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What Are the Disadvantages of FMLA Administration Outsourcing?


        FMLA Administration Outsourcing

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While FMLA outsourcing can make FMLA administration more accurate and efficient, there are a few drawbacks to consider. HR departments may need an initial adjustment period while they re-shuffle their workload and delegate new tasks.

Employees might be displeased with needing to contact an outside resource rather than their company’s HR department to make leave requests. In addition, decisions regarding leave requests may not happen as quickly as they do when employees are able to speak directly to an HR representative, even if the vendor is complying with FMLA deadlines. Any additional delay can cause frustration as employees attempt to plan for their personal circumstances.

The Family and Medical Leave Act (FMLA) is a federal law that allows eligible employees to take unpaid leave for a variety of personal circumstances.

Due to the numerous regulations and complexities of the FMLA, administering FMLA leave can be a daunting task for many HR departments. In an effort to make FMLA administration more accurate and efficient, many employers have opted to outsource their leave programs to outside vendors.


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Is FMLA Outsourcing Right for Your Company?


        FMLA Administration Outsourcing

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It is important to consider several factors in order to determine which FMLA administration option is best for your organization.

Examine how efficiently your company’s HR department currently handles FMLA administration. Are they able to keep track of FMLA regulations and stay up to date on changes to FMLA requirements? Are leave requests being over-granted due to a lack of understanding of FMLA regulations and employee eligibility requirements?

In addition, assess your HR department’s current workload to determine whether FMLA administration is making it difficult to delegate or complete other tasks.

The Family and Medical Leave Act (FMLA) is a federal law that allows eligible employees to take unpaid leave for a variety of personal circumstances.

Due to the numerous regulations and complexities of the FMLA, administering FMLA leave can be a daunting task for many HR departments. In an effort to make FMLA administration more accurate and efficient, many employers have opted to outsource their leave programs to outside vendors.


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ERISA: A Timeline for Compliance


        Final Rule Updates SBC Requirement

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When you offer retirement and health benefits to your employees, you need to make sure you’re providing the right documents to stay in compliance with the Employee Retirement Income Security Act of 1974 (ERISA).

ERISA requires that you provide several types of documents to the Department of Labor (DOL) and plan participants. Noncompliance can result in fines, so make sure you’re providing the right documents at the right times.

Here’s a quick overview of the documents you need to stay in compliance:

Plan Document
 The plan document contains a description of the terms and conditions for the operation and administration of the plan. It must be provided within 30 days of a written request.

Summary Plan Description (SPD) 
The SPD contains plan information, including the benefits, rights and obligations of the covered participant. It should be written in a style and format that can be easily understood by the average plan participant. The SPD should be provided within 90 days of the participant being covered by the plan or the beneficiary receiving benefits, or within 30 days of a written request.

Summary of Material Modification (SMM) The SMM describes material changes to a plan and any changes in the information required in the SPD. An updated SPD satisfies the SMM requirement. The SMM or updated SPD must be distributed to participants and pension plan beneficiaries no later than 210 days after the end of the plan year in which the changes were made, or within 30 days of a written request.

Form 5500
 The Form 5500 satisfies various annual reporting obligations that plan administrators must meet under ERISA and the Internal Revenue Code. Form 5500 may be filed electronically on the DOL website. This form is generally due by the last day of the seventh calendar month after the plan year ends, or within 30 days of a written request. See www.dol.gov/ebsa/pdf/rdguide.pdf for details. Some plans are exempt from this requirement.

Summary Annual Report (SAR) 
This report is a narrative report of the Form 5500 and includes a statement of the participant’s right to receive the annual report. Plans that are exempt from annual 5500 filing, as well as large and unfunded health plans, may be exempt from the SAR requirement. The SAR must be provided to participants and pension plan beneficiaries no later than 210 days after the plan year ends or two months after the Form 5500 due date.



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SBC Effective Date


        Final Rule Updates SBC Requirement

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The final regulations generally apply to coverage that begins on or after Sept. 1, 2015. However, for disclosures to individuals and dependents in the individual market, the requirements apply to coverage that begins on or after Jan. 1, 2016.

Until these final regulations become applicable, plans and issuers must continue to comply with the 2012 final regulations, as applicable.

On June 16, 2015, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) published final regulations on the summary of benefits and coverage (SBC) and uniform glossary requirement under the Affordable Care Act (ACA).

