Benefits Compliance Inbox Highlights

What Benefits Questions are Employers Asking Right Now?

Q: Do wrap docs need to be distributed to only enrolled members, or all benefits eligible employees?
A: The ‘plan document’ and ‘wrap plan’ (which are often one in the same) are not actually subject to distribution unless a participant requests it. However, the plan summary plan description (SPD) is required to be distributed to all benefit eligible employees at least once every 5 years. It also needs to be provided to new employees when they become eligible for the benefits plans.

Q: We offer 3 medical plans, one of which has an integrated HRA. At this time, we do not include the HRA as a COBRA eligible benefit for anyone, and thus its not included in the COBRA premium. Is this correct?
A: An HRA is a COBRA benefit and needs to be offered as a component of the underlying medical plan since they are considered one bundled plan. There are 2 options for calculating the HRA COBRA rate- past cost method, or actuarial value method (past cost method is the more popular choice). It is important that all COBRA election notices are updated to include the HRA bundled with the applicable medical plan.

Q: An employee was just terminated for theft. Are we allowed to deny COBRA on the grounds of ‘gross misconduct’? What constitutes ‘gross misconduct’ within the meaning of the exception to COBRA?
A: While the COBRA rules provide an exception to the requirement that employers offer COBRA election paperwork to employees upon termination for instances of ‘gross misconduct’, the applicable rules do not define what might constitute this type of event. The DOL states ‘whether a terminated employee has engaged in “gross misconduct” that will justify a plan in not offering COBRA to that former employee and his or her family members will depend on the specific facts and circumstances. Generally, it can be assumed that being fired for most ordinary reasons, such as excessive absences or generally poor performance, does not amount to “gross misconduct.“’ Employers should exercise caution when denying COBRA on this basis, and should clearly document what might result in this denial in their written employee materials and COBRA policy.

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