- 1-2 Employees: 100% of all employees. All groups must include at least one medical enrolled employee who is not a business owner or spouse of business owner.
- 3-50 Employees: 70% of eligible employees, with a minimum of 2 employees enrolling in CaliforniaChoice.
- Employees with other group coverage are not counted towards participation unless employer contribution is 100%.
- Group’s home office must be located in California (Principal Executive Office).
- 51+% of eligible employees must reside in California.
Employer Application (Includes medical and optional benefits information)
- Workers’ Compensation coverage must be in force prior to or on the requested CaliforniaChoice effective date.
- Group must have a 9-digit Federal Tax ID Number (cannot be SS#).
- Quarterly/Annual Wage Report – Must list employee names, social security numbers, wages, and withholdings (no alterations are permitted). Indicate employee status directly on the quarterly/annual wage report (All employees must be accounted for): E=Enrolling W=Waiving P=Part-time TP=Temporary S=Seasonal WP=Waiting Period T=Terminated U=Union
- W-4 form is required for new hires not shown on the quarterly/annual wage report.
- Payroll records required for entire group if more than 50% are not on the quarterly/annual wage report. Payroll may be requested for new hires.
- Owner/Partner Statement – Required if owner(s) not shown on the quarterly/annual wage report with a full-time salary (current state minimum wage multiplied by number of hours to be considered eligible (20 or 30) then multiplied by 13 weeks)
- Current Dental Carrier Billing (for groups with 10+ eligible who are electing EPO 3000, EPO 3500, PPO 4000 or PPO 5000 Dental)
- Submit copy of current billing statement and statement from 12 months prior in order to waive the waiting period for major services (statement from 24 months prior required for Ortho—must show Ortho coverage).
- Minimum Premium Deposit Check – Employer may submit a copy of the group’s premium deposit check, payable to CaliforniaChoice at case submission. Original check(s) for at least 90% of total premium due must be received by the underwriter prior to case approval.
- Section 125 (POP)—Add an additional $100 one-time fee to the premium deposit.
- COBRA premium is not required, but if submitted, include a separate check from employer or COBRA enrollee. CONEXIS will bill directly.
- Employee Enrollment Application/Waivers (and dependent waivers, if dependents not enrolling). Employee waivers require reason for waiving and must be completed in full.
- Disabled Dependent Certification Form — Must be completed for dependent child(ren) over the age of 26.
The Department of Labor recently released their inflation-adjusted penalties for ERISA, the Family Medical Leave Act, and the Genetic Information Nondiscrimination Act.
The chart below shows some of the more common penalties assessed from DOL audits.
|Failure to provide a summary of benefits and coverage||$1,105 per employee|
|Failure to inform employees of CHIP coverage opportunities||$112 per employee per day|
|Failure to comply with FMLA notice requirements||$166 per employee per day|
|Failure to comply with certain GINA requirements||$112 per employee per day|
|Failure to provide an SPD or plan document||$110 per employee per day|
|Failure to provide documents to the DOL upon request||$149 per day, not to exceed $1,496 per request|
|Failure to file an annual 5500 form||$2,097 per day|
The new ERISA penalties serve as important reminders to employers who sponsor benefit plans. Many employers either think they are too small to be audited (not true), or that the medical carriers adhere to all the rules and furnish employees with what is required (not true). It is for this reason that we have taken on the responsibility to protect our clients by providing them with the proper notices and instructions to maintain compliance.
With healthcare premiums continuously increasing year over year, many employers are searching for options to help reduce their benefit costs. A seemingly quick fix would be to eliminate dependent coverage, but you may want to consider eliminating dependent contribution rather than not offering coverage at all.
First and foremost, the circumstances are different for Small Groups in comparison to Applicable Large Employers. If you are considered an ALE, with 51 or more full time equivalent employees, then you are required to offer dependent coverage by law, or you may face an employer shared responsibility penalty. Please note that the definition for Small Group plans has been expanded to include up to 100 employees, so it is possible to be an Applicable Large Employer and still offer Small Group plans (51-100 employee size). Per the Affordable Care Act, and the ‘pay or play’ provision, the definition of ‘dependent’ only applies to children under the age of 26. Spouses are not considered dependents, nor are step children or foster children.
There are two types of penalties you may face if you do not offer proper coverage as an ALE.
- If you DO NOT offer minimum essential coverage to at least 95% of your full time equivalent employees and their dependents then you may face a penalty if at least one of your employees obtains premium assistance from the public marketplace (Covered CA). If just one of your employees receives premium assistance, then you are liable for a $2,000 penalty for each employee, after the first 30 employees. [Total employees – 30, multiplied by $2,000]
- If you DO offer minimum essential coverage to at least 95% of your full time equivalent employees and their dependents, then you may still be imposed a penalty if any employee receives premium assistance from the marketplace. If coverage is offered, but turns out to be unaffordable (more than 9.66% of household income), the employee has the option to purchase coverage and receive premium assistance. The employer in this instance will be penalized $3,000 for each employee that receives the premium tax credit.
If you are considered a Small Employer with 50 or less full time equivalent employees, then it is not a requirement for you to offer dependent coverage. If you elect to eliminate dependent coverage at renewal altogether, then you do not need to offer COBRA since terminating or amending the group health plan does not constitute a listed triggering event.
Dependents are only offered COBRA if:
- Employment is terminated
- Employee hours are reduced
- Employee passes away, divorces, or legally separates
- Employee obtains Medicare
- Loss of dependent child status
The Employee Retirement Income Security Act (ERISA) oversees group benefit plans, and with the onset of the Affordable Care Act, the ERISA Summary Plan Description (SPD) requirements are in the spotlight. More often than not, a plan administrator assumes that a Certificate of Insurance qualifies as an SPD, and that either the insurance company or their broker is responsible for preparing and delivering SPD’s. In this instance, the employer (plan administrator) is solely responsible for ERISA compliance.
An employer must have a written SPD, which serves as the main vehicle for communicating plan rights and obligations to participants and beneficiaries. An SPD that includes the plan’s terms and conditions, such as a Certificate of Coverage, and includes (or ‘wraps’) it with the specific ERISA disclosure language is considered a ‘Wrap SPD.’ One step further would be to produce a mega-wrap document which would encompass all benefit lines into one document, which is HIPAA compliant as long as none of the benefits are self-funded.
ERISA requires that a SPD be distributed to enrolled participants within 90 days of coverage, or 120 days of a new plan being established. If an SPD has not changed, an employer is required to furnish another copy to all participants every five years.
An example of some of the information required in an SPD:
- Plan name
- Employer’s name and address
- Employer’s EIN
- Plan Administrator’s name, address, and phone number
- Type of plan and description of benefits
- Effective and End Dates of the plan
- Eligibility terms
- How refunds are allocated to plan participants
- Claims procedures
- ERISA legal disclosure of participants’ rights
- Sources of plan contributions
- Details descriptions of plan provisions and exclusions
- Information regarding COBRA, HIPAA, and other federal mandates
- Summary of Benefits (SBC)
While it may be a bit overwhelming if your group is not currently in compliance – we are here to help. We offer all of our clients a Wrap SPD that is co-developed and maintained by a major ERISA law firm, and has successfully passed DOL audits.
Feel free to contact us to ensure your group is in compliance.