Chapter_Three_416 - Regulating Employee Benefits Key...

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Unformatted text preview: Regulating Employee Benefits Key Federal & State Statutes Employee Retirement Income Security Act (1974) ERISA Amendments COBRA HIPAA Federal Antidiscrimination Laws Title VII of the Civil Right Act of 1964 Age Discrimination in Employment Act (1967) Pregnancy Discrimination Act (1978) Americans with Disabilities Act (1990) Family & Medical Leave Act (1993) California FEHA Act Leave Laws ERISA Background Many firms offer employees the benefit of investing in the company’s retirement plan but government oversight had been lacking In 1974, Congress enacted ERISA The Act governs certain administrative aspects of employee benefit and retirement plans ERISA does not require employers to provide any particular benefits The purpose of the Act is to protect the interests of individuals participating in employee benefit plans ERISA Covers Does private employers not cover plans by government entities, churches, non- U.S. residents or independent contractors Regulates the establishment and administration of Medical insurance Life insurance Disability programs Pension programs Plans Covered by ERISA Welfare plans Medical, surgical, or hospital care Benefits for sickness, accident, disability or death Pensions plans Defined benefit plans Defined contribution plans Employer at risk Funding requirements & the PBGC Employee at risk Predominant (e.g., 401(k)) Summary plan description Tells participants what the plan provides and how it operates. It provides information on when an employee can begin to participate in the plan, how service and benefits are calculated, when benefits becomes vested, when and in what form benefits are paid, and how to file a claim for benefits ERISA Key Provisions Title I [Protection of employee rights] Reporting & disclosure Summary Plan Descriptions Vesting & participation standards Funding Fiduciary responsibilities Title II [IRS “carrot” for employers to offer retirement plans] Title III [Administration & enforcement] Title IV [Plan termination insurance] PBGC Amendments Continuation coverage [COBRA (1985)] Group health plan requirements [HIPAA (1996)] Participation & Vesting Must be Over 21 with 1 Year Service Vesting = Non-forfeitable rights to benefits Standard Always full vesting in employee’s contributions Formulas for employer’s contributions Cliff vesting Employer matching funds to 401(k): 3 years Employer contribution to defined benefit plan: 5 years Graduated schedule 401(k): 20% beginning in Year Two with an additional 20% up to year 6; Defined benefit plan: 20% beginning in Year Three with an additional 20% up to year 7 COBRA COBRA is the promise of temporarily continued health care coverage when someone stops working. It is the bridge an unemployed worker needs until he or she finds work. Applies to group health plans provided by employers with 20 or more employees. Gives participants and beneficiaries the right to maintain, at their own expense, coverage under their health plan (but at much less expensive group rates) If any employee is legally terminated or loses benefit coverage due to a reduction in hours, COBRA requires extended health coverage for up to 18 months. Qualifying Events Under COBRA Death of covered employee Termination (voluntary or involuntary—other than for gross misconduct) or reduction in hours Divorce or legal separation Dependent child loses eligibility Employee eligible for Medicare COBRA Process Employers must notify the health plan administrator of a qualifying event within 30 days after an employee’s death, termination, reduced hours or entitlement to Medicare The plan administrator must send participants and beneficiaries an election notice within 14 days after receiving the employer’s notice Participants and beneficiaries then have 60 days to elect COBRA continuation coverage of the policy they have The initial premium must be paid 45 days after electing coverage See the DOL website for answers to frequently asked questions Cal COBRA Same qualifying events as federal COBRA. Applies to employees who worked with an employer with 2 – 19 employees Coverage available for 36 months For those who take advantage of federal COBRA for 18 months, an additional 18 months of coverage is available under Cal COBRA. For more information consult the California Department of Managed Health Care /hp_cobra.aspx COBRA is expensive but, unless you have options, essential. HIPAA Guarantees access to group health insurance coverage. It is the fresh start new employees need Pre - existing condition exclusions Pre-existing means treatment in the 6 months before joining the new plan. HIPAA used to permit insurers to impose a maximum exclusion period of up to 12 months but required that credit be given for the time a person had been insured at a previous job (i.e., if you worked for more than a year at an old employer, the credit would result in immediate coverage for pre-existing conditions at the new employer). Effective January 1, 2014, the Affordable Care Act eliminated pre-existing condition exclusions in health insurance policies for those 19 and older (pre-existing condition exclusions were invalidated for children insured under their parents’ plans when the ACA was passed in 2010). HIPAA Generally requires group health insurers to renew coverage Privacy Rule Addresses the permitted and prohibited use and disclosure of health information Situations not requiring an individual’s authorization See the DOL website for answers to frequently asked questions on HIPAA r_hipaa.html#.UIhh6mfWqE4 HITECH The Health Information Technology for Economic and Clinical Health Act [HITECH] was enacted in 2009 in order to shift