SPD, Plan Document, Certificate of Insurance – Do You Have What You Need?


A summary plan description (SPD) is the primary vehicle for informing participants and beneficiaries about their plan and how it operates. It must:

  • Be written for the average participant and be sufficiently comprehensive to apprise covered persons of their benefits, rights, and obligations under the plan; and
  • Accurately reflect the plan’s contents as of the date not earlier than 120 days prior to the date the SPD is disclosed.

SPDs are to be distributed automatically to participants within 90 days of becoming covered by the plan and to pension plan beneficiaries within 90 days after first receiving benefits. However, a plan has 120 days after becoming subject to the Employee Retirement Income Security Act (ERISA) to distribute the SPD. An updated SPD must be furnished every five years if changes are made to SPD information or the plan is amended — otherwise the SPD must be furnished every 10 years.

Plan documents are all documents related to plan, including the SPD. The plan administrator must furnish copies of certain documents upon written request and must have copies available for examination. These documents include the latest updated SPD, latest Form 5500, trust agreement, and other instruments under which the plan is established or operated. Copies must be furnished no later than 30 days after a written request. The plan administrator must make copies available at its principal office and certain other locations.

Evidence of coverage (EOC) is further information regarding the plan that details coverage for the plan period. Each insurance carrier will have an EOC booklet, also called a schedule of benefits. These documents are often called certificates of insurance. This EOC/schedule of benefits does not meet the SPD requirements under ERISA. The EOC explains the health benefits participants and their dependents have under the plan. It details the services that will and will not be covered and the actions employees must to take to receive the health benefits — such as paying a co-pay, meeting a deductible, or using particular health care providers. The EOC can also refer to a certificate or contract provided to a health plan member that contains information about coverage and other rights.

ERISA requires the plan sponsor (employer) to provide an SPD to all plan participants. The SPD may incorporate the carrier’s EOC by reference, which generally provides sufficient description of the plan’s benefits. However, the SPD also must include specific content, such as ERISA plan number, Employer Identification Number (EIN), plan financing method, and other information that would not be found in a carrier EOC. Many employers choose to do an SPD wrap, which incorporates all benefits in one document instead of having a separate one for each line of coverage.

According to the Department of Labor’s Final Rules Relating to Use of Electronic Communication and Recordkeeping Technologies by Employee Pension and Welfare Benefit Plans; Final Rule, you can distribute insurance certificates and various ERISA required plan documents electronically via a company website. The department allows electronic notification and distribution of documents by email, attachment to an email, or by posting documents on a company website. However, just placing the documents on a company website does not, by itself, satisfy ERISA’s disclosure requirements.

Under ERISA, the rules allow for electronic delivery of all documents that must be furnished or made available to participant and beneficiaries. This includes SPDs, summary annual reports, individual benefit statements, and investment-related information for participant-directed accounts. These rules are limited to disclosures that plans are required to make to participants and beneficiaries under ERISA.

Prior to implementing, a plan administrator must notify all participants and beneficiaries of the availability of the particular disclosure document by sending written or electronic notice that directs them to the document on the website.

Top Seven Questions About Health Coverage for Domestic Partners

DOMA-photoWe are regularly asked about Domestic Partner rules. Here are the most popular 7 questions from employers – as compiled by our partners at ThinkHR.

The U.S. Supreme Court settled the issue of same-sex marriages several years ago. The marriages are legal throughout the country and all spouses, regardless of gender, are treated the same under federal and state laws affecting benefit plans. Less clear, however, is the issue of domestic partners, civil unions, and other unmarried relationships. Employers often have questions about whether they are required to extend health coverage to unmarried partners and how to administer their plans if coverage is extended.

Following are the top seven questions we receive from employers about domestic partner health coverage.

1. What are domestic partnerships and civil unions?

A domestic partnership or civil union generally refers to two adults, unrelated by blood and neither of whom is married, who are in a committed relationship and assume responsibility for each other’s financial and emotional needs. Although not recognized under federal law, some states have established definitions for “registered domestic partnerships,” “domestic partnerships,” and “civil unions” to extend specific rights and responsibilities under various state laws. There also are several municipalities and local jurisdictions that extend rights to unmarried couples that meet the criteria developed by the jurisdiction. Further, many employers have voluntarily adopted broad definitions of domestic partners to extend eligibility under their group health plans.