These regulations finalize provisions in proposed regulations that were published on Dec. 30, 2014, in order to amend prior final regulations from Feb. 14, 2012. According to the Departments, the changes made by these final regulations are designed to improve consumers’ access to important health plan information and to provide clarification that will make it easier for group health plans and health insurance issuers to comply with the SBC requirement.


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New SBC Template


        Final Rule Updates SBC Requirement

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In conjunction with the December 2014 proposed regulations, the Departments issued a draft-updated template, instructions and supplementary materials. The Departments previously issued an FAQ on March 31, 2015, announcing that the finalized template, instructions and uniform glossary are not expected to be finalized until January 2016. The final rule reiterates this expected timeline.

These new documents will apply for plan years beginning on or after Jan. 1, 2017 (including open enrollment periods in fall of 2016 for coverage beginning on or after Jan. 1, 2017).

On June 16, 2015, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) published final regulations on the summary of benefits and coverage (SBC) and uniform glossary requirement under the Affordable Care Act (ACA).

These regulations finalize provisions in proposed regulations that were published on Dec. 30, 2014, in order to amend prior final regulations from Feb. 14, 2012. According to the Departments, the changes made by these final regulations are designed to improve consumers’ access to important health plan information and to provide clarification that will make it easier for group health plans and health insurance issuers to comply with the SBC requirement.


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SBC and Uniform Glossary Requirements


        Final Rule Updates SBC Requirement

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The ACA expanded ERISA’s disclosure requirements by requiring group health plans and issuers to provide an SBC to applicants and enrollees at certain times, such as before enrollment and re-enrollment. The SBC requirement became effective for plan coverage that began on or after Sept. 23, 2012.

In addition, plans and issuers must make a uniform glossary of health coverage-related terms and medical terms available to participants. Plans and issuers must provide the uniform glossary upon request, in either paper or electronic form, within seven business days after receipt of the request.

The 2012 regulations require plans and issuers to provide the SBC and uniform glossary in a standardized format. In conjunction with the 2012 regulations, the Departments provided a template for the SBC and related materials, including a uniform glossary, for plans and issuers to use (available on the DOL website).

After the 2012 regulations were issued, the Departments released a series of FAQs on the SBC requirement. FAQs Parts VII, VIII, IX, X, XIV and XIX addressed questions related to compliance with the 2012 regulations, implemented additional safe harbors and released updated SBC materials.

On Dec. 30, 2014, the Departments issued additional proposed regulations, as well as a new proposed SBC template, instructions, an updated uniform glossary and other materials. The draft-updated template, instructions and supplementary materials are available on the DOL website under the heading “Templates, Instructions, and Related Materials—Proposed (SBCs On or After 9/15/15).”

The ACA establishes a penalty of up to $1,000 for each willful failure to provide the SBC. Failing to provide the SBC may also trigger an excise tax of $100 per individual for each day of noncompliance. However, the Departments have stated that their approach to implementation emphasizes assisting (rather than imposing penalties on) plans, issuers and others that are working diligently and in good faith to understand and come into compliance with the SBC requirement.

On June 16, 2015, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) published final regulations on the summary of benefits and coverage (SBC) and uniform glossary requirement under the Affordable Care Act (ACA).

These regulations finalize provisions in proposed regulations that were published on Dec. 30, 2014, in order to amend prior final regulations from Feb. 14, 2012. According to the Departments, the changes made by these final regulations are designed to improve consumers’ access to important health plan information and to provide clarification that will make it easier for group health plans and health insurance issuers to comply with the SBC requirement.


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Overview of the SBC Final Regulations


        Final Rule Updates SBC Requirement

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The 2015 regulations generally finalize the December 2014 proposed regulations without significant changes, which implement certain changes to the SBC requirement. Overall, the modifications in the final regulations:

     • Clarify when and how a plan or issuer must provide an SBC

     • Streamline the SBC template

     • Add certain elements to the SBC template that the Departments
     believe will be useful to consumers

In addition, the final regulations make some of the SBC enforcement safe harbors and transitions permanent, with several modifications.

On June 16, 2015, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) published final regulations on the summary of benefits and coverage (SBC) and uniform glossary requirement under the Affordable Care Act (ACA).

These regulations finalize provisions in proposed regulations that were published on Dec. 30, 2014, in order to amend prior final regulations from Feb. 14, 2012. According to the Departments, the changes made by these final regulations are designed to improve consumers’ access to important health plan information and to provide clarification that will make it easier for group health plans and health insurance issuers to comply with the SBC requirement.


