Manufacturers know the importance of offering a competitive wage and benefits compliance package to employees. In fact, manufacturing workers earn approximately 13 percent more in hourly compensation, including wages and benefits, than comparable workers in other private sector businesses.
Developing an attractive employee benefits package is just the first hurdle. Companies in the manufacturing industry must also comply with federal laws that apply to all health and welfare benefit plans. Federal requirements often change annually to meet the growing healthcare demands in the U.S., and companies must keep up with these changes or risk severe penalties.
When managing an employee benefits package, consider what legal requirements pertain to the manufacturing industry. Businesses may also need to comply with additional compliance requirements based on guidelines under the Affordable Care Act (ACA). The following compliance checklist applies to most manufacturing companies.
Affordable Care Act
The ACA mandate typically applies to employers with 50 or more full-time employees. Under the Affordable Care Act, employers must offer affordable health insurance to workers and their children until age 26.
As of January 1, 2021, all employees covered under applicable large employers (ALEs) are limited to a contribution amount that does not exceed 9.83 percent of the employee’s household income for that taxable year. All ALEs must have a minimum of one health plan offered to full-time employees that satisfies the affordability standard to avoid penalties.
Changes have also been made to health flexible spending accounts (FSAs) under the ACA. In 2021, the HSA contribution limit changed to $3,600 for individuals and $7,200 for family coverage.
This is a 1.5 percent increase from 2020.
Another change under the ACA pertains to out-of-pocket maximums on health plans. Non-grandfathered plans, meaning health plans that went into existence after March 23, 2010, when the ACA was first enacted, must meet specified limits on cost-sharing for essential health benefits (EHB).
In 2021, the out-of-pocket expense on annual high deductible health plans (HDHPs) is $7,000 for individuals and $13,800 for family coverage.
Non-grandfathered health care plans must comply with preventative care. If a manufacturer chooses to move to a non-grandfathered health plan, the business must show that the plan complies with benefit provisions and patients’ rights required by the Affordable Care Act.
Consolidated Omnibus Budget Reconciliation Act
The Consolidated Omnibus Budget Reconciliation Act (COBRA) also applies to companies in the manufacturing industry. This federal law enables employees to temporarily continue their existing healthcare coverage if they lose their job or suffer another qualifying event.
Under COBRA, businesses that offer employer-sponsored healthcare plans and have 20 or more employees are required to offer covered employees the option of continuing their healthcare coverage in certain situations. Failure to comply with COBRA can lead to hefty fees for businesses.
COBRA requires plan administrators to provide an explanation of coverage and rights within 90 days of the coverage start date. In addition, employers must notify the plan administrator of any qualifying events, and the plan administrator must provide a COBRA election notice within 14 days after being notified of a qualifying event.
If it is discovered that coverage will be terminated earlier than the end of the coverage period, the plan administrator must provide an early termination notice to all plan participants. Notices must also be provided in cases of insufficient payment and premium changes.
Employee Retirement Income Security Act
The Employee Retirement Income Security Act (ERISA) of 1974 sets standards for many voluntary retirement and health plans in the private industry. The federal law protects employees’ retirement assets by enforcing rules that all qualified plans must follow to prevent fiduciaries from misusing plan assets.
To determine compliance with ERISA, companies must ensure that their plan document is up-to-date and that all participants and beneficiaries can gain access to the document if requested. The Department of Labor must also be given access to ERISA plan documents.
Request Assistance with Employee Benefits Compliance
Manufacturers may also be required to comply with other federal laws, such as the Mental Health Parity and Addiction Equity Act (MHPAEA), the Health Insurance Portability and Accountability Act (HIPAA), Women’s Health and Cancer Rights Act (WHCRA), Newborns’ and Mother’s Health Protection Act (NMHPA), the Genetic Information Nondiscrimination Act (GINA), and the Family and
Medical Leave Act (FMLA).
With help from an experienced employee benefits and HR consulting firm, companies in the manufacturing industry can acquire the insurance policies they need and meet compliance requirements with ease. For more information about employee benefits compliance for manufacturing companies or to speak with an experienced benefits consultant, contact New City Insurance today.