2. Do employers that offer group health coverage to spouses also must cover domestic partners?

Employers may choose to extend eligibility to domestic partners, but it is not required unless mandated by a state’s insurance law. Most states have no requirements while others, such as New Jersey, merely require group health carriers to offer the employer the option of including domestic partners as dependents. California, on the other hand, has the strictest requirement: any group policy that covers spouses must extend eligibility to “registered domestic partners (RDPs).” The California Family Code defines RDPs and the California Secretary of State provides a registration system.

Employers that purchase group health insurance receive specific information from the carrier about any applicable state insurance laws. Self-funded (uninsured) plans are not affected since they are exempt from state insurance mandates.

Note: Public-sector employers, such as cities, counties, and public schools and universities, and private-sector employers that contract with public agencies, may be subject to additional requirements under local laws. Specific information typically is provided to the parties by the government agency.

3. Is special tax reporting required for domestic partner health coverage?

Yes, in most cases. Although group health coverage provided to the employee, spouse, and children under age 27 (and some older children) is tax-free, the value of any employer-paid coverage for a domestic partner is taxable. The employer must report the fair market value of the coverage, minus any after-tax contributions paid by the employee, as imputed income on the employee’s Form W-2 for federal and state/local tax purposes. There are two exceptions:

  • Federal: Coverage is tax-free if the domestic partner meets the following conditions under § 152 of the Internal Revenue Code:
    • Shares the same principal residence as the employee;
    • Receives more than half of his or her support from the employee;
    • Is a citizen, national, or legal resident of the United States, or resident of Canada or Mexico; and
    • Is not a qualifying child of a taxpayer.
  • State/Local: The majority of state and local tax laws conform to federal law, so taxes do not apply if the domestic partner is the employee’s tax dependent under § 152. (Non-conforming states, however, may impose state and/or local taxes.) Alternatively, several states specifically exempt certain categories of domestic partners from state or local taxes, even though federal taxes apply. For instance, California does not tax the value of employer-paid coverage for registered domestic partners (RDPs) as defined by state law.

Employers that offer health coverage to domestic partners should refer to their payroll vendor for specific information about the state and local tax withholding and reporting rules in the locations where their employees live and work.

4. Can employees pay for domestic partner health coverage on a pretax basis?

Cafeteria plans allow employees to make pretax contributions for group health coverage, but only for employees and their tax dependents (i.e., spouse, children, and § 152 dependents). Most domestic partners do not meet the financial dependency criteria to qualify under § 152, so contributions for their coverage would have to be made on an after-tax basis. IRS regulations permit an accommodation, however, for the employer’s convenience in administering payroll. That is, the cafeteria plan may allow pretax contributions for the domestic partner’s health coverage, provided that the full market value of the coverage is reported as the employee’s imputed income. For instance, assume the market value of the partner’s coverage is $200, the employee contributes $50 on a pretax basis, and the employer contributes the remaining $150. In that case, the employee’s taxable income is reduced by $50, but $200 of imputed income is reported on the employee’s W-2.

5. Can employees make midyear enrollment changes to add or drop their domestic partner?

Special enrollment rules under the Health Insurance Portability and Accountability Act (HIPAA) allow employees to add coverage midyear for a new spouse, but not for a domestic partner (since no marriage has occurred). On the other hand, the HIPAA rule for a midyear enrollment in the event a dependent losing his or her coverage under another plan does apply to domestic partners (if eligible for the employer’s plan).

Cafeteria plans may allow midyear changes in accordance with IRS regulations for permitted election changes. Although not required, employers that extend health plan eligibility to domestic partners also often provide for midyear enrollment changes under their cafeteria plans.

Beware of discrepancies between the group health insurance policy and the cafeteria plan document. Carriers are required to include the mandatory HIPAA special enrollment rules in group policies, but they often omit the optional cafeteria plan provisions. Always check all documents and policies before allowing an employee to make a midyear change. Self-funded employers should ensure that any stop-loss insurance protection applies with respect to all persons who are eligible under the group plan.

6. Are domestic partners eligible for other health-related benefits, such as FSAs, HRAs, or HSAs?

In most cases, no. Reimbursements from health flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), and health savings accounts (HSAs) are limited to eligible health care expenses for the employee and his or her tax dependents. Domestic partners are not tax dependents, unless the domestic partner qualifies under § 152, which usually is not the case.

7. Are domestic partners eligible for COBRA?

Federal law defines COBRA-qualified beneficiaries as the employee (or former employee), spouse, and children if covered under the group health plan at the time of the qualifying event. A domestic partner, therefore, is not a COBRA-qualified beneficiary in his or her own right. The employee, however, may elect COBRA for his or her domestic partner, if the group health plan extends eligibility to domestic partners, since COBRA beneficiaries have the same enrollment options as active employees.

