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Your Last-Minute Open Enrollment Checklist

by Inoventive Solutions
October 22, 2024

By now you should be prepared and ready to go for your 2025 policy year employee benefits open enrollment. You should have all your plan documents and have prepared or held presentations for your staff to explain the benefits package and any major changes to plans that you offer.

Employees should be familiar with how to use the enrollment portal and who they should talk to if they have questions.

To ensure success, there are a few things you should do to make sure you maximize enrollment, that your employees have the correct materials and that you are in compliance with the law.

Take an active role — Most of the policy selection is done online, but that doesn’t mean you can’t support your employees and let them know you are there in case they have any questions or are confused about any aspect of the benefits package.

You should want all of your employees to choose the package that best fits their individual needs. To ensure they make the best possible choices and have a successful experience, motivate them to take an active role in their education by encouraging questions and showing them where they can find answers in the online enrollment platform.

Last-minute blasts — You’ve probably sent a few e-mail reminders to you staff, but most certainly some of them still missed those communications. Make sure you send a few extra blasts at different times of the week, like Tuesday at 10 a.m. and another on Thursday at 2 p.m.

You should also have all of your employees’ mobile phone numbers, and be sending them reminder text messages is a sure-fire way to get in front of the ones who may not be as diligent about monitoring their e-mail.

Double-check your plan materials — Do a final review of your plan documents for any necessary updates regarding member eligibility, plan benefits, new vendors and name changes to ensure that the current state of your benefits offerings is complete and accurate.

Also, do a final review of your summary of benefits and coverage (SBC) and your summary plan description (SPD) to make sure they reflect any changes from the prior year. This is crucial as both documents are required under the law.

The SPD may include the elements necessary to meet the requirements of the SBC, but it also needs to be a separate document that can be handed out with respect to each coverage option made available to the participants.

To account for the annual open enrollment window, double-check your open enrollment schedule, deadlines, documents and forms, coverage options and changes, phone numbers, and website and mobile information for contacting resources, statement of current coverage, and plan-specific summaries and rates.

Identify staff that didn’t enroll last year — To make sure you maximize participation and that nobody misses out, run a list of all your staff who didn’t sign up for benefits last year so you can approach them individually and convey the importance of securing health coverage.

While you’re at it, make sure that all of your new hires in the past year have also signed up for coverage and that you didn’t miss them when sending out reminders about open enrollment.

Check compliance with ACA — If you are an “applicable large employer” under the Affordable Care Act, meaning that you have more than 50 full-time or full-time equivalent employees, you are obligated under the law to provide health coverage to your staff that is “affordable” and covers 10 essential benefits.

There is a figure for what is considered affordable, which changes every year. For your plan to be considered ACA-compliant in 2025, it must not cost an employee more than 9.02% of their household income. 

The takeaway

To ensure maximum enrollment it pays to plan ahead and also focus on educating your staff about the importance of their group health plan and why it’s so important to choose a plan that is right for them and that is within their budget in terms of premium-sharing and out-of-pocket costs.

The key regular communications and having an open-door policy so individual employees can ask questions in private.

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3 in 4 Workers Would Accept Lower-Pay for Better Benefits: Survey

by Inoventive Solutions
October 15, 2024

A new study has found three out of four U.S. workers would accept a job with a slightly lower salary if it offered better health care and medical coverage.

The main driver in workers prioritizing benefits is the rapidly rising cost of group health insurance premiums and out-of-pocket costs, according to the study by Voya Financial.

Besides looking for better health coverage, there’s growing interest among employees for voluntary benefits that can buffer health care costs, like critical illness, accident and dental and vision insurance.

As we approach open enrollment season for policies incepting at the start of the year, the study findings provide food for thought as you try to balance your benefit offerings with employee salaries.

The general theme of the poll was that health insurance and out-of-pocket costs like copays, coinsurance and deductibles are having a real effect on many workers’ finances, and in particular, their ability to save for retirement.

Consider the following:

  • 72% of workers surveyed strongly or somewhat agreed they would take a job with a slightly lower salary for better health care and medical coverage, including lower premiums and out-of-pocket costs.
  • 51% said that high health care costs were having a major or significant impact on their ability to save for retirement.
  • 51% said they would be more likely to stay with their current employer if it provided access to a health savings account (HSA).
  • 51% said they would be more likely to stay with their employer if it provided access to voluntary benefit offerings, and
  • 54% said they would be more likely to stay with their employer if it provided access to mental health benefits and resources.

