Compliance & Administration

Under ACA Section 4980H(a), an Applicable Large Employer (ALE) that fails to offer minimum essential coverage to at least 95 percent of its full-time employees (and their dependent children) in any month may face a penalty of approximately 2,970 dollars per full-time employee per year (2024 amount, indexed annually), minus the first 30 employees. This penalty is triggered if at least one full-time employee receives a premium tax credit on the Marketplace. Under Section 4980H(b), if an ALE offers coverage that fails to meet affordability or minimum value standards, the employer may face a penalty of approximately 4,460 dollars per year for each full-time employee who receives a premium tax credit. ALKEME tracks these thresholds, models penalty exposure, and ensures your coverage offers satisfy all ACA requirements.

ERISA requires employers to maintain a written plan document for each welfare benefit plan, a Summary Plan Description (SPD) that describes plan terms in plain language, and Summaries of Material Modifications (SMMs) when significant plan changes occur outside the SPD update cycle. SPDs must be distributed to participants within 90 days of becoming covered and updated at least every five years if the plan has been amended, or every ten years otherwise. Employers with 100 or more participants in a welfare benefit plan must file Form 5500 annual returns with the DOL. ALKEME prepares wrap plan documents that consolidate multiple insurance certificates under a single ERISA plan, drafts compliant SPDs, and manages Form 5500 filing timelines.

COBRA (the Consolidated Omnibus Budget Reconciliation Act) requires employers with 20 or more employees to offer continuation of group health coverage to qualified beneficiaries who lose coverage due to a qualifying event such as termination of employment, reduction in hours, divorce, or death of the covered employee. The employer must provide an initial COBRA notice to all new plan participants and a specific rights notice within 14 days of learning of a qualifying event. Qualified beneficiaries have 60 days to elect continuation coverage and may be required to pay up to 102 percent of the full group rate premium. COBRA coverage generally lasts 18 months for employment-related events and 36 months for family status events. ALKEME can manage COBRA administration directly or oversee a third-party COBRA administrator to ensure timely notice delivery, accurate premium billing, and complete compliance documentation.

A Section 125 cafeteria plan is a written plan that allows employees to choose between receiving cash compensation or selecting qualified benefits on a pre-tax basis. At minimum, most employers maintain a premium-only plan (POP) that allows employee contributions to group health, dental, and vision insurance to be deducted from pay before federal income taxes, Social Security taxes, and Medicare taxes. More comprehensive cafeteria plans may include health flexible spending accounts (FSAs), dependent care FSAs, and Health Savings Account (HSA) contributions. Cafeteria plans must satisfy eligibility, benefits, and concentration tests to ensure they do not discriminate in favor of highly compensated or key employees. ALKEME drafts Section 125 plan documents, conducts annual nondiscrimination testing, and ensures plan administration complies with IRS regulations.