Trey Tompkins No Comments

COBRA, FSA and HRA Deadlines Impacted By Hurricanes Helene and Milton

EBSA Disaster Relief Notice 2024-01 provides extensions and relief from certain deadlines under the Consolidated Omnibus Budget Reconciliation Act (COBRA) and other benefit claims filing requirements for individuals affected by Hurricanes Helene and Milton. Issued by the Department of Labor’s Employee Benefits Security Administration (EBSA) on November 7, 2024, the notice aims to support participants, beneficiaries, and plan sponsors facing disruptions due to the recent hurricanes.  The relief applies to individuals residing in FEMA-designated disaster areas impacted by Hurricanes Helene and Milton as well as employers located in those areas.  The relief generally prevents the enforcement of impacted deadlines until May 1, 2025. The counties that are impacted by the announced relief are in Florida, Georgia, North Carolina, South Carolina and Virginia. Additional questions about the relief can be directed to trey@adminamerica.com.

COBRA Coverage and Premium Payment Extensions

Under COBRA, individuals have the right to continue their healthcare coverage after events such as termination of employment, with a strict deadline for electing this coverage and making necessary premium payments. Disaster Relief Notice 2024-01 extends these deadlines for individuals residing in FEMA-designated disaster areas. Affected individuals are granted additional time to elect COBRA continuation coverage and to pay premiums without the risk of coverage termination.

Typically, individuals have 60 days to elect COBRA continuation coverage after losing health benefits, followed by monthly premium payment deadlines. However, the notice extends these election and payment deadlines until May 1, 2025, allowing participants extra time for coverage decisions and ensuring they can maintain access to essential health services. For example, a person impacted by the hurricanes who missed a premium payment deadline will not face immediate coverage termination if the delay is within the extension period.

Extended Deadlines for Benefit Claims and Appeals

For benefit claims and appeals, Disaster Relief Notice 2024-01 also provides extended deadlines for health, disability, and other welfare and retirement benefit claims. Normally, participants must adhere to specific timelines for filing claims and appealing any denied claims. However, given the circumstances, the EBSA notice allows additional time for impacted individuals to file claims, receive reimbursements, and appeal denied benefits. This extended period applies to initial benefit claims as well as subsequent appeal processes, recognizing that disruptions caused by the hurricanes may prevent participants from promptly gathering and submitting the necessary documentation.

Plan participants and beneficiaries now have the extended period to complete these actions without forfeiting benefits. This applies to claims filed both for healthcare coverage and other welfare benefits, such as disability and life insurance, with deadlines also extended through May 1, 2025.  

Administrative Flexibility for Plan Sponsors

The notice also provides relief to plan sponsors, administrators, and fiduciaries, enabling them to delay certain administrative tasks related to COBRA coverage and benefit claims. For example, if a plan sponsor faces difficulties issuing required notices or processing claims due to hurricane-related disruptions, the EBSA guidance allows flexibility, provided they make reasonable and good-faith efforts to meet these responsibilities as soon as feasible. This flexibility aims to relieve administrative burdens and reduce potential penalties for employers or plan sponsors affected by the disasters.

EBSA Disaster Relief Notice 2024-01 Affected Counties

Below is an alphabetical list of the impacted counties, organized by state (as of 11/14/24):

Florida: Alachua, Baker, Bay, Bradford, Brevard, Calhoun, Charlotte, Citrus, Clay, Collier, Columbia, DeSoto, Dixie, Duval, Escambia, Flagler, Franklin, Gadsden, Gilchrist, Glades, Gulf, Hamilton, Hardee, Hendry, Hernando, Highlands, Hillsborough, Holmes, Jackson, Jefferson, Lafayette, Lake, Lee, Leon, Levy, Liberty, Madison, Manatee, Marion, Monroe, Nassau, Okaloosa, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Putnam, Santa Rosa, Sarasota, Seminole, St. Johns, St. Lucie, Sumter, Suwannee, Taylor, Union, Volusia, Wakulla, Walton, Washington