The above bullet points have one theme in common: reducing the employees’ premium and out-of-pocket outlays.

The takeaway

As open enrollment approaches, consider holding information sessions to help your staff understand the true value the benefits you offer can provide.

Voya Financial found that 75% of workers surveyed strongly or somewhat agreed they were interested in receiving support to maximize their workplace benefits dollars across their:

  • Health insurance,
  • HSAs,
  • Voluntary benefits, and
  • Retirement savings.

For example, “Many individuals may not realize that voluntary benefits can help lessen the financial impact of a covered event such as an illness or accident and can potentially reduce the need to tap into a retirement account for any out-of-pocket medical or other expenses,” said Christin Kuretich, vice president of supplemental products at Voya Financial.

With that in mind, offering benefits like critical illness or accident insurance can provide a safety net in case of one of these events hits one of your staff. 

To better explain benefits to your staff, providing training, individual guidance and literature that explains how best to maximize their benefits. Importantly, employees are increasingly interested in digital tools (like apps or websites) that can provide tools and advice to help them make decisions related to health care, workplace benefits and retirement.

Finally, HSAs can also reduce an employee’s total costs and also help lower their taxable income. HSAs are accounts to which workers contribute with pre-tax funds and then reimburse themselves for out-of-pocket medical costs. Those funds are also not taxed.

"Document
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Reminder: Employers with 10 or More Staff Must File ACA Forms Online

by Inoventive Solutions
October 8, 2024

With 2025 just a few months away, it’s important that small employers understand their group health insurance reporting obligations under the Affordable Care Act as they changed at the start of 2024.

Before 2024, only employers that sent out 250 or more Forms 1094-B/1095-B and 1094-C/1095-C were required to file them online with the IRS. But since early 2024 (and affecting the 2023 tax year), employers filing 10 or more ACA reporting forms have been required to file electronically.

It’s important that you understand your filing obligations to avoid fines that can quickly add up.

Here are the deadlines for 2025

Meeting the filing deadlines for Forms 1094-C and 1095-C is critical to complying with ACA requirements. Here are the deadlines for next year:

Jan. 31, 2025 — Employers must by this date have sent Form 1095-C to all of their full-time employees, who must supply the form to the IRS when they file their taxes.

Feb. 28 — This is the deadline to file Forms 1094-C and 1095-C by paper with the IRS for the few employers who are still eligible to do this.

March 31 — This is the deadline to file Forms 1094-C and 1095-C electronically with the IRS.

Filing electronically

You can file your forms electronically on the ACA Information Returns (AIR) Program, which is run by the IRS. This page includes all of the resources and guidance you need to understand and use it.

Hardship waivers

Employers can request a waiver for filing electronically if they can prove that doing so will cause an undue hardship on them or if it goes against their religious beliefs. Employers must submit their waiver request at least 45 days prior to the due date for returns by using this form.

Penalties

Employers who offer their workers health insurance and who fail to file the ACA forms electronically despite being required to do so (and if they don’t have a waiver) can be subject to a fine of $310 per return that was not reported electronically.

There are also other penalties regarding ACA reporting forms:

  • Failure to file correct information on a form: $310 per return for which the failure occurs. The maximum penalty an employer may incur under this penalty is nearly $3.8 million per calendar year.
  • Failure to provide a correct information return or payee statement: $310 per return for which the failure occurs. The maximum penalty that may be incurred is nearly $3.8 million per calendar year.
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Get an Early Start on Open Enrollment

by Inoventive Solutions
September 17, 2024

As open enrollment is right around the corner, now is the time to make a plan to maximize employee enrollment and help your staff select the health plans that best suit them.

You’ll also need to make sure that you comply with the Affordable Care Act if it applies to your organization, as well as other laws and regulations.

Here are some pointers to make open enrollment fruitful for both your staff and your organization.

Review what you did last year

Review the results of last year’s enrollment efforts to make sure the process and the perks remain relevant and useful to workers.

Were the various approaches and communication channels you used effective, and did you receive any feedback about the process, either good or bad?

Start early with notifications

You should give your employees at least a month’s notice before open enrollment, and provide them with the materials they will need to make an informed decision.