medical records away from paper. HHS is spending approximately $26 billion to promote and expand the adoption of health information technology by creating electronic health records [EHR]. The HITECH Act set meaningful use of EHRs as a critical national goal and incentivized EHR adoption. Providers who adopt and use EHRs will receive a incentive payments from Medicare; those who do not will be penalized 1 to 3%. The main components of meaningful use are: Using EHRs in a meaningful manner [e.g., e-prescribing]; Using EHR technology for electronic exchange of health information to improve quality of health care; and Using EHR technology to submit clinical quality and other measures. [Bloomberg, 2012] Security breaches are a concern [Health & Hospitals Networks, 2015] Federal Pregnancy Discrimination 182 % increase in the filing of pregnancy discrimination charges over the past decade The Pregnancy Discrimination Act makes it illegal to discriminate on the basis of pregnancy. Maternity and short-term disability policies Inability to perform v. pregnancy Prohibits termination Employee’s old job? Cal Pregnancy Disability Leave Cover employees who work with firms with five or more employees (Govt. Code § 12945) No eligibility requirements for employees Guarantees employees up to four months of unpaid leave and the same job upon return to work Can cover prenatal visits, intermittent leave, reduced work schedule, pregnancy, childbirth or related medical conditions (including postpartum depression) Family & Medical Leave Act guarantees employeesAct who have been on the job at least a year up to 12 weeks of unpaid leave per year for A birth or adoption Care of sick children, spouses [including same-sex spouses as of March 27, 2015], parents or employee’s own serious health condition [i.e., a condition requiring inpatient care or continuing treatment by a health care provider] Leave can be taken incrementally or in one stretch Employers must maintain the employee’s health coverage during leave but employees are responsible for paying their share of health insurance premiums and if premiums are 30 days late employers can cancel the employee’s health insurance [if a written 15 day notice is given] Requirements Employers must have 50 employees in a 75 mile radius of the employee’s workplace Medical confirmation upon an employer’s request Thirty day notice to employers required California Leave Laws Pregnancy Disability Leave Act (Govt. Code § 12945) Covers firms with five or more employees Four months leave guaranteed California Family Rights Act (Govt. Code § 12945.2) Mirrors FMLA (requires 50 or more employees working within a 75 mile radius of the workplace; If an employer is covered by the CFRA, eligible employees are those who have worked for the employer for at least 12 months and have worked at least 1,250 hours during the 12-month period immediately preceding the leave.) SB 406 would have expanded CFRA to apply to employers with more than five employees (instead of 50) and expanded the class of family members for whom leave may be taken because of a serious health condition. The smaller employer size provision was deleted but the class of family members covered remained. However, Governor Brown vetoed the bill because it could create up to 24 weeks of family leave in a year. He expressed support for a revised bill. Protects an employee’s job while away from work Does not cover pregnancy but does cover baby bonding [potentially extending leave to 7 months] California Leave Laws California Paid Family Leave Act (Unempl. Ins. Code § 2601) Supplements FMLA & CFRA Up to six weeks of paid leave for employees taking leave for baby bonding or serious health condition of spouse, domestic partner, child or parent (but not the employee him- or herself) Grandparents, grandchildren, siblings and parent-in-laws also included Previously, as much as 55% of usual earnings were paid up to 6 weeks. AB 908 was signed by Governor Brown on April 11, 2016. Effective 2018, it allows those earning close to minimum wage to be paid 70% of their salary while on leave, while workers with higher pay [up to $108,000 annually] will get 60% of their salary during leave. The original bill attempted to extend paid benefit beyond six weeks [New York provides 12] but that provision was removed at the Governor’s insistence. California Leave Laws California Paid Family Leave Act Covers employees who have disability insurance under the state Employment Development Department [ ] as well as those covered by a voluntary disability plan adopted by an employer in lieu of SDI Employers can require employees to take FMLA & CFRA leave but does not protect job as does FMLA & CFRA Improves employees’ working lives at reasonable cost to employers who also benefit (Los Angeles Times, January 12, 2011) California Leave Laws Kin Care Leave Act (Lab. Code § 233) When an employer provides paid sick leave, employees can use half of their year’s accrued sick leave benefits to care for a sick parent, child, spouse or domestic partner As of January 2016, employees will be able to use kin-care leave for the illness or preventative care for grandparents, grandchildren or siblings. California Leave Laws Employers cannot discriminate against employees who take time off to appear in court because they or a relative has been victimized by specified crimes [Labor Code § 230.5] Employers must engage in an interactive process and provide reasonable accommodation to victims of domestic violence, sexual assault or stalking [Labor Code § 230.4] Large employers [50 or more employees] must permit employees who perform emergency duties (e.g., volunteer firefighter, reserve officer) to take temporary leaves (up to 14 days annually) for training [Labor Code § 