BASE^® Blog

When an employer decides to offer health benefits, they may not fully understand that by providing an employee benefits plan they are subject to a federal law called ERISA.  Not complying with ERISA can put a business at risk for steep penalties with the Department of Labor (DOL).

The Federal Employee Retirement Income Security Act (ERISA) is a federal law that governs how employers provide benefit plans to their employees.  It protects the interests of the employee benefit plan participants and their beneficiaries, and mandates that the plan sponsors provide a Summary Plan Description (SPD) to their participants.  The ERISA laws established standards to ensure that plan funds are protected, and the qualified participants receive their appropriate benefits.  It also ensures that the participants have access to the information about their health benefit plan.

The BASE® ERISA Wrap is designed to help employers fulfill ERISA requirements.  It is designed to wrap around the existing certificates of insurance and benefit plan booklets to provide the required provisions and information necessary to comply with ERISA.

Many employers mistakenly assume that insurance contracts, certificates of insurance, and benefits summaries fulfill the ERISA requirements for an SPD and Plan Document, but they do not include the required or recommended provisions that protect the plan and employer from the DOL penalties.  Any business, regardless of the number of employees or how the business is structured, is required to have ERISA documentation in place if the employer provides their employees with health benefits.

If an employer can answer “yes” to one of the following questions, the benefit is an ERISA-qualified benefit.

1. Is there a plan, a fund, or a program in place?
2. Does the employer sponsor the plan, fund, or program?
3. Does the employee pay pre-tax contributions?
4. Is the employer providing ERISA listed benefits, such as medical care, benefits for sick, accident, disability, unemployment benefits, vacation benefits, etc.?
5. Does the employer provide benefits to the plan participants and/or beneficiaries?

The recently enacted Federal Families Coronavirus Response Act (FFCRA), means that employers with ERISA qualified benefits have another reason for needing an ERISA Wrap in place to ensure compliance. BASE is re-issuing the proper documentation to our clients in order to protect the plan and the employer by making the most recent language updates available.

The BASE® ERISA Wrap documentation has been updated to reflect certain COVID-19 related changes for group health benefits.  The updated documents now provide that coverage for group health benefits will continue during a COVID-19 related paid leave, as required by the FFCRA, and is federally required to be shared with plan participants.  The ERISA Wrap will protect these business owners for all the benefits they offer by providing an SPD that will include the required ERISA language and the detailed instructions on the proper way to distribute these documents to their employees.

Many employers may be unsure if ERISA applies to their business and their benefit(s) or what to do with the updated ERISA information.  It can be confusing, but BASE® is here to make sure the business is in compliance and is not at risk for DOL penalties.  If a business is unsure if their benefits qualify for ERISA or if they have the most updated information, call BASE® at 888.386.9680 or visit www.BASEonline.com.

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Health care costs are an ever-escalating expense and for the year 2020, it is no different, especially when looking towards post COVID-19.  The question of where health care is headed is as certain as to when the pandemic will end, however projections make it clear that the cost of health care and options need to help prepare individuals for more control over health care costs and provide savings.  Predictions point towards the increase in health care being passed on through insurance premiums, which makes now an important time for researching options to combat those increases.

The BASE® Integrated Health Reimbursement Arrangement is a great option to keep the cost of group health insurance coverage affordable for both the employer and their employees.  By coupling a group health plan with the BASE® Integrated HRA, employers are able to suppress the yearly increases most commonly associated with traditional forms of health care.  As things continue to evolve during this crazy time, many employers are reassessing their current benefits.  One thing for them to take into consideration is what an Integrated HRA can do for both the employer and employee – not just now, but into the future.

With this HRA, both the employer and employee will realize cost savings and a tax benefit. 

To the EMPLOYER:

• Plan Design. Employers can choose to raise the deductible on their current group health insurance plan, reducing the overall cost of the insured plan, self-insuring a portion of that deductible to keep the employees responsibility of the deductible maintainable.  All reimbursements are tax-free to the employee and tax deductible to the employer. 
• Protection of Funds.  HRA funds are only paid to the employees once a qualifying expense has been adjudicated by BASE® with no prefunding necessary. 
• Cost Containment. Employers have more control of the overall cost of their benefit plan by coupling a group health insurance plan with the BASE® Integrated HRA. 
• The plan will work with any carrier, health insurance plan, or group benefit plan. 
• Tax Benefit. All reimbursements are 100% deductible as a business expense.

To the EMPLOYEE:

• No Contribution. No prefunding of an account is necessary. 
• No Taxes. All reimbursements are non-reportable and non-taxable income.

The BASE® Integrated HRA has been proven to reduce an employers’ health insurance premium increases by 10-50%, which could be a crucial means of creating more control over health care costs and increased savings in a post COVID-19 era.  BASE® is here to answer your questions on the best approach for offering benefits while controlling premiums.  For more information, call BASE® at 888.386.9680 or visit BASEonline.com.

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