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Providing the SBC


        Final Rule Updates SBC Requirement

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The final regulations provide additional guidance on when a plan or issuer must provide the SBC to participants and beneficiaries. For example, the final regulations clarify how to satisfy the requirement to provide an SBC in the following situations:

     • The issuer provides the SBC upon request before application for coverage—
     If the issuer provides the SBC upon request before application for coverage, the
     requirement to provide an SBC upon application is deemed satisfied, and
     the issuer is not required to automatically provide another SBC upon application
     to the same entity or individual (provided there is no change to the information
     required to be in the SBC). However, if there has been a change in the
     information required to be included in the SBC, a new SBC that includes the
     changed information must be provided upon application (that is, as soon as
     practicable following receipt of the application, but in no event later than
     seven business days following receipt of the application).

     • The terms of coverage are not finalized—If the plan sponsor is negotiating
     coverage terms after an application has been filed and the information
     required to be in the SBC changes, an updated SBC is not required to be provided
     to the plan or its sponsor (unless an updated SBC is requested) until the first day of
     coverage. The updated SBC is required to reflect the final coverage terms under
     the policy, certificate, or contract of insurance that was purchased.

On June 16, 2015, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) published final regulations on the summary of benefits and coverage (SBC) and uniform glossary requirement under the Affordable Care Act (ACA).

These regulations finalize provisions in proposed regulations that were published on Dec. 30, 2014, in order to amend prior final regulations from Feb. 14, 2012. According to the Departments, the changes made by these final regulations are designed to improve consumers’ access to important health plan information and to provide clarification that will make it easier for group health plans and health insurance issuers to comply with the SBC requirement.


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SBC Reducing Duplication


        Final Rule Updates SBC Requirement

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The 2012 regulations provide three special rules to avoid unnecessary duplication when providing the SBC. For example, the 2012 regulations provide that if either the plan or the issuer provides the SBC to a participant or beneficiary in accordance with the timing and content requirements, both will have satisfied their SBC obligations. The final regulations retain these rules, and also add new rules to prevent unnecessary duplication where:

     • A group health plan utilizes a binding contractual arrangement where
     another party assumes responsibility to provide the SBC

     • A group health plan uses two or more insurance products provided by
     separate issuers to insure benefits with respect to a single group health plan

     • The SBC for student health insurance coverage is provided by another
     party (such as an institution of higher education)

On June 16, 2015, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) published final regulations on the summary of benefits and coverage (SBC) and uniform glossary requirement under the Affordable Care Act (ACA).

These regulations finalize provisions in proposed regulations that were published on Dec. 30, 2014, in order to amend prior final regulations from Feb. 14, 2012. According to the Departments, the changes made by these final regulations are designed to improve consumers’ access to important health plan information and to provide clarification that will make it easier for group health plans and health insurance issuers to comply with the SBC requirement.


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SBC Formatting and Content Changes


        Final Rule Updates SBC Requirement

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The ACA limits the length of the SBC to four pages, but the 2012 regulations interpret this requirement to be four double-sided pages. The final regulations retain this interpretation, allowing the SBC to be four double-sided pages.

However, some plans and issuers have expressed concern regarding the difficulty of complying with the page limit while including all of the required information. Therefore, the final regulations provide that the Departments will address specific issues related to completing the four-page template, as well as the issues plans and issuers encounter while meeting these requirements, with the finalization of the new template and associated documents, separate from the final regulations.

The proposed regulations also included a number of changes to the content of the SBC and uniform glossary to reflect the ACA’s insurance market reforms. For example, references to annual limits for essential health benefits and pre-existing condition exclusions would be removed. In addition, the disclosures relating to continuation of coverage, minimum essential coverage and minimum value would be revised to provide more useful information to consumers, including those shopping in the individual market. These content changes were not finalized in the final regulations, but will likely be addressed when the new template and associated documents are finalized.

However, the final regulations do clarify that all plans and issuers must include the following on the SBC:

     • Contact information for questions.

     • A Web address where a copy of the actual individual coverage policy
     or group certificate of coverage can be reviewed and obtained.

On June 16, 2015, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) published final regulations on the summary of benefits and coverage (SBC) and uniform glossary requirement under the Affordable Care Act (ACA).

These regulations finalize provisions in proposed regulations that were published on Dec. 30, 2014, in order to amend prior final regulations from Feb. 14, 2012. According to the Departments, the changes made by these final regulations are designed to improve consumers’ access to important health plan information and to provide clarification that will make it easier for group health plans and health insurance issuers to comply with the SBC requirement.


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