This includes the various health plans that you are offering your staff for next year.

Encourage them to read the information and come to your human resources point person with questions.

Help in sorting through plans

You should be able to help them figure out which plan features fit their needs, and how much the plans will cost them out of their paycheck. Use technology to your advantage, particularly any registration portal that your plan provider offers. Provide a single landing page for all enrollment applications.

Also, hold meetings on the plans and put notices in your staff’s paycheck envelopes.

Plan materials

Communicate to your staff any changes to a health plan’s benefits for the next plan year through an updated summary plan description or a summary of material modifications.

Confirm that their open enrollment materials contain certain required participant notices, when applicable – such as the summary of benefits and coverage.

Check grandfathered status

A grandfathered plan is one that was in existence when the ACA was enacted on March 23, 2010, and is thus exempt from some of the law’s requirements.

If you have a grandfathered plan, talk to us to confirm whether it will maintain its grandfathered status for the next plan year. If it is, you must notify your employees of the plan status. If it’s not, you need to confirm with us that your plan comports with the ACA in terms of benefits offered.

ACA affordability standard

Under the ACA’s employer shared responsibility rules, applicable large employers must offer “affordable” plans, based on a percentage of the employee’s household income. For plan years that begin on or after Jan. 1 of next year, the affordability percentage is 9.86% of household income. At least one of your plans must meet this threshold.

Get spouses involved

Benefits enrollment is a family affair, so getting spouses involved is critical. You should encourage your employees to share the health plan information with their spouses, so they can make informed decisions on their health insurance together.

Also, encourage any spouses who have questions to schedule an appointment to get questions answered.

"Employers
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Employers Use Variety of Strategies to Provide Competitive and Cost-Effective Health Care Benefits

by Inoventive Solutions
September 10, 2024

As they wrestle with providing attractive but affordable health care benefits for employees, employers are trying a variety of strategies. A recent report from insurance brokerage Gallagher shows businesses are balancing workers’ physical and emotional health against ever-rising costs.

There are many cost drivers in health care and insurers and employers are in a fine balancing act of trying to keep a lid on costs and also keeping their employees happy. And while firms are leaving no stone unturned in their quest for reducing costs, some are also adding new services employees are keen on.

Here’s what the report found:

Offering more plans

To combat rising costs, many employers (80%) offer more than one health plan. A growing share of employers offer high-deductible health plans (HDHPs) and health savings accounts (HSAs) to employees. The percentage of companies offering such plans has increased five consecutive years and is now at 56%. At the same time, 24% of employers report more employees choosing HDHPs than the other offered plans.

Employers and employees contribute to the HSAs. When employers contribute, they provide about $500 or more for single coverage and $2,000 or more for family coverage.

Weight-loss drugs

Weight-loss drugs such as Ozempic and Wegovy are growing in popularity. However, these drugs (known as GLP-1s) are expensive, and employers are trying to manage the effects of those costs.

Slightly more than half of employers surveyed include weight management in their benefits programs, but they attach strings to the use of weight-loss medications. This may include:

  • Step therapy, which entails trying other, less expensive yet proven pharmaceuticals and health and fitness regimens first.
  • Prior authorization before approving their use.
  • Eligibility requirements. Around one-fifth of employers set eligibility requirements that include a combination of minimum body mass index and comorbid conditions. They do not pay for the drugs for otherwise healthy employees looking to drop a few pounds.

Plan eligibility and scope

Despite rising costs, some employers are expanding eligibility for and the scope of their health care plans.

The Gallagher report shows a small increase in the share of employers offering coverage to employees’ domestic partners and to part-time employees, though these remain the minority.

Some are also offering more specialty coverages. For example, more than half cover hearing aids and behavior analysis for employees’ children with autism. A small but growing fraction (17%) cover gene therapy.

Almost half of employers cover some form of treatment for infertility, including drugs, specialist evaluations, in vitro fertilization and other fertilization procedures. However, controversies surrounding some of these procedures have led to a patchwork of state mandates and restrictions. This has made providing these benefits more complex for companies.

Mental health and leave

More employers are paying attention to their employees’ mental and emotional states in addition to physical wellness. Most are concerned about staff suffering from burnout and stress.

