obligations to consider for January 1 renewals. Many of these requirements don’t necessarily coincide with specific calendar dates, but since the majority of plans renew as of January 1st, several requirements tend to get overlooked at this time of year.

First of all, employers must notify several unique groups of their right to change coverage elections during open enrollment, just as active employees:

  • Individuals enrolled under COBRA,
  • Those on state continuation (if applicable), including spouses or dependent children, and
  • Employees out on furlough, FMLA (including FFCRA leave) or other approved leave, either paid or unpaid.

Second, employers must ensure that no one who is enrolled in a general-purpose health FSA also opens and contributes to an HSA. As a reminder, a health FSA, including a spouse’s FSA, is considered disqualifying coverage that makes an individual ineligible for an HSA.

Third, distribute required notices and the Summary of Material Modifications (SMM) if any changes are made to the plan document/SPD.

Fourth, if an employer requests proof of dependent status, either a signed employee attestation or documentation (e.g., marriage license, birth certificate, tax return, etc.) should be required for everyone on the same terms. In other words, the types of documentation requested should not vary from employee to employee.

Fifth, as of the first day of the plan year, employers need to determine whether they need to file Form 5500 for the current plan year. To do so, they’ll need to count the exact number of plan participants enrolled, not including dependents, on the first day of the plan year. So, if you sponsor an employer-paid basic life plan that automatically includes all eligible employees, be sure to use the life plan enrollment for the count. Plans with under 100 participants are exempt from filing Form 5500 if unfunded, fully-insured or both.

Finally, (though this list is NOT exhaustive), employers must confirm if they are an applicable large employer (ALE), and therefore subject to the employer mandate for the current year by calculating the number of employees during the calendar year that just ended. Employers with 50 or more full-time employees plus FT equivalents must offer coverage to full-time employees and also file ACA reporting with the IRS. For reference, the IRS website provides resources to assist with ALE calculation.

Wrapping up the year is never easy – and this list isn’t meant to include everything an employer needs to consider during this time of year. However, we’ve seen that these are the most commonly missed compliance requirements during Q4. Keep these in mind along with the other tasks you’re managing to make sure you end the year on a positive note. Here’s to 2024!

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Sarah Borders, CEBS

Principal, Benefits Compliance Solutions. Sarah has spent the last 15 years in the employee benefits industry, has numerous designations and serves on NAHU’s Employer Working Group Subcommittee and is an active board member of Austin AHU. She recently stepped down as Vice President of Benefits Compliance at one of the nation's largest brokerage firms to start her own compliance consulting practice. Her designations include an active license with the Texas Department of Insurance, CEBS (Certified Employee Benefits Specialist), Certified Health Care Reform Professional, HIPAA certification and Health Care Service Associate. She holds an MBA from Texas A&M Corpus Christi and a BA from University of Incarnate Word. Her consulting firm, Benefits Compliance Solutions, partners with employers to identify unknown risks and avoid hundreds of thousands of dollars in fines and lawsuits from failure to comply with their healthplan obligations.

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