Question 1

What is the ACA employer mandate?

Accepted Answer

The ACA employer mandate (IRC Section 4980H) requires Applicable Large Employers (ALEs) — those with 50 or more full-time equivalent employees — to offer minimum essential coverage (MEC) to at least 95% of their full-time employees and their dependents, or face penalties. There are two penalty tiers: 4980H(a) applies when an ALE fails to offer coverage at all ($3,340/FTE in 2026); 4980H(b) applies when coverage is offered but is unaffordable or does not meet minimum value ($5,010/FTE in 2026). Both penalties are indexed annually.

Question 2

How do I determine if I am an Applicable Large Employer (ALE)?

Accepted Answer

You are an ALE if you employed an average of 50 or more full-time equivalent (FTE) employees during the prior calendar year. Full-time employees work 30+ hours per week (or 130+ hours per month). Part-time employees are converted to FTEs by dividing their total monthly hours by 120. Count all employees across all related entities under common ownership (controlled group rules apply). If you are close to the 50-employee threshold, consult an ERISA attorney — the controlled group rules are complex and the penalties for misclassification are significant.

Question 3

What is ERISA fiduciary duty for health plans?

Accepted Answer

ERISA imposes fiduciary duties on anyone who exercises discretionary authority or control over a health plan — including the employer as plan sponsor. The core duties are: (1) Act solely in the interest of plan participants; (2) Follow a prudent process for all plan decisions, including vendor selection and monitoring; (3) Follow the plan documents; (4) Diversify plan investments (primarily relevant to 401(k), but applies to health plan assets too). ERISA fiduciary liability is personal — it cannot be indemnified by the employer, and fiduciaries can be held personally liable for plan losses.

Question 4

What COBRA notices am I required to send?

Accepted Answer

COBRA requires several notices: (1) General Notice — sent to new plan participants within 90 days of coverage start; (2) Election Notice — sent to qualified beneficiaries within 14 days of the employer learning of a qualifying event (or within 44 days if the employer is also the plan administrator); (3) Notice of Unavailability — if coverage is not available; (4) Notice of Early Termination — if COBRA coverage ends before the maximum period. The penalty for failure to provide timely COBRA notices is $110/day per qualified beneficiary.

Question 5

What are the qualifying events that trigger COBRA?

Accepted Answer

COBRA qualifying events for employees: (1) Voluntary or involuntary termination of employment (except for gross misconduct); (2) Reduction in hours below full-time threshold. Qualifying events for spouses and dependents: (1) Employee's termination or reduction in hours; (2) Employee's death; (3) Divorce or legal separation from the employee; (4) Employee's enrollment in Medicare; (5) Dependent child losing dependent status under the plan. The COBRA election period is 60 days from the later of coverage loss or the election notice.

Question 6

Does HIPAA apply to self-funded health plans?

Accepted Answer

Yes. Self-funded health plans are covered entities under HIPAA and must comply with the Privacy Rule, Security Rule, and Breach Notification Rule. Key obligations: limit access to protected health information (PHI) to employees who need it for plan administration; execute Business Associate Agreements (BAAs) with all vendors who handle PHI (TPA, PBM, stop-loss carrier); train employees who handle PHI annually; conduct an annual security risk assessment; and establish a breach notification procedure (60-day notification to affected individuals and HHS). HIPAA penalties range from $100 to $50,000 per violation.

Question 7

What is a Summary Plan Description (SPD) and when must I distribute it?

Accepted Answer

An SPD is a plain-language document that explains your health plan's benefits, eligibility rules, claims procedures, and participant rights. ERISA requires you to distribute an SPD to all plan participants within 90 days of becoming covered, and to new participants within 90 days of enrollment. You must also distribute an updated SPD every 5 years (or every 10 years if no material changes). Failure to provide an SPD upon request within 30 days carries a penalty of $110/day per participant. The SPD must be written in a manner calculated to be understood by the average plan participant.

Question 8

What is the Summary of Benefits and Coverage (SBC)?

Accepted Answer

The SBC is a standardized 4-page document that summarizes your health plan's key benefits and cost-sharing in a format that allows apples-to-apples comparison across plans. It is required by the ACA and must be provided: (1) During open enrollment; (2) Within 7 business days of a request; (3) Within 90 days of a special enrollment event; (4) At least 60 days before any material modification to the plan. The SBC is different from the SPD — it is shorter, standardized, and focused on benefits comparison rather than plan administration.

Question 9

What is the mental health parity rule?

Accepted Answer

The Mental Health Parity and Addiction Equity Act (MHPAEA) requires that mental health and substance use disorder (MH/SUD) benefits be no more restrictive than medical/surgical benefits. This applies to financial requirements (deductibles, copays, out-of-pocket limits), quantitative treatment limits (number of visits, days of coverage), and non-quantitative treatment limits (prior authorization, step therapy, network standards). The 2024 MHPAEA final rule significantly expanded employer obligations, including a requirement to perform and document comparative analyses of non-quantitative treatment limitations.

Question 10

What annual notices am I required to distribute to employees?

Accepted Answer

Key annual required notices: (1) CHIP notice — by the first day of each plan year, notifying employees of state premium assistance programs; (2) Medicare Part D creditable coverage notice — by October 15 each year; (3) Women's Health and Cancer Rights Act notice — annually; (4) Newborns' and Mothers' Health Protection Act notice — at enrollment and annually; (5) Summary Annual Report (SAR) — within 9 months of plan year end (for plans required to file Form 5500). Missing required notices can result in penalties of $110/day per participant.

Question 11

Do I need to file Form 5500?

Accepted Answer

Most self-funded health plans with 100 or more participants at the beginning of the plan year must file Form 5500 annually with the DOL. The filing deadline is 7 months after the plan year end (July 31 for calendar-year plans), with a 2.5-month extension available. Small plans (fewer than 100 participants) are generally exempt. The penalty for late filing is $250/day, up to $150,000 per plan year. Self-funded plans must also attach Schedule A (insurance information) and Schedule H (financial information).

Question 12

What is the No Surprises Act and what does it require of employers?

Accepted Answer

The No Surprises Act (effective January 2022) protects patients from unexpected medical bills for emergency care and certain non-emergency care at out-of-network facilities. For self-funded employers, key obligations include: (1) Ensuring your plan's cost-sharing for surprise bills does not exceed in-network cost-sharing; (2) Providing required disclosures about surprise billing protections; (3) Participating in the independent dispute resolution (IDR) process when providers dispute payment. The No Surprises Act also requires plans to provide a price comparison tool and good faith cost estimates.

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