However, they also believe their managers are not able to recognize the signs. More than a fifth now offer training to managers and human resources staff on identifying warning signs and referring employees for help, and that share has grown in the past two years.

Finally, more firms are offering family-focused leave policies. This recognizes the growing emphasis employees place on work-life balance amid tight labor markets.

Almost 90% offer paid bereavement leave (outside vacation leave,) while almost half provide paid time off to bond with a new child, and 15% provide it for taking care of ill or disabled family members.

The takeaway

Employers are faced with two difficult realities. The workforce is aging, meaning that retirements will shrink the pool of available skilled workers. At the same time, health care costs are ever-increasing.

To meet both these challenges, employers are using the strategies detailed above, as well as other approaches. Some combination of them will help you compete in the war for talent while protecting your bottom line.

"Accounting
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Study Predicts 8% Group Health Plan Cost Increase for 2025

by Inoventive Solutions
August 6, 2024

A new study predicts that group health insurance costs will jump 8% in 2025, on par with what American employers have experienced this year and in 2023.

The higher rates reflect the costs borne by health insurers, which are seeing more claims for care that was postponed during the COVID-19 pandemic and a steady rise in the cost of pharmaceuticals as more innovative and effective drugs come to market, according to the study by PricewaterhouseCoopers.

Additionally, health plans have seen a surge in demand and utilization for behavioral health services, which has been hampered by a limited supply of in-network mental health professionals, who are also demanding higher reimbursement rates.

And while drug costs are rising, some of the medications may actually reduce future health care costs for those taking them. There are also new biosimilar drugs coming to market that cost a fraction of the originals.

Cost drivers

Thanks to a continuing stream of pharmaceutical breakthroughs that are saving patients’ lives and/or improving their quality of life, insurers have to make coverage decisions. Many of the new drugs are costly, but they may also reduce overall health care costs in the long run as they may reduce the need for expensive intervention and emergency treatments.

Two classes of drugs that are on health insurers’ radar in 2024 and 2025 are:

  • GLP-1 agonists (annual cost: about $11,000).Various of this category of drugs treat type 2 diabetes, and can assist with chronic weight management and may reduce secondary cardiovascular events.
    Most health plans offer coverage of GLP-1 agonists for type 2 diabetes. However, health plans won’t cover them solely for weight management, which is not considered an essential health benefit under the Affordable Care Act.
  • Central nervous system drugs (annual cost: about $22,000). This includes various drugs treating conditions such as Alzheimer’s, Parkinson’s, multiple sclerosis and schizophrenia.
    While these medications may make it difficult for health plans to manage their costs, the report notes that despite the initial cost, health plans may see reduced medical costs as patient health improves.

Mental health services are also driving costs, and they were listed among the top three inflators of drug costs by health plans surveyed for the PwC report.

While the per member per month outlays for mental health services have historically been too low to be considered a cost driver of overall medical costs, spending on mental health has jumped 50% since the pandemic. As a result, behavioral health services are accounting for a greater portion of health plan spending.

The main factors affecting costs are a significant supply and demand imbalance for behavioral health services. Health plans are competing with each other to sign on mental health providers from a pool that is not enough to satisfy demand.

Counterbalancing costs

There are three trends that could counterbalance some cost increases.

Biosimilars. — Biosimilars are biological products that are “highly similar” to and have “no clinically meaningful differences” from an existing Food and Drug Administration-approved reference product. One of the most recent drugs that has seen a flood of competing biosimilars hit the market is Humira (adalimumab), a medication that reduces the signs and symptoms of moderate to severe rheumatoid arthritis.

One report estimates that the savings generated by biosimilars in 2022 was $9.4 billion in the United States. Another analysis performed in early 2023 projects total savings from biosimilars to range from $125 billion to $237 billion between 2023 and 2027.

Health plans are increasingly focused on reducing wasteful spending, which is forcing them to look at:

Exploring new pharmacy benefit manager models. — This is in light of continuing reports of the country’s largest PBMs actually increasing the cost of medications for payers (health plans, self-insured employers and insureds).

Integrating medical and pharmacy benefits. — An example of this is a health plan pharmacy team identifying when members haven’t picked up prescriptions, aren’t taking medications as prescribed or not refilling prescriptions on time.

Connected benefits allow for real-time medical, behavioral health and pharmacy data analysis to help maximize management of chronic conditions, close care gaps and monitor prescription use and potential interaction.

