A benefits compliance checklist for US companies

Benefits compliance is a necessary task for every company. A high-performing HRMS and robust processes can help you to meet legal and regulatory requirements at a minimum cost. Whether you’re just starting out or managing a seasoned team, here is a benefits compliance checklist that will make sure that you make the grade.

Affordable Care Act (ACA)

The Affordable Care Act has different requirements based on company size. Companies with 50 employees or more must offer health insurance to their staff and dependent children. Employers are required to provide the cost details on an employee’s W-2 form for tax purposes.

Essential benefits management features and more are covered in this guide to 52 HRMS features to look for in your next software purchase

The ACA also requires companies to file 6055 and 6056 reporting with the Internal Revenue Service (IRS) which will be used to validate that companies are meeting their coverage obligations. The details of who provides the report and under what scenarios can be complex so it may make sense to use the services of an HR or HRMS consultant.

Family and Medical Leave Act (FMLA)

The Family and Medical Leave Act allows an employee to take a family or medical leave while retaining their job and health insurance. It can be complicated to administer if you do not have strong control on when it applies and how it can be utilized. There are also notice provisions for the FMLA and a requirement to inform employees of the available options.

The FMLA comes from the Department of Labor. A lack of compliance can involve fines and court appearances so it’s one to keep on your compliance checklist.  

Health Insurance Portability and Accountability Act (HIPAA)

The Health Insurance Portability and Accountability Act states that employees who leave a company are able to continue on to a future health plan at a new organization. A company would be wise to use an HRMS to track benefits as this data is essential for complying with the legislation. A former employee or dependent can request confirmation that they were covered under a plan up to two years after coverage ends. There are hefty fines for missing to adhere to HIPAA so it’s definitely one to keep your eye on.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

The Consolidated Omnibus Budget Reconciliation Act allows employees who experience qualifying events to continue their healthcare coverage even though they are no longer eligible. It includes employees who are terminated, retiring or experiencing a reduction in hours. It can include a spouse’s healthcare when the employee is no longer eligible for coverage or there is a divorce.

An employer is required to notify employees of their rights under COBRA. The penalties from the Department of Labor and the IRS can be high so this is one that belongs on your benefits compliance checklist.

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Heather Batyski

About the author…

Heather is an experienced HRMS analyst, consultant and manager. Having worked for companies such as Deloitte, Franklin Templeton and Oracle, Heather has first-hand experience of many HRMS solutions including Peoplesoft and Workday.

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Heather Batyski