Requirement to Reimburse EE's for Over Charging on Averaged Rate/age Rated Small Group?

Oct 17, 2015

  1. yorkriver1
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    yorkriver1 Guru

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    I have a small group with an age rated plan that is composite averaged for employee contributions. The carrier has provided an Excel set up to create the composite rate. With employees entering/leaving employment, dependents qualifying/leaving, the rates actually paid by the employer could be lower or higher that what is collected during the plan year.
    When this system was put in place last renewal, I don't recall anyone mentioning that the employer had a statutory requirement to use any excess premiums for employee benefit costs or to return them to the employees in proportion to their contribution, like single, married, etc.

    Just was told by a manager at my FMO that any extra premiums collected by a group when this method is used must be used for future benefits or returned to employees. I wonder if the manager is confusing this with the requirement to return premium amounts that don't meet the carrier loss ratio limits under ACA.

    I did tell the employer we need a summary of the premiums paid, which I could help them do, but also a breakdown of the totals deducted from employee's pay. They just changed from one payroll service to another, so they are concerned about getting the info from both. This is a lot of work if not needed.

    Anyone have experience or knowledge about the requirement to return/use premiums for benefits? I am OK with that, as it would be a good way to fund some voluntary type benefits, group life, etc, or as we have already planned, not increase the employee contributions for next plan year.
     
  2. leevena
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    leevena Guru

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    Yes, it is true. Nothing to do with aca, it is an erisa requirement.
     
    leevena, Oct 18, 2015
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  3. yorkriver1
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    Any suggestions for getting my hands on the wording of the erisa rule for this issue? I have a message in to the FMO and our NAHU chapter president.

    My online searching turned up some overall good erisa info, but not this issue so far. TYIA
     
  4. leevena
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    Sorry, nothing handy or readily available. It is one of those things I just know. You could read ERISA, focus on Article 1. Clearly states that once an asset, it can only be used for the benefit of the plan or refunded.
     
    leevena, Oct 19, 2015
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  5. yorkriver1
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    NAHU has a resource to look up questions. Getting the reg. info there. Also have feedback to just use the excess, if any, to pay future premiums, document. Best solution is the least complicated.
     
  6. leevena
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    leevena Guru

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    Agree. Refunding is an accounting nightmare, not to mention it may trigger tax consequences. Using it to offset future is the way most groups go.
     
    leevena, Oct 19, 2015
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