Compliance officer: 3 ACA slip-ups can trigger expensive penalties
The DOL has said that by the end of 2018, it plans to audit every employer covered by the ACA for compliance with the healthcare reform law. Realistic or not, it sent a strong message to employers.
It’s certainly debatable on whether the DOL can make good on its lofty goal — but the implication is crystal clear: Many employers will have their ACA practices put under the microscope.
Common trouble spots
What’s bound to get employers in trouble when the feds come knocking?
You’re already aware of many of the major no-nos — failing to extend coverage to dependent children up to age 26, putting dollar limits on health benefits, etc. — and are in compliance with those provisions.
Still, there are more under-the-radar ACA requirements that are bound to trip up some employers — and trigger expensive non-compliance penalties — warned David Lindgren, a compliance officer with Flexible Benefit Service Corporation, during a presentation he gave at the SHRM 2016 Annual Conference and Exposition in Washington, D.C.
He said because so many employers are focused on other major ACA provisions at the moment (and understandably so) — like the reporting requirements and Cadillac Tax — it’s easy for some smaller ACA requirements to fall through the cracks.
Here are a few of the more commonly missed ACA rules that can trigger penalties, according to Lindgren:
- Rule: Plans must provide written notice of a coverage rescission. Generally, rescissions (or retroactive cancellations of coverage) aren’t allowed under the ACA except in cases of fraud or material misrepresentations — i.e., lies about an individual being a spouse or dependent. But if an employer rescinds coverage and fails to give the affected employee notice about the rescission, the penalty is big: The rescission gets lifted.
- Rule: Plans must provide a notice of patient protections — e.g., the right to select a primary care physician or women’s right to direct OB/GYN access. This simple step is often missed because employers assume their insurer is providing the notice, and the insurer assumes it’s being taken care of by the company, Lindgren said. But of the notices don’t go out, standard ACA penalties apply — i.e., $100 per participant per day, up to a $500K cap.
- Rule: Plans must provide coverage for approved clinical trials. Clinical trials are broken down into Stages 1, 2, 3 and 4. Some plans had been structured to only cover Stage 3 and 4 trials. If that’s the case, the plan can be subject to $50 per-participant ACA penalties.
Did you update your COBRA notices?
Lindgren also pointed out that some employers are unaware that the DOL changed its model COBRA notices to include information about the public health insurance exchanges — a.k.a., the “Marketplace.”
Both the model General Notice (Word Doc.), as well as the model Election Notice (Word Doc.), were changed.
Employers should be using the new “Marketplace” language included in the revised notices to ensure good faith compliance with the ACA and COBRA.
Cite: “ACA Compliance: Avoiding the 30 Penalty Triggers,” a presentation by David Lindgren at the SHRM 2016 Annual Conference and Exposition.
