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5 Mandated Employee Notifications You may be Missing

Background

As a small business owner, you’re probably aware that you must provide employees with certain notifications. For example, if a worker loses their job, then you must send them a COBRA offer letter. However, there are more of these required notifications than you may realize. And the penalties for being out of compliance can be quite stiff. So we put together a quick rundown of the top five mandated employee notifications to help keep you on the right side of the compliance police.

1) Summary of Benefits and Coverage (SBC)

What is it?

An SBC is a summary of your medical and Rx plan benefits. It also gives examples of how much workers would have to pay for common services under the policy. (Example SBC)

When must it be given out?

  • When employees enroll in coverage for the first time
  • At the beginning of each new plan year
  • Within seven business days, if a worker requests a copy

Who must you give them to?

You must give these items to any worker covered under your group health plan.

2) COBRA Notifications

What are they?

There are two primary COBRA notifications:

  • The Initial notice (aka General notice) describes general COBRA rights and employee obligations. (Sample Initial Notice)
    • Many employers forget or are unaware of this notice.
  • The Election notice outlines the rights to continuation coverage and explains how to make an election. (Sample Election Notice)

While there are two more potential COBRA notifications, it is unlikely that you will need them.

When must they be given out?

You must provide employees with the Initial notice within their first 90 days of coverage under the group health plan. And you have to send the Election notice within 14 days after any qualifying event.

Who must you give them to?

You must give these items to any worker covered under your group health plan.

3) CHIP Notices

What is it?

The CHIP notice informs employees that they may be eligible for help in paying for their dependent’s coverage under the company’s health plan. The letter is generic so you can literally just print it out and hand it to the employees. Here’s the most recent version.

When must it be given out?

You must hand out the CHIP notice annually, before the start of each plan year.

Who must you give them to?

You should give this notice to all of your employees.

4) Marketplace Coverage Options

What is it?

The Marketplace Coverage Options notice informs employees of the ACA Health Insurance Exchange. It let’s them know that they can buy individual plans and that they may qualify for help in paying for this coverage. Here’s the government’s model notice for the form.

When must it be given out?

You must give new employees this form within 14 days of their hire date.

Who must you give them to?

You should give this notice to all of your employees.

5) Medicare Part D Notifications

What is it?

The Part D notification helps Medicare eligible employees decide whether or not to opt into a Medicare Drug plan. The letter informs Medicare recipients of the credibility of your company’s Rx plan. But, just so you know, nearly all group Rx plans are considered credible. To download copy of the form specific to your company, please complete the questionnaire located on the CMS website.

When must it be given out?

You have to hand out the notification annually before October 15th. And to any new Medicare eligible employee at the time they enroll in the prescription drug plan.

Who must you give them to?

You should give the notice to all Medicare eligible individuals covered under your company’s prescription drug plan. But, it’s a a good idea to simply distribute the notice to all employees. Since you can’t always tell who is eligible for Medicare.

Wrapping Up

First, it’s okay if you’re currently not handing out all of these notices. Many local employers are in the same boat. And that’s the main reason we created this article. Second, it’s easy to be overwhelmed by all of these requirements. But, if you group them together, you”ll find staying in compliance is a much easier task. So here’s a simple way to do that.

Create a new employee welcome pack. And include the following notices in each one of them:

  • SBC Notice
  • CHIP Notice
  • Initial COBRA Notice
  • Marketplace Coverage Options Notice
  • Medicare Part D Notice

This will cover your company for the majority of these notices in one fell swoop. And by distributing new SBCs and Part D notices again at each renewal, you’ll be covering even more of your bases.

Finally, please be wary of health insurance brokers that attempt to use these notifications as scare tactic for winning your business. They’ll try to convince you that your company will have to pay outrageous fines and penalties. Unless of course you allow them to become your broker so they can fix all of these “problems”.

But you should know that the department of labor will usually only demand such penalties in cases of willful intent. So, for the majority of employers that are simply unaware of these requirements, it’s highly unlikely that the max fines will be assessed. However, if you want to work with an honest broker who will help you with these and all other requirements, give us a call or email and we’ll get started right away. And we promise, no scare tactics!

 

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