Georgia: Appling, Atkinson, Bacon, Ben Hill, Berrien, Brantley, Brooks, Bryan, Bulloch, Burke, Camden, Candler, Charlton, Chatham, Clinch, Coffee, Colquitt, Cook, Crisp, Decatur, Dodge, Echols, Effingham, Elbert, Emanuel, Evans, Fulton, Glynn, Grady, Hancock, Irwin, Jeff Davis, Jefferson, Jenkins, Johnson, Lanier, Laurens, Liberty, Long, Lowndes, McIntosh, Mitchell, Montgomery, Pierce, Rabun, Richmond, Screven, Tattnall, Telfair, Thomas, Tift, Toombs, Treutlen, Turner, Ware, Warren, Wayne, Wheeler, Wilcox, Worth

North Carolina: Alamance, Anson, Beaufort, Bertie, Bladen, Brunswick, Cabarrus, Camden, Carteret, Caswell, Chatham, Cherokee, Chowan, Columbus, Craven, Cumberland, Currituck, Dare, Davidson, Davie, Duplin, Durham, Edgecombe, Forsyth, Franklin, Gates, Graham, Granville, Greene, Guilford, Halifax, Harnett, Hertford, Hoke, Hyde, Iredell, Johnston, Jones, Lee, Lenoir, Martin, Mecklenburg, Montgomery, Moore, Nash, New Hanover, Northampton, Onslow, Orange, Pamlico, Pasquotank, Pender, Perquimans, Person, Pitt, Randolph, Richmond, Robeson, Rockingham, Rowan, Sampson, Scotland, Stanly, Stokes, Surry, Swain, Tyrrell, Union, Vance, Wake, Warren, Washington, Wayne, Wilson, Yadkin

South Carolina: Abbeville, Aiken, Allendale, Anderson, Bamberg, Barnwell, Beaufort, Berkeley, Calhoun, Charleston, Cherokee, Chester, Chesterfield, Clarendon, Colleton, Darlington, Dillon, Dorchester, Edgefield, Fairfield, Florence, Georgetown, Greenville, Greenwood, Hampton, Horry, Jasper, Kershaw, Lancaster, Laurens, Lee, Lexington, Marion, Marlboro, McCormick, Newberry, Oconee, Orangeburg, Pickens, Richland, Saluda, Spartanburg, Sumter, Union, Williamsburg, York

Virginia: Albemarle, Appomattox, Bedford, Bland, Botetourt, Buchanan, Buckingham, Carroll, Charlotte, Craig, Dickenson, Floyd, Giles, Grayson, Greene, Lee, Madison, Montgomery, Nelson, Patrick, Pittsylvania, Pulaski, Russell, Scott, Smyth, Tazewell, Washington, Wise, Wythe Independent Cities: Bristol, VA, Covington, VA, Danville, VA, Galax, VA, Norton, VA, Radford, VA, Roanoke, VA

How the ACA's affordability percentage impacts potential tax penalties.
Trey Tompkins No Comments

The 2024 ACA ESRP Affordability Percentage

This week the IRS revealed an annual adjustment to the the Affordable Care Act’s (ACA) affordability percentage. This percentage helps determine whether employers may owe significant fines under the ACA’s Employer Shared Responsibility Provision (ESRP). The newly announced limit for group health plan years beginning in 2024 is 8.39%. This is significantly lower than 2023’s affordability percentage of 9.12%. The IRS announced this most recent annual change in Revenue Procedure 2023-29.

Employers and their benefits advisors should analyze how this lower affordability percentage impacts their ESRP Penalty risk next year. Incorporating the new limits into employee benefits planning for 2024 could spare employers from very large penalties down the road.

The Importance of the Affordability Percentage to Employers

The ACA’s ESRP applies to Applicable Large Employers (ALEs). ALEs are employers (or related employers) who employed 50 or more full time employees (or equivalents) during the prior year. ALEs who do not provide health coverage that is “affordable” to employees and their dependents risk significant tax penalties. For 2024, the penalty for failing to provide affordable coverage to each full time employee who receives a premium tax credit for health insurance coverage is $4,460 per year.

The ACA defines affordability as a percentage of each employee’s household income. Because employers typically cannot know an employee’s household’s other sources of income, the IRS allows employers to establish the affordability of their coverage in reference to three different benchmarks: the current Federal Poverty Level, the employee’s Rate of Pay, and the employee’s W2 income for the applicable year.

The percentage announced by the IRS this week is the maximum amount employers can charge for employee only group health insurance coverage as compared to any one of those three benchmarks.