A study of its own clients by health insurer Health Care Service Corporation found that large employer groups with integrated pharmacy and medical benefits saved an average of $516 per member per year in medical costs over a three-year period.

The takeaway

As health insurance costs continue to rise, we can work with you to find health plans that will fit your and your employees’ budgets and help you look for actions to take that could have a positive effect on your rates.

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Gen Z Workers Go for HDHPs, but Don’t Forget Your Other Employees

by Inoventive Solutions
July 2, 2024

While the number of U.S. workers choosing high-deductible health plans has leveled off during the last two years, uptake has been growing rapidly among one segment of the working population: Gen Z employees.

The 2024 “State of Employee Benefits Report” by benefits administration provider Benefitfocus found that 45% of Gen Z workers and 43% of millennial workers surveyed were enrolled in HDHPs. The report notes 84% of employers offer both HDHPs and traditional health plans to ensure that they can met the needs of a multi-generational workforce.

It emphasizes that employees often choose health plans that will end up costing them more than it should in terms of out-of-pocket expenses or premiums, and that employers should help by providing assistance and education.  

Study findings

The trend of more Gen Z workers gravitating to HDHPs makes sense, since these plans are best suited for younger individuals who are generally healthier and have fewer health problems than their older counterparts — Gen Xers and Baby Boomers.

HDHPs feature higher deductibles and more out-of-pocket expenses in exchange for lower premiums upfront. The plans are typically tied to a health savings account (HSA), which employees can fund with pre-tax dollars to reimburse for health-related expenses.

But employers are cautioned against offering just HDHPs as they are not a good fit for everyone, particularly those who are regular users of their health plans or have chronic conditions that require more doctors’ visits, medical procedures and medications.

The study suggests that employers should offer a mix of plans that will meet the needs of their workforce. It found that:

  • 64% of health plan enrollees selected a traditional plan in plan year 2024, compared to 69% in 2022.
  • Across generations, higher-salaried individuals choose HDHPs over traditional plans.
  • Generation X has the highest premiums compared to other generations, across all plans.
  • The average employer covers 78% of their employees’ health insurance premiums, up from 74% in 2022. Despite the increase, employees are still facing higher premium outlays.
  • Participation in HSAs and flexible spending accounts fell 20% from 2022 to 2024, indicating that employers are not doing enough to educate their staff about these tax-advantaged accounts.

One of the keys to a successful employee benefits program is to ensure that your workers are all choosing a plan that is best for their life situation. Choosing the wrong plan could end up costing them more in either:

  • Upfront premiums for an unnecessary expensive plan with strong benefits that the employee may not use because they are young and/or healthy, or
  • Out-of-pocket expenses if they choose a plan that has a high deductible when they are frequent users of medical services, either due to pre-existing conditions or other issues that crop up later in life.

What you can do

The report recommends that employers:

Focus on assistance and education — The study found that 70% of workers want help from their employer to better understand the employee benefits they are enrolled in or are considering.

To help your staff choose the plan that’s going to give them the most bang for their buck, your guidance and advice can be crucial. During your educational sessions, provide scenarios of how choosing the wrong plan can financially burden an enrollee. Provide tools that can help them ascertain which plan is right for them.

Offer a mix of plans — To ensure that employees have access to the health plan that is best for their health circumstances and budget, you should offer a mix of HDHPs and traditional health plans like health maintenance organizations and preferred provider organizations.

You can tailor your employee benefits educational sessions to each generation. Make sure not to overgeneralize, as there are instances when a younger person should be in an HMO or PPO.

Offer voluntary benefits — Not all voluntary benefits are created equal, and some add more value than others. These plans complement an existing health insurance plan by providing a financial backstop when faced with an unexpected medical emergency. They include:

  • Accident insurance
  • Critical illness/specified disease insurance, and
  • Hospital indemnity insurance.

As well, benefits that help with other unexpected expenses that life deals increasingly burdened employees, are growing in popularity:

  • ID theft protection,
  • Legal insurance, and
  • Pet medical insurance.
"Therapist
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Addictions Are Rising Among Workers; What Employers Can Do

by Inoventive Solutions
June 25, 2024

According to a study by the Substance Abuse and Mental Health Services Administration, 10% of America’s workers are dependent on one substance or another.

