Compliance Q&A: Medicare as Primary Payer, ERISA and Short-Term Disability, and Free Diabetic Supplies with HSA Plans
- November 28, 2024
- Posted by: Gus Altuzarra
- Category: Compliance Q&A
11.21.24 | MEDICARE AS PRIMARY PAYER
Q. Can an employer require that Medicare be taken as the primary insurance policy once an employee reaches Medicare eligibility at age 65?
A. If the employer has fewer than 20 employees, most insurance policies will pay secondary to Medicare. This essentially requires employees eligible for Medicare to enroll, since the employer’s plan will pay secondary regardless of whether the Medicare-eligible employee actually enrolls in Medicare. This is not an option for employers with 20 or more employees due to the Medicare Secondary Payer rules.
11.7.24 | ARE SHORT-TERM DISABILITY PLANS CONSIDERED ERISA PLANS?
Q. Do short-term disability (STD) and temporary disability (TDI) plans need to be included in the wrap Summary Plan Description (SPD) and Form 5500 filing? Should there be a distinction made between the two plans in the wrap SPD?
A. STD “plans” can be structured to be an ERISA plan or a payroll practice. Some employers like to treat STD plans as ERISA plans because of favorable protections afforded to employers by ERISA. If the employer treats the STD plan as an ERISA plan, it should be included in the company’s wrap documentations.
Other employers prefer to avoid ERISA formalities (like a plan document and summary plan description) and choose to treat the STD “plan” as a mere payroll practice which is expressly exempt from ERISA. If the employer chooses to treat the STD benefit as a payroll practice, it should NOT be part of the company’s wrap documentation.
State mandated disability programs typically require employers to pay into a state program and these are not administered by the employer. In that case, the mandated disability benefit is neither an ERISA plan or payroll practice. if a state requires that an employer maintain a disability benefit, then the employer will need to decide whether to treat it as an ERISA plan or payroll practice and document the benefit accordingly.
11.14.24 | DIABETIC SUPPLIES AT NO COST ON HSA PLANS
Q. Can a self-insured plan offer diabetes supplies at no cost and with no deductible on qualified HDHP plans per the IRS regulations for HSAs?
A. Insulin is considered preventative and can be provided under an HDHP prior to satisfying the deductible. In addition, any dosage form (e.g., vial, pump, inhaler) of any different type of insulin is permitted. The IRS also expanded the types of acceptable insulin products to include continuous glucose monitors for people with diagnosed diabetes. IRS Notice 2019-45 includes some additional preventative care drugs permitted for people with diabetes.
Answers to the Question of the Week are provided by Kutak Rock LLP. Kutak Rock provides general compliance guidance through the UBA Compliance Help Desk, which does not constitute legal advice or create an attorney-client relationship. Please consult your legal advisor for specific legal advice.
