On April 2, 2018, significant changes to ERISA’s disability claims procedures will take effect. These new rules will require all ERISA-covered plans which provide disability benefits to make significant modifications to the way disability benefit claims are reviewed and decided. This post describes what is changing and why, and the steps employers must take now to ensure compliance.
Compliance with the Affordable Care Act’s (ACA) employer shared responsibility rules requires that applicable large employers identify their full-time employees. A “full-time employee” for this purpose is an employee who works on average 30 hours per week or 130 hours per month. “Hours of service” includes both hours for which an employee is paid for the performance of services, as well as hours for which an employee is paid for a period during which no duties are performed—including short- and long-term disability leave. Including paid hours for which no work is performed poses some unique reporting challenges, principally due to the need to make adjustments to compensation that affect affordability and the lingering question of the period of time for which hours must be attributed in the case of individuals on long-term disability. This post examines these challenges.
Background—hours of service
The final Code § 4980H regulations define the term “full-time employee” to mean, “with respect to a calendar month, an employee who is employed an average of at least 30 hours of service per week with an employer.” For convenience, the regulation further provides that, “130 hours of service in a calendar month is treated as the monthly equivalent of at least 30 hours of service per week.” “Hours of service” for this purpose is defined as follows: Continue Reading The Affordable Care Act’s Reporting Requirements for Carriers and Employers (Part 13 of 24): Coding Form 1095-C, Part II for Short- and Long-Term Disability Benefits