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How Serious is ERISA?

With so many rules and regulations a business must follow it is often difficult to know which ones apply and how serious the penalties could be if not applied.  One of those regulations:  The Employee Retirement Income Security Act (ERISA). 

The Employee Retirement Income Security Act (ERISA) protects the interests of employees (and their beneficiaries) and safeguards any employer-sponsored plan.  ERISA is a federal law that governs how employers provide benefit plans and the Summary Plan Description (SPD) to the participants.  The law establishes standards to ensure that plan funds are protected, how the qualified participants receive their appropriate benefits, and their access to the health benefit plan information.

During the fiscal year of 2019, the DOL reported recoveries of $2.5 billion with a 56.25% increase over 2018.  Recoveries are the result of imposed penalties up to $110/per day per employee for employers failing to adhere to ERISA rules and regulations.  This increase affirms that the DOL ERISA enforcement program remains very active, is taking their job seriously, and continues to find breaches of ERISA.  In recent years, much focus has been on retirement plans, but health plans have become an increasingly high DOL priority.

Many businesses do not understand how serious it could be if their business fails to comply with ERISA.  Failure to comply can expose their company to ERISA litigation and DOL or IRS monetary penalties.  In a court case, Harris-Fry v. United of Omaha Life Insurance Company, a federal district court case awarded $74,140 in penalties on a plan administrator for failing to simply provide the plaintiff with the plan documents requested in a timely manner.  The court imposed the maximum penalty of $110 per day (for 674 days) to punish the plan administrator for failing to respond to the plaintiff’s request.

To be in compliance and avoid the steep DOL penalties, BASE® has just the product.  The BASE® ERISA Wrap was designed to help employers fulfill the ERISA requirements for an SPD and Plan Document.  These documents are designed to wrap around existing certificates of insurance and benefit plan booklets to provide the required provisions and information necessary to comply with ERISA.  Within the requirements, plan administrators must provide their participants with information about the health plan features including plan rules, financial information, documents on the operation/management of the plan, and funding.

Virtually all employers, regardless of size or number of participants, who provide health benefits to their employees are required to have an ERISA Wrap.  To avoid not being in compliance with ERISA, BASE® suggests a full review of the business’ compliance measures in place.  For more information on the ERISA Wrap, call BASE® at 888.386.9690 or visit www.BASEonline.com.

Health Reimbursement Arrangement Certainty in 2021

While small business owners are looking to keep their employees safe and healthy, their health care costs could be unpredictable for 2021.  It is a brand new (pandemic) world out there since COVID-19 introduced a significant amount of uncertainty in projecting health care costs for 2021.  One thing for certain is Health Reimbursement Arrangements and the valuable tax dollars that businesses of varying sizes could save.

Health Reimbursement Arrangements (HRAs) are tools for business owners to increase their tax savings and to offer tax-free health benefits.  An HRA may reimburse for qualified medical expenses such as co-pays, deductibles, and health insurance premiums.  These IRS-approved tax savings plans benefit both the employer and employee, saving both valuable tax dollars each year.

BASE® Section 105 HRA – allows small business owners the opportunity to deduct up-to 100% of health care costs, including their family’s health insurance premiums and out-of-pocket medical expenses as a business deduction expense.  On average, BASE® clients save over $5,000 each year in valuable tax dollars.

The Section 105 HRA certainty for 2021 looks to still save employers valuable tax dollars and help them find more ways to deal with the annual rise in health care costs.  The Section 105 HRA can help reduce the financial impact of health care expenses when 2021 could possibly be a hard year for self-employed businesses to find the funds to pay for health care.  

BASE® Integrated HRA – allows employers to suppress the yearly increases most associated with traditional forms of health care, coupled with a high-deductible group health plan.  On average, BASE® clients save 10-50% each year on health insurance premiums.  

The Integrated HRA certainty for 2021 looks to still help employers save on the cost of the health insurance premiums.  In a recent study, health insurance premiums could increase between 4-40% to cover the losses they did not plan for in 2020, and to cover the anticipated costs for 2021.  With the predicted increase, the Integrated HRA can still help businesses keep premiums low while providing their employees with a way to pay for their health care expenses.

BASE® QSEHRA & BASE® ICHRA – The Qualified Small Employer HRA (QSEHRA) allows employers to help employees pay for qualified medical coverage and out-of-pocket medical expenses.

The Individual Coverage HRA (ICHRA) allows employers to provide employees with tax-preferred funds for qualified insurance premiums and/or medical expenses, offering a more personalized, account-based health benefit.

Both the QSEHRA and ICHRA certainty for 2021 looks to still help employers provide employees with tax-preferred funds to pay for qualified health care costs while saving thousands on not providing a traditional group health plan.  With the predicted rise in health care expenses, a small business may not be able to afford their employees with the health care benefits they deserve, but with these two HRAs, employers can keep their health care costs low, while still being able to provide their employees with benefits.  BASE® clients save thousands by not providing traditional group health plans while still providing an attractive benefits package.

BASE® EBHRA – The Excepted Benefit HRA allows employers of all sizes, that offer a traditional group health plan, to provide an additional $1,800 pre-tax to reimburse employees for out-of-pocket medical expenses and non-insured medical expenses.  BASE® clients save on employees’ pre-tax reimbursements and further expand its benefit options.

The EBHRA certainty for 2021 looks to still help employers provide their employees with additional funds to help pay for their health care expenses.  Health care costs are so unpredictable for 2021 and providing additional funds through an EBHRA will offset any surprise health care costs.

The pandemic-induced economic downturn may also mean many employers, big or small, are less likely to offer, or keep, health care coverage - BASE® can keep that from happening!  For more information on Health Reimbursement Arrangements and saving thousands with this cost containment solution, call BASE® at 888.386.9690 or visit www.BASEonline.com.