From a business perspective, most of the concern surrounding the Affordable Care Act (ACA), also known as Obamacare, is the upcoming employer mandate and the penalties that come with noncompliance. But the employer mandate should not be employers’ only area of concern. There are other provisions that carry their own penalties.
One such area is the market reforms that added protections for participants in group healthcare plans. The Department of Labor has announced that it is expanding its COBRA audits to include those market reform provisions. One small lapse in complying with those provisions could cost an employer $36,500.
Any employer (including recruiters if they employ their contractors and/or in-house employees) that is subject to COBRA audits can now also be subjected to a DOL audit of their ACA-related documents tied to the market reforms. Infinisource, which serves as our third-party COBRA administrator, recommends that employers keep an easily accessible binder or file that includes the following documents:
- A sample of the written notice sent notifying plan participants that dependent coverage had been extended to children up to age 26.
- A copy your coverage denial notice and a list of anyone it was sent to.
- Plan limits for each plan year on or after Sept. 23, 2010.
- Notice that the lifetime limit on the dollar value of benefits no longer applied and that an individual may once again be eligible for coverage.
- Any documents specifying annual limits for each plan year on or after Sept. 23, 2010.
- Any documents establishing grandfathered health plan status, if applicable.
- Choice of provider notice for obstetrics or gynecology.
- Documents related to preventative and emergency services.
- The plan’s review procedure.
- Notices regarding benefit determinations.
- Agreements between the plan and any vendor that provides external reviews.
The penalties for violations found in these audits can be very stiff. For each violation, an employer could pay an excise tax of $100 per day for each individual that is affected. So if an employer makes just one mistake that affects just one person for a year, that single violation could cost that employer $36,500.
The market reform provisions are not limited to employers with 50 or more full-time employees like the employer mandate is. If an employer provides a group healthcare plan, they must comply with the market reforms even if they don’t meet the 50-employee threshold. The only exception is grandfathered plans that are exempted from some of the market reform regulations. If you have clients that provide healthcare insurance to their employees or if your firm provides health insurance for contract employees, you should be prepared for an ACA audit.
This article is for informational purposes only and should not be considered legal advice.