Separately, many states have enacted coverage continuation provisions under their state insurance laws. These often are referred to as “mini-COBRA” laws. Certain states that provide protections for domestic partnerships or civil unions may also extend their mini-COBRA provisions. California is one example; Cal-COBRA (the state’s mini-COBRA law) extends to registered domestic partners (RDPs) as defined by state law. Mini-COBRA provisions, if any, will be described in the carrier’s group policy.

In summary, employers that choose to extend group health plan eligibility to domestic partners, or who purchase group policies that include state-mandated domestic partner provisions, are encouraged to work with carriers, benefit advisors, and payroll vendors to develop and administer appropriate procedures. All plan materials should contain consistent definitions of eligibility, communications should encourage employees to consult their tax advisors regarding federal and state tax laws, and payroll vendors should ensure accurate W-2 reporting.

Overview of the SHOP Marketplace

Health Care History Lessons

The following information comes directly from the SHOP section of Healthcare.gov.  There are 9 SHOP plans available in Louisiana (and hundreds of other small group options).  We would be happy to show them all to you.  Employers with lower-paid employees in particular will have the most to gain by choosing SHOP plans.  But, there are also other situations that make SHOP a potentially attractive option.  Please take a look and let us know if you need any help evaluating your options.

The Small Business Health Options Program (SHOP) Marketplace is for small employers who want to provide health and dental insurance to their employees — affordably, flexibly, and conveniently.

To use the SHOP Marketplace, your business or non-profit organization must have 50 or fewer full-time equivalent employees (FTEs).

You don’t have to wait for an open enrollment period. You can start offering SHOP insurance to your employees any time of year.

FYI: Self-employed with no employees?Visit the Health Insurance Marketplace for Individuals & Families. The SHOP Marketplace is for business with at least one full-time equivalent (FTE) employee other than owners, partners, or family members. Learn about coverage if you’re self-employed.

5 reasons to use the SHOP Marketplace to offer employee insurance

  1. The SHOP Marketplace offers high-quality plans from private insurance companies.
  2. You have choice and flexibility. You can:
    • Offer your employees one plan, or let them choose from multiple plans
    • Offer only health coverage, health and dental coverage, or only dental coverage
    • Choose how much you pay toward your employees’ premiums, and whether to offer coverage to their dependents
    • Decide how long your employees’ initial enrollment period is, and how long new employees must wait before joining the plan
  3. You can handle everything online — applying, choosing plans, managing your coverage, and paying your premiums — whenever it’s convenient for you.
  4. You can use your current agent or broker, work with any SHOP-registered agent or broker, or handle everything yourself. Our agency is an approved Marketplace broker.
  5. If you have fewer than 25 employees, you may qualify for a Small Business Health Care Tax Credit worth up to 50% of your premium costs.

Next steps to offer SHOP health insurance


More answers: The SHOP Marketplace

Small Business Health Options Program (SHOP) Marketplace

The Small Business Health Options Program (SHOP) Marketplace on HealthCare.gov is open to small employers with 1-50 employees. Small employers can offer their employees (and, dependents, if they choose) health and dental insurance at any time of year through the SHOP Marketplace.

Below are a few new videos that give a quick overview of the program.  It only takes a few minutes to see if you qualify.

The Small Business Health Care Tax Credit

small-business-health-insurance-minYou may qualify for employer health care tax credits if you have fewer than 25 full-time equivalent employees making an average of about $50,000 a year or less.

See if you qualify for the Small Business Health Care Tax Credit

To qualify for the tax credit, all of the following must apply:

  • You have fewer than 25 full-time equivalent (FTE) employees
  • Your average employee salary is about $50,000 per year or less
  • You pay at least 50% of your full-time employees’ premium costs
  • You offer coverage to your full-time employees through the SHOP Marketplace. (You don’t have to offer it to dependents or employees working fewer than 30 hours per week to qualify for the tax credit.)

The tax credit is worth up to 50% of your contribution toward your employees’ premium costs (up to 35% for tax-exempt employers).

Higher benefits for smaller businesses

The tax credit is highest for companies with fewer than 10 employees who are paid an average of $25,000 or less. The smaller the business, the bigger the credit.


