Legislation Affecting Small Employers

Ohio Small Group Reform:
Defines a small group as having between 2 and 50 employees on 50% of its working days during the preceding year. It defines an eligible employee as one that works 25 hours per week but excludes any part time or seasonal employee who works only part of the calendar year on the basis of natural or suitable times or circumstances. It further defines the maximum waiting period for a new employee to qualify for coverage as 90 days. This legislation also sets guidelines that insurance carriers must follow in establishing new and renewal premium rates.

HIPAA – Health Insurance Portability & Accountability Act of 1996:
This far-reaching legislation is designed to improve the portability of health coverage and increase security and privacy of health care information. Penalties for non-compliance are severe. Regardless of size, HIPAA provides rules for portability, special enrollment events and nondiscrimination requirements for group health plans. In addition, it includes rules that guarantee the availability and renewability of health insurance for employers who sponsor plans with 2-50 employees.

The HIPAA Privacy Rule was effective April 14, 2003. Strict requirements protect a covered person’s PHI (Protected Health Information) and the U. S. Department of Health & Human Services (DHHS) has issued regulations as to the use and disclosure of Individually Identifiable Health Information. As an employer with a health plan, you need to determine whether you want a “hands on” or “hands off” approach for creating or receiving PHI. A “hands on” approach has very specific requirements which must be in place in advance of creating or receiving PHI.

Summary Plan Descriptions (SPD):
Regardless of size, employers should be providing covered employees with this ERISA required document including specific information about your employee benefits plan. We work with our clients to provide them with the needed information and document template necessary to satisfy this requirement.

COBRA – Consolidated Omnibus Budget Reconciliation Act:
Applies to employers with 20 or more employees on 50% of the working days in the preceding calendar year. COBRA requires most employers that sponsor group health plans to notify employees and eligible family members of their rights to continue benefits in the event that group coverage is lost due to certain situations. It has specific notification and election requirements and carries stiff penalties for non-compliance. Like most of these, it is an employer responsibility law. There are various COBRA administration companies that you can contract with to help you with your responsibilities. We purchase for our clients comprehensive software to help them comply.

State Continuation:
This legislation was effective March 1, 1985 and applies to companies regardless of their size but may be superseded by COBRA's more liberal benefits as applicable. The law provides for continuation of coverage for a period of 6 months IF the employee was involuntarily terminated and eligible for unemployment compensation.

Medicare Secondary:
This law applies to companies with 20 or more employees (full & part time) for each working day in each of 20 or more calendar weeks in the current or preceding year. The purpose of this federal law is to shift the primary burden of the cost of care to the employer plan and away from the federal government Medicare program by making Medicare the secondary payer in most instances where an employee is still working. Does not apply to retirees or those working fewer than the required number of hours to qualify for the insurance.

Family Medical Leave:
Effective August 5, 1993 this law affects employers with 50 or more employees (full and part time) on 20 or more calendar weeks in the current or preceding year. To qualify an employee must have been employed at least 12 months and worked at least 1250 hours in the 12 month preceding the anticipated leave of a maximum of 12 weeks in a 12 month period for specified reasons. During the medical leave, the employer must maintain the group health insurance on the same terms as if the employee had continued to work.

Pregnancy Discrimination Act:
Public Law 95-555 was effective April 29, 1979 with respect to employee fringe benefits prohibiting sex discrimination on the basis of pregnancy, childbirth or related medical conditions. While the Federal law regulates employers who employ 15 or more employees on this subject, Ohio employers must comply with Ohio enacted legislation which covers employers which EMPLOY MORE THAN 4 PERSONS stating that women affected by pregnancy or childbirth may not be treated any differently for employment related purposes including fringe benefit program. Both laws refer to the number of persons EMPLOYED and not just insured. This is EMPLOYER RESPONSIBILITY legislation with which you must comply. Failure to do so could result in the necessity to self insure a large pregnancy or childbirth claim which is not part of your insurance contract.

Premium Conversion:
Enables employee contributions to health insurance to be made with pre-tax rather than after-tax dollars, saving both the employee and employer tax dollars. Requires a formal plan document and summary plan description. Many insurance carriers provide sample documents that you can review with your tax or legal counsel.