The nation is still battling the biggest drug scourge: opioid and fentanyl. Provisional data from CDC’s National Center for Health Statistics indicate that in 2023 there were an estimated 107,543 drug overdose deaths in the U.S., 81,083 of which were opioid-related. While those are shocking statistics, the majority of addicts are hooked on other drugs or alcohol, and that includes millions of American workers.

A study by the American Addiction Center found that 22.5% of respondents admitted to using drugs or alcohol during work hours. The most common substance used during working hours is cannabis.

Those who work from home at least part of the time are more likely overall to abuse drugs or alcohol than those who work in offices. Overall, people who work from home part-time or full-time are about 10% more likely than people who work full-time in offices to get drunk at work.

As an employer, the costs are great if you have someone on staff who has a substance-abuse problem. Workers with addictions to drugs are alcohol have:

  • Lower or lack of workplace productivity;
  • Higher health care costs;
  • Increased absenteeism and presenteeism;
  • Diminished quality control;
  • More disability claims;
  • Increased workplace injuries;
  • Lower morale;
  • Higher job turnover; and
  • Employee theft.

How your health plan can help

If you have an Affordable Care Act-compliant health plan, it will offer access to mental health and substance abuse treatment, which is considered one of 10 essential benefits plans must offer.

The ACA requires health plans to pay for prevention and early intervention as well for substance abuse issues. 

Health care plans also have to comply with a “parity” law, which requires them to treat mental health issues the same way they do physical diseases. Since the COVID-19 pandemic demand for mental health services has soared, straining both providers of those services and the health plans.

The Centers for Medicare and Medicaid Services in 2024 also started requiring all ACA-compliant health plans to contract with at least one substance use disorder treatment center and one mental health facility in every county where they are available in the plan’s service area.


What else can you do?

Some employers have tried to help employees tackle their addictions or abuse problems by implementing workplace prevention, wellness and disease-management strategies. These programs improve health, which lowers health care costs and insurance premiums and produces a healthier, more productive workforce.

Considering offering an employee assistance program. These programs offer temporary free access (typically a set amount of sessions) to a number of services like counseling as well as substance abuse assistance. These sessions are confidential and the employer will not know if an employee is accessing them.

Consider offering more accessible substance use management solutions, like digital and telehealth-based solutions. There are a growing number of these types of service providers, which make accessing counselors more convenient and cost-effective.

Offer confidential screenings and assessments. There are a number of screening, brief-intervention and referral-to-treatment modules available to help people confront their drinking or drug use and get the help they need. 

"HRA
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HRA Gym Cost Reimbursement? Not So Fast Says IRS

by Inoventive Solutions
June 18, 2024

The IRS has issued a new bulletin, reminding Americans that funds in tax-advantaged medical savings accounts cannot be used to pay for general health and wellness expenses.

The bulletin focuses on medical savings accounts that employers will often sponsor, including flexible spending accounts (FSAs), health reimbursement arrangements (HRAs) and health savings accounts (HSAs), which are funded by employees’ untaxed earnings.

These accounts are only to be used for qualified, legitimate medical expenses, like out-of-pocket costs for medical services, prescription medications and medical hardware.

The IRS said that it had issued the bulletin due to concerns about companies misrepresenting the circumstances under which food and wellness expenses can be paid or reimbursed through one of these accounts.

IRS Commissioner Danny Werfel said some companies behind these plans are employing aggressive marketing tactics that suggest that these accounts can pay or reimburse for things like food for weight loss, “when they don’t qualify as medical expenses.”

Mistaken claims

Some companies mistakenly claim that notes from doctors based merely on self-reported health information can convert non-medical food, wellness and exercise expenses into medical expenses, but this documentation actually doesn’t, according to the IRS.

Such a note would not establish that an otherwise personal expense satisfies the requirement that it be related to a targeted diagnosis-specific activity or treatment; these types of personal expenses do not qualify as medical expenses.

These accounts can only reimburse for services, prescription drugs and hardware that alleviate or prevent a physical or mental defect or illness.

The IRS maintains examples of what these plans can reimburse for, and it has a set of frequently asked questions on its website to address any confusion. The essence of what is reimbursable comes down to whether it’s a qualified medical expense.

