Group health plans are subject to numerous compliance and notice obligations. Most (but not all) of the requirements listed below apply to both insured and self-insured group health plans; however, for an insured plan the carrier ensures that the plan is compliant. Thus, it is important that sponsors of self-insured group health plans are aware of these obligations and ensure that they or another party will complete these on behalf of the plan.
It is important to note that level-funded plans are self-funded plans, so the entity that set up or markets the level-funded plan is not legally responsible to perform these activities and often is not performing them unless there is a specific agreement in place that obligates it to do so. It is allowable for an employer who sponsors a self-funded plan to contract with an outside entity (such as a TPA, COBRA administrator, accountant, or other specific type of vendor) to perform the functions listed below, and most self-insured employers do contract with at least one such entity.
- Nondiscrimination rules. IRC section 105(h) nondiscrimination rules – most TPAs or claims administrators provide data forms for the plan sponsor to complete and then the TPA runs the tests. Plan sponsor should make any changes needed to comply with the tests. This might include reducing pre-tax contributions by some highly-compensated employees. Some TPAs charge to run the nondiscrimination tests, or run one free test annually but charge for any later tests.
- PCORI fee. Calculate amount due, file Form 720 and remit payment
- 1095-B/1094-B. Complete & furnish 1095-B to enrollees in self-funded plan, and file 1094-B and copies of 1095-B’s with the IRS.
- If self-funded plan is sponsored by an “applicable large employer” (ALE), can furnish and file 1095-C and 1094-C instead of using “B” series.
- Medicare Part D creditable status. Furnish notice to Medicare-eligible employees & notify CMS by on-line filing. (Use either creditable or non-creditable coverage notice, as appropriate)
- COBRA. Distribute appropriate COBRA notices (e.g., Initial, Election, others) and administer COBRA continuation coverage. Most employers hire an outside COBRA administrator rather than doing it themselves.
- Summary Plan Description (SPD). Create and distribute SPD to plan participants. (Insurer provides for free for insured plan, but usually charges an additional amount or simply does not provide for a self-insured plan for which insurer is the TPA.)
- Plan Document. Create plan document (can be a wrap-around or “wrap” document); not required to distribute but must provide to participants if they request a copy (in writing). Plan can have a combined Wrap Document and SPD.
- NOPP. HIPAA Notice of Privacy Practices. If plan is insured and employer does not get Protected Health Information (PHI), can distribute only insurer’s NOPP; however, a self-insured plan must distribute its own NOPP. (Exception: NOPP is not required for a self-insured plan that is also self-administered and has fewer than 50 eligible employees.)
- Other Employee notification requirements. CHIP, GINA, HIPAA Privacy, MHPAEA, NMHPA, WHCRA, PPACA (e.g., SBC, Grandfather status), ERISA (e.g., internal claims and appeals and external review).
- Form 5500. File if plan has at least 100 employee participants as of first day of plan year. (If plan has a trust that holds assets, must file Form 5500 regardless of number of participants.)