230.4] California Leave Laws [Effective July 2015] Healthy Workplaces, Healthy Families Act of 2014 requires employers to provide at least three paid sick days per year [only the second in the nation to do so] An employee [full and part-time] who, on or after July 1, 2015, works in California for 30 or more days within a year from the commencement of employment is entitled to paid sick days to care for themselves or a family member. Sick days are to accrue at a rate of no less than one hour for every 30 hours worked. An employee would be entitled to use accrued sick days beginning on the 90th day of employment. Employers are authorized to limit an employee’s use of paid sick days to 24 hours or 3 days in each year of employment. Employers are prohibited from discriminating or retaliating against an employee who requests paid sick days. California Leave Laws [Effective January 2016] An amendment to the Family-School Partnership Act (SB 579) expands the reasons for which an employee may take job-protected leave under the Family School Partnership Act [Labor Code § 230.8]. Section 230.8 previously required employers with 25 or more employees to allow employees to use up to 40 hours of unpaid time (limited to eight hours in any calendar month) to participate in school or childcare related activities. The amendment expands this provision to also allow employees to take job-protected time off to find, enroll or reenroll their children in a school or with a licensed child care provider. California Leave Laws For all types of leave consult the web site of the California Fair Employment and Housing Commission for more information Title VII of the Civil Rights Act of 1964 Prohibits discrimination in employment on the basis of race, color, sex, national origin or religion. What is not protected? State and local governments passed laws paralleling, and often expanding upon, Title VII and the other protective legislation. In California, the Fair Employment & Housing Act (Govt. Code § § 12900-12996) FEHA is far more comprehensive than Title VII Federal Age Discrimination in Employment Act Protects workers age 40 and over Employers can compel older workers to pay more for health insurance (if proportional) Equal benefit principle (if costs equal) OWBPA & early retirement waivers Federal Americans with Disabilities Act Disabilities may not be used as the basis for workplace discrimination Disability [substantial impairment of a major life function, a record of same or being perceived as disabled] Qualified workers Disabled workers entitled to the same benefits available to able bodied workers Employers can offer less generous disability retirement benefits to the disabled California Disability Law California is much more employee-friendly than federal law in the area of disability The Fair Employment and Housing Act defines disability as a physical or mental condition or disorder that affects a major life system or limits a major life function (i.e., makes achievement of the activity difficult) Under the FEHA most medical conditions will be covered as disabilities As of 2014, disability discrimination charges constitute the second largest category investigated by DFEH Exclusions are current use of illegal drugs, pedophilia, compulsive gambling, mild conditions California Disability Law Qualified employees with disabilities are entitled to reasonable accommodation for their disability dictated on a case-by-case basis Determining what is a reasonable accommodation is an interactive, individualized process, usually triggered by an employee’s request or when the employee exhausts his or her leave, in which employee and employer must communicate with each other and cooperate in good faith to determine if an employee can work effectively Employers can ask if the employee perform the requirements of the job description but cannot ask about the medical cause of the disability An employee’s preference is not the only option as the employer has the right to implement an effective accommodation Accommodations can include leaves of absence, reassignment, teleworking, light duty [be creative and persistent] Undue hardship is an employer’s defense California Disability Law AB 987 amended FEHA [effective January 2016] to provide that employers and other covered entities cannot retaliate against employees or other persons who request an accommodation for a disability [or for religious beliefs]. The amendment makes clear that merely requesting an accommodation is a protected activity under the FEHA regardless of whether the accommodation is granted. Federal Genetic Information Nondiscrimination Act ■Title I of the Act prohibits discrimination in employer-sponsored group health premiums based on genetic information ■Title II of GINA prohibits the use of genetic information in the decision to hire, fire, promote or discipline and the disclosure of said information. ■Applied to private employers as well as federal (most, but not all), state and local government employers with 15 or more employees ■The potential impact of genetic testing on personalized medicine is staggering [LAT 2014] Leave Law Knowledge Helps “I took … Employee Benefits with you last … Quarter. I just wanted to reach out to you and say thank you because all those PowerPoints and documents that you uploaded on Blackboard have helped me so much! I got a full time job at … Hospital as a Human Resource Coordinator and I'm in charge of leaves of absences. I cannot express how grateful I am for all those documents because they have helped me so much since I'm very new to LOAs. I'm still learning how the process goes and what the FMLA and CFRA laws are as well as the Pregnancy Disability Laws.” Sally ...
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