Some examples of what HRAs, HSAs and FSAs may or may not cover include:

Gym memberships: You cannot be reimbursed for membership fees if you joined the gym for general health, as it’s not a medical expense.

However, you can seek reimbursement if the membership was purchased for the sole purpose of affecting a structure or function of the body (such as a prescribed plan for physical therapy to treat an injury) or the sole purpose of treating a specific disease diagnosed by a physician (such as obesity, hypertension or heart disease).

Food or beverages purchased for weight loss or other health reasons: The costs can be reimbursed only if:

  • The food or beverage doesn’t satisfy normal nutritional needs,
  • The food or beverage alleviates or treats an illness, and
  • The need for the food or beverage is substantiated by a physician.

If any of the three requirements is not met, the cost of food or beverages is not a medical expense.

Exercise for the improvement of general health: If you are paying for swimming, dance or kayaking lessons, the costs cannot be reimbursed by these accounts, even if a doctor recommends it, because these activities are only for the improvement of general health.

Nutritional counseling or a weight-loss program: This is a qualified medical expense only if it treats a specific disease diagnosed by a physician (such as obesity or diabetes).

Smoking cessation: The cost of a smoking cessation program is a qualified medical expense because the program treats a disease (tobacco-use disorder).

The takeaway

If you offer HSAs, HRAs and/or FSAs to your staff, you may want to consider sharing the IRS bulletin with them so they understand what they can seek reimbursement for. If they are being reimbursed for non-medical items and services, they may run afoul of federal tax law.

"African
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Pregnant Workers Fairness Act Final Rules: What Employers Need to Know

by Inoventive Solutions
May 14, 2024

The Equal Employment Opportunity Commission has published a Pregnant Workers Fairness Act final rule that will give new protections akin to disability accommodation under the Americans with Disabilities Act to pregnant workers and those who have recently given birth.

The rule, which takes effect June 18, will require employers to make reasonable accommodations for employees or applicants with known limitations related to pregnancy, childbirth or related medical conditions.

The new regulations apply to employers with 15 or more workers on their payroll. This is a significant new labor law and another source of potential lawsuits for employers.

Who is covered

Essentially, the Pregnant Workers Fairness Act (PWFA) requires employers to make reasonable accommodations for these workers if they ask for it, particularly if they are temporarily unable to perform one or more essential functions of their job due to issues related to their pregnancy or recent childbirth.

Reasonable is defined as not creating an undue hardship on the employer. Temporary is defined as lasting for a limited time, and a condition that may extend beyond “the near future.” With most pregnancies lasting 40 weeks, that time frame would be considered “the near future.”

What’s required

Like what is required by the ADA, if an employee asks for special accommodation due to a covered issue under the PWFA, the employer is required to enter into an interactive process with the worker to identify ways to accommodate her.

The law requires employers to accommodate job applicants’ and employees’ “physical or mental condition related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions.”

The condition does not need to meet the ADA’s definition of disability and the condition can be temporary, “modest, minor and/or episodic.”

The PWFA covers a wide range of issues beyond just a current pregnancy, including:

  • Past and potential pregnancies,
  • Lactation,
  • Contraception use,
  • Menstruation,
  • Infertility and fertility treatments,
  • Miscarriage,
  • Stillbirth, and
  • Abortion.

What’s a ‘reasonable accommodation’

The law’s definition of reasonable accommodation is similar to that of the ADA. The regulation lays out four “predictable assessments,” which would not be an undue hardship in “virtually all cases”. These would allow an employee to:

  • Carry or keep water nearby and drink, as needed;
  • Take additional restroom breaks, as needed;
  • Sit if the work requires standing, or stand if it requires sitting, as needed; and
  • Take breaks to eat and drink, as needed.

Employer rights

As mentioned, an employer may reject an accommodation if it would create an undue hardship, which is defined as a significant difficulty or expense.

Employers may ask for documentation under the PWFA if it is reasonable and the employer needs it to determine whether the employee or applicant has a covered condition and has asked for accommodation due to limitations the condition causes her.

If the worker is obviously pregnant, the employer may not require documentation.

The takeaway

Employers with 15 or more workers will need to add mentions of the new rule in their employee handbooks and train managers and supervisors about it, in order to keep from running afoul of the PWFA.

The ramping up period is short and it’s important that you have in place policies that require supervisors and managers to notify human resources if a worker asks for special accommodations.

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