How This Newly Announced Change Affects ALEs

Employers and their benefits advisors planning 2024 group health plan offerings need to understand the impact of the new percentage. Employee premiums that were affordable in 2023 may not be in 2024. Employers could avoid this penalty risk with proper preparation.

For example, assume an employee who earns an hourly wage of $20.00 per hour. Also assume that this employer chooses the Rate of Pay standard to establish that their coverage is affordable. In 2023, if the employer offered that employee coverage for $237 per month, it would have been considered affordable. In 2024, that same employee’s coverage would have been unaffordable even if the premium was reduced to $219 per month. This example becomes even more pertinent for employers with lower paid employees.

Analyzing and adjusting their 2024 employee premiums now could save employers enormous ESRP penalties in the years to come.

For More Help Understanding how the ESRP Applies to Your Situation

Employers can contact Admin America for more information about the ESRP. Contact our ACA team via telephone at (678) 578-4631 or via email at aca@adminamerica.com. Alternatively, additional online resources are available here.

Form 5500 Plan Compliance isn't a game.
Trey Tompkins No Comments

So you forgot to file a Form 5500 for your large group health plan

Employers that offer group health plan benefits frequently overlook compliance with ERISA’s annual Form 5500 filing requirements. This creates enormous potential liability. Fortunately, the Delinquent Filer Voluntary Compliance Program (DFVCP) offers employers a simple and cost effective way to mitigate potential penalties. Without the DFVCP, those penalties might otherwise reach into the hundreds of thousands of dollars (or more). In this article, we’ll briefly describe the benefits of the DFVCP and the process for taking advantage of it. 

Form 5500 Reporting Requirements for Group Health Plans

The Employee Retirement Income Security Act (ERISA) requires most employers that offer non-retirement benefits (such as health and dental coverage, life insurance, disability payments, and other welfare-related benefits) covering 100 or more participants at the beginning of a plan year to file a Form 5500. Plans offered by organizations exempt from ERISA (such as governments and churches) are exempt from the Form 5500 filing requirements. 

Plan Administrators must file Form 5500s annually within seven months after the end of each applicable plan year. An extension of up to 2.5 months is possible by filing IRS Form 5558.  For example, ERISA requires employers who sponsor calendar year plans to file their Form 5500s by the end of following July (unless they have filed a Form 5558 extension request before that date).

The potential penalties for failing to timely file a required Form 5500 are staggering.  Both the Department of Labor (DOL) and the Internal Revenue Service (IRS) can separately assess penalties.  IRS penalties are limited to $25 per day, up to a maximum of $15,000. The DOL penalties are authorized up to $1,100 per day with no maximum.  At worst, those kinds of penalties jeopardize the entire business. At best, they jeopardize the loss of a lot of sleep.

The Delinquent Filer Voluntary Compliance Program (DFVCP)

The DFVCP is a formal program offered jointly through the DOL and the IRS. The program serves two purposes. It encourages employers to voluntarily correct annual filing violations and omissions. It also substantially reduces their potential penalty liability.  The DFVCP limits late filing penalties to $10 per day with caps of $2,000 per Plan Year or $4,000 per Plan, whichever is less.  Employers can accurately estimate their expected DFVCP payments in advance. The Employee Benefits Security Administration (EBSA) provides an online calculator.

Employers should plan to submit all delinquent Forms 5500 concurrently with the required DFVCP penalty payment. This maximizes their penalty risk reductions by maximizing the number of Plan Years to which the DFVCP applies.  Employers have the option of mailing in their penalty payment along with paper copies of their Form 5500s. Alternatively, they can pay the penalties online and electronically file through the EBSA’s EFAST2 system.

Get Form 5500 and DFVCP Help from Admin America

Admin America is happy to assist employers with the preparation of any necessary Form 5500s.  Our services include:

  • preparation of signature-ready, machine-readable Form 5500s with schedules, guaranteed for electronic within five business days;
  • Substantial fee discounts for Form 5500s prepared as the same time for multiple plan years for a single plan (or employer);
  • Access to the expertise of our on-staff attorney; and
  • Assistance with filing Form 5584 – Request for Extension for Time to File, if applicable.

Employers can get more information about Admin America’s services online, via e-mail at sales@adminamerica.com or by calling (678) 578-4644. You can also request a call from us.