In the last edition of Thesconnection, we included information about the new FSA rule that will allow employers to modify their plan’s “use-it-or-lose-it” rule.
While this is a welcome alternative employers should carefully consider the impact of adding a grace period. The following are some points to consider:
- Decrease in forfeitures: Many employers use year-end forfeitures to offset the cost to administer their Flex plans. Adding a grace period will likely decrease forfeitures resulting in higher employer costs.
- System Issues: Employers who outsource administration of their Flex plan should be sure to check with their administrator to make sure their systems can accommodate this change, especially those who are using electronic payment cards.
- Terminating employees: An employee who terminates mid-plan year would be eligible for the grace period only if they continue their participation through COBRA continuation. On the other hand, an employee who terminates during the grace period would be eligible to incur expenses through the end of the grace period without electing COBRA because they were active participants at the end of the prior plan year.
There are significant changes on the way for Medicare as Part D is introduced effective January 1, 2006. Part D will provide prescription drug coverage to Medicare beneficiaries. We are preparing a special edition of Thesconnection, to be released shortly, that is designed to provide you with a basic overview of Medicare Part D and it’s impact on employers.
Most employers are aware of the annual reporting (Form 5500) filing requirements for ERISA plans and the heavy penalties imposed for not meeting those requirements. You may not know that the U.S. Department of Labor has designed the Delinquent Filer Voluntary Compliance Program (DFVC) as a way to encourage compliance. The DFVC allows delinquent plan administrators to avoid potentially higher civil penalties by satisfying the program’s requirements and voluntarily paying a substantially reduced penalty amount. Additional information can be found on the DOL’s website:
http://www.dol.gov/ebsa/newsroom/0302fact_sheet.html
The following is the second installment in our series on mandatory State disability plans:
New Jersey requires employers to provide a minimum level of disability benefits. Employees may be required to contribute 0.5% of maximum subject wages determined annually ($24,900 as of 1/1/05).
Employees are covered either after:
- 20 weeks of work in covered employment during a base year with a minimum earning of $103 in each week or
- $5,200 in annual earnings.
The benefit is 2/3 of average weekly wage (subject to a maximum of 53% of statewide average remuneration). The Maximum weekly benefit, effective 1/1/05, is $470. The benefit waiting period is 7 days per disability but if benefits are payable for 3 consecutive weeks then benefits will become payable for the first 7 days. The maximum duration of benefits is 26 weeks per period of disability.
Generally, disability benefits and sick pay may be received simultaneously but disability benefits will be offset if benefits plus continued wages exceeds the employee’s average weekly wage. The law also provides for a post-employment coverage period of 2 weeks.
For more information please contact your Thesco Account Executive.
There are 424 HMO’s in the U.S. California has the most (30) followed by Michigan (25) and New York (23). Hawaii, North Dakota and Wyoming each have one and alas, poor Alaska has none!
Are there any state laws that require an employer to cover domestic partners under their benefit plans?
This questions will be answered in our next edition of Thesconnection.
Does a COBRA beneficiary who originally waives or declines COBRA continuation have the right to revoke that declination?
Answer: COBRA beneficiaries who waive or decline COBRA coverage have a right to revoke that declination as long as they do so within the 60-day COBRA election period. Note that in cases where a declination is revoked it is not required that coverage be restored retroactively to the date of loss of coverage but, rather only from the date the declination was revoked.