ACA Shared Responsibility: 2015 Versus 2016

Image result for ACA Shared Responsibility

Determining ALE Status
• An employer is considered an ALE if they average 50
or more full-time employees and equivalents per
month in the previous calendar year
– Full-time employees automatically count as one “head”
– Non full-time employees have an equivalency calculated where their total hours of service in a
month (capped at the first 120 hours) are divided by 120 to determine their FT equivalency.
• An employee that worked 90 hours in a month would be 0.75




·     Determined by reviewing average monthly Full-time and FTE counts from 2014



·     Determined by reviewing average monthly Full-time and FTE counts from 2015



·     2015 Transition relief permitted use of any consecutive 6-month period in 2014


·     Transition relief no longer applies, ALE determination based on full 2015 calendar year



Affordability Safe Harbors




• Affordability threshold 9.56%

• Federal Poverty Level $11,770

• Affordable FPL premium $93.77

• Affordability threshold 9.66%

• Federal Poverty Level $11,880

• Affordable FPL premium $95.63 (+2%)


Penalties for non-compliance: 4980(a) – The “A” Penalty


• Employers with 100 or more Full-time employees and equivalents must offer coverage (2015 Transition Relief)

• Coverage must be offered to 70% of all full-time employees



• When calculating the ‘A’ penalty, the full-time employee count is reduced by 80


• 4980(a) annual penalty of $2,080 per FT employee



• Employers with 50 or more Full-time employees and equivalents must offer coverage (Transition Relief ends)

• Coverage must be offered to 95% of all full-time employees

• When calculating the ‘A’ penalty, the full-time employee count is reduced by 30 (Transition Relief ends)

• 4980(a) annual penalty of $2,160 per FT employee


Penalties for non-compliance: 4980(b) – The “B” Penalty





• Penalty of $260 per month for each employee offered unaffordable or non-MV coverage AND qualifies for a subsidy to purchase marketplace coverage

• Increase to $270 per month (indexed for inflation)


IRS Reporting (1094-C / 1095-C)





• Required of all ALEs

• Employee statements due March 31, 2016

• IRS eFile Due June 30, 2016

• eFile required when filing 250 or more forms





• Required of all ALEs

• Employee statements due January 31, 2017

• IRS eFile Due March 31, 2017

• eFile required when filing 250 or more forms


1095-C Coding – 1I No longer valid

Series Code Usage


1A Qualifying Offer


Affordable by FPL standard, MEC/MV for employee, MEC for spouse and dependent all 12 mo.



Employee Only

MEC, MV Coverage


1C Employee + Dependent(s) MEC, MV for employee, MEC for dependents



Employee + Spouse MEC, MV for employee, MEC for dependents


1E Employee + Family

MEC, MV for employee, MEC for dependents and spouse


1F Non-MV coverage (all coverage tiers)

Coverage does not provide MV



Offer to no Full-Time employees



No MEC coverage offered Often explained by Series 2 codes


1l Qualifying Offer Transition Relief

No Longer Valid

1095-C Coding – New Codes

Series Code




Conditional Spouse Offer


MEC/MV to Employee, no offer for dependents, conditional offer for spouse



Conditional Spouse Offer


MEC/MV to Employee, MEC for dependents, conditional offer for spouse


Penalties for non-compliance: Failure to file




• Failure to file an informational return to the IRS will result in a per-form penalty of $250

• Failure to furnish a payee statement to an employee will result in a per-instance penalty of $250


• Failure to file penalties remain unchanged


Marketplace Notice Challenges

Sample 2016 Employer Notice

• Currently issued by a handful of state-run exchanges
and state exchanges operated by the federal
• Sent to address indicated by employee (usually the
location worked) – have a plan to ensure notices are
funneled to the appropriate department
• Not the final word on ESR penalties, responding to the
notice doesn’t mean that you won’t have to respond
to the IRS again later.

Marketplace Appeal Request

Marketplace Employer Appeal Request Form

• Appeals are shared with the employee – consider
employee relations implications and communication
strategies to inform affected employees
• Only the IRS can levy ESR penalties


Health Insurance Marketplace Subsidy Notices

Have you received a Health Insurance Marketplace Subsidy Notice (Subsidy Notice) from the Department of Health and Human Services (HHS)? If so, your response may affect whether or not the IRS later assesses a pay or play penalty. This article explains the appropriate way to respond to these notices.

HHS recently began sending Subsidy Notices to employers. The purpose of the Subsidy Notice is to inform employers that an individual—who identified the employer as his or her employer—enrolled in health insurance through the Health Insurance Marketplace and was certified as eligible for an Advanced Payment of Premium Tax Credit (APTC).

