Ask the Experts Podcast - July 2025
Our team will discuss the latest trends and topics in the world of employee benefits and compliance.
In this episode, we will discuss:
Compliance Considerations with a Direct Primary Care Arrangement
Offering Different Benefits to Salary vs Hourly Employees
Transitional Relief Plans and Their Impact on ALE Status and Requirements
Marriage QLEs and Plan Changes
Offering an ICHRA and a Traditional Group Health Plan
EEO-1 Reporting
PCORI Requirements and Short Plan Years
Podcast: Ask the Experts July 2025
Welcome to Ask the Experts, a monthly podcast taking on the latest questions around healthcare legislation and compliance.
Welcome to another edition of Ask the Experts. Today's guest is Crystal Bertner, Senior Compliance Specialist.
Welcome, Crystal. Thanks so much, Shelly, it's great to be here.
Crystal, let's get started with our first question. Are there any requirements a broker should be concerned with meeting when it comes to offering a direct primary care setup alongside a traditional high deductible health plan group plan?
Yeah, so there are a few considerations here. The first is ERISA and COBRA. Now in many cases, the direct primary care arrangement will be an arrangement sponsored by the employer and viewed as providing medical care. Therefore, it is considered a group health plan subject to ERISA and COBRA requirements. Next, HSA eligibility is another consideration. For an individual to be eligible for an HSA, they must be enrolled in a high deductible health plan and have no other disqualifying coverage. A direct primary care arrangement is likely considered disqualifying coverage if it provides coverage for free or at a reduced cost for services other than preventive care before the deductible is satisfied. Also keep in mind ACA requirements. These arrangements do not count as minimum essential coverage, minimum value, or an offer of coverage under the ACA employer mandate, so they will want to make sure that it's paired with the high deductible health plan or another ACA compliant plan.
If a group wants to class out their plan offerings, is that okay? Specifically, a group is considering offering one plan with specialty medications that are covered, which would be available only to the salaried employees, and the other two plan options do not cover specialty medications and are available to the hourly employees. What do you think about this offering?
Yeah, so generally employers can set up different classes of employees. They do just want to make sure that this is not being done on a discriminatory basis, that the classes are based on a bonafide employment-based classification distinction, and that annual nondiscrimination testing is being done to make sure that the plan is not discriminating in favor of the highly compensated. One example of a legitimate classification can be salary versus hourly employees. As you mentioned, salaried employees would get one plan and hourly employees would get another plan. They don't necessarily have to be the same. But with that being said, I would consider if it's appropriate for the employer as the fiduciary to offer access to specialty drugs only to salaried employees. An alternative approach here to avoid potential compliance concerns could be to offer all plans to all employees with higher contributions required for the plan that includes specialty drug coverage.
I have a group in Illinois that has a small group transitional relief plan with United Health Care, but they're getting close to being over 50 ATNE, which means the average total number of employees. I was told by UHC even if they go over 50 ATNE last calendar year, and if they are currently over 50 for 2025, they can remain on the transitional plan as a small group. My question is, even if they remain on the traditional plan with UHC as a small group, would they not be subject to the large group mandate based on the IRS guidelines of an ALE, applicable large employer?
Yeah, so while UHC may continue to treat the group as a small group for their purposes, this does not override the employer's obligations under the ACA if they meet the definition of an ALE. Whether or not they are an ALE for the current calendar year depends on their average employee count in the prior calendar year. Now, you mentioned that they were getting close to being over 50, which is important when looking at whether they're an ALE for 2026, but to determine whether they are an ALE for 2025, we would need to look at the 2024 numbers. If they averaged 50 or more full-time employees, including full-time equivalents, in 2024, they are considered an ALE for 2025 under IRS rules. The same would apply for 2025 to determine if they're an ALE and must comply in 2026. In short, even if UHC allows them to stay on a small group transitional plan, they would still be responsible for complying with large group ACA mandates if they are an ALE.
Can you please confirm if a marriage qualifying life event would allow the employee to change plans along with adding their new spouse?
Marriage is a qualifying life event for the employee to add their new spouse, but as far as whether they can change from one medical plan to another, that will depend on the employer and how their Section 125 plan document is written. I'd recommend that they refer to their Section 125 plan document for confirming if this is allowed.
I have a broker asking about being able to offer an ICHRA and a group health plan at the same time to the same group. In this case, the entire group is made up of owners. There are no employees to speak of within the group. Can you please provide me some guidance in this particular area?
So technically, a company can offer both an ICHRA and a traditional group health plan. However, they cannot offer both to the same class of employees. Since this group consists solely of owners, this does likely change things a bit. The ability for owners to participate in an ICHRA or group health plan depends on how the business is structured tax-wise. If the company is set up as an LLC, S-Corp, LLP, or sole proprietor, then owners are not employees and cannot receive tax-free benefits under an ICHRA or a group health plan. However, if the company is set up as a C-Corp, owners are employees and can participate. I'd first start out with confirming the business structure. If all individuals are in fact owners and not employees, they will need to look at other options and speak with their CPA or accountant to set up an appropriate arrangement.
I have an employer that received an email from UnitedHealthcare stating that the EEO1 data collection is now open. Are you familiar with this and does this apply to all groups of 100 or more?
In general, all private employers with 100 or more employees are required to file the EEO1 Component 1 Report annually through the EEOC. This is a report that includes details on workforce demographic data. There is a separate threshold, which is 50 or more employees, if the employer is a federal contractor or subcontractor. If this employer is subject to this reporting requirement, they can either report to the reporting themselves or work with a third party. Some payroll providers do it, so you could start there if it's something that this employer is required to do.
And my last question for today, Crystal. We have an employer group that we wrote with an Aetna-level funded plan effective 8-1 of 2024. Do they need to file and pay a PCORI fee?
That is going to depend on when the plan year ends. PCORI applies to self-insured plans, including level funded plans, and HRA plans, and that's due by July 31st of the calendar year immediately following the last day of the plan year. In this case, if the plan runs from August 1st, 2024 to July 31st of 2025, they will not need to file and pay until July 31st of 2026. Now, if the plan happened to be a short plan year and ended on December 31st, 2024, they would need to file and pay by July 31st of 2025.
Can you explain what you mean by a short plan year, please?
Sure. So, short plan year just means a plan year that is less than 12 months. There are some cases where a plan is written mid-year and ends at the end of the year. If that was the case here and the plan ran from August 1st, 2024 to December 31st of 2024, that would be considered a short plan year, and they would need to file and pay PCORI by July 31st, 2025. But if it runs for 12 months from August 1st, 2024 to July 31st, 2025, they will not need to file and pay PCORI until July 31st, 2026.
Thank you, Crystal. We hope you found this podcast helpful and informative.
If you have any questions, please contact your account executive or account manager. This podcast is designed to highlight various employee benefit matters of general interest to our listeners. It is not intended to interpret laws or regulations or to address specific client situations. You should not act or rely on any information contained herein without seeking the advice of an attorney or tax professional.