Pay or play penalties are potentially triggered when at least one of an applicable large employer’s (ALE) “full-time employees” (as that term is defined under the Affordable Care Act or ACA) receives an APTC.

Subsidy Notices are sent by HHS. Only the IRS can assess a pay or play penalty. So, it is important for employers to understand:

  • The Subsidy Notices do not determine whether the employer is subject to a pay or play penalty; and
  • Failure to appeal the Subsidy Notice does not preclude the employer from later appealing the assessment of a pay or play penalty by the IRS.

Applicable Large Employer Responses to Subsidy Notices
First and foremost, an employer should not appeal a Subsidy Notice on behalf of an employee for whom the employer did not: (1) offer coverage under its group health plan; or (2) offer coverage that was both affordable and of minimum value.

As explained below, however, employers should carefully consider whether to appeal the Subsidy Notices received on behalf of other employees—especially full-time employees—who were offered coverage under the employer’s group health plan that is both affordable and of minimum value.

Full-Time Employees
Only full-time employees can trigger a pay or play penalty. If an employer receives a Subsidy Notice on behalf of a full-time employee who was offered affordable, minimum value coverage, it may be in the employer’s best interest to appeal the Subsidy Notice. This may allow the employer to “nip in the bud” the issue of a later assessment of a pay or play penalty by the IRS. (Alternatively, if the IRS still assesses a pay or play penalty on behalf of a full-time employee who the employer successfully appealed a Subsidy Notice, the evidence of the successful appeal may be helpful to the employer in contesting the IRS’s assessment of a pay or play penalty.)

It may not only be in the employer’s best interest to appeal the Subsidy Notice—it may also be in the employee’s best interest because the employee may be ineligible for the APTC. In other words, a successful appeal of the Subsidy Notice may also limit the amount of the APTC that the ineligible employee must repay.

Non-Full-Time Employees
A non-full-time employee cannot trigger a pay or play penalty. So, it is unnecessary to appeal a Subsidy Notice received on behalf of a non-full-time employee for purposes of the pay or play penalty.

If an ALE offered a non-full-time employee affordable, minimum value coverage, however, the ALE may want to appeal the Subsidy Notice to limit the amount of the APTC that the employee must repay.

Non-Applicable Large Employer Responses to Subsidy Notices
Non-ALEs (generally employers with less than 50 full-time and full-time equivalent employees) are not subject to the pay or play penalty. So, again, there is no reason for a non-ALE to appeal a Subsidy Notice for pay or play penalty purposes.

But a non-ALE may consider appealing a Subsidy Notice on behalf of an employee who was offered affordable, minimum value coverage, to limit the amount of the APTC that the employee must repay.

How to Appeal the Subsidy Notice
To appeal the Subsidy Notice, an employer should use the form provided by HHS, which is available at healthcare.gov (https://www.healthcare.gov/marketplace-appeals/employer-appeals). This form provides a space for the employer to include a narrative explaining why the employee is ineligible for an APTC. In this narrative, the employer should indicate that the employee was either enrolled in coverage under the employer’s group health plan or that the employee was offered coverage under the employer’s group health plan. The employer should also include the employee’s cost of employee-only coverage under the employer’s lowest-cost group health plan and an affirmative statement that the group health plan provides minimum value.

In addition to the narrative, the employer may include supporting documentation, such as:

  • A copy of the election form (or a screenshot from an electronic enrollment platform) showing that the employee is enrolled in the employer’s group health plan, or was offered and waived coverage under the employer’s group health plan.
  • If the employee didn’t affirmatively waive coverage, the employer should include plan records showing that the employee was offered coverage but failed to elect coverage under the employer’s group health plan.
  • Any materials evidencing the employee’s cost of coverage. (Evidence of satisfying an affordability safe harbor may be helpful, but will not be determinative of actual affordability.)
  • Evidence that the employer’s group health plan is of minimum value (e.g., a summary of benefits showing that the group health plan covers at least 60% of eligible expenses).
  • A copy of the Subsidy Notice

As a reminder, an ALE’s decision to appeal Subsidy Notices has no bearing on the ALE’s ability to later appeal the IRS’s assessment of a pay or play penalty. But being proactive in appealing Subsidy Notices may prevent the IRS from later assessing a pay or play penalty.

If you have any questions about Subsidy Notices or how you should respond, please contact the Benefit Administration Group.