With ACA reporting looming on the horizon, many employers are focused on what’s new, but BPC wants to take a moment to review some older regulations that may be thrown into new light in 2016.
BPC fielded questions from clients and employers throughout 2015 about the prospect of dropping group health coverage and instead reimbursing employees for the cost of individual health insurance premiums. These arrangements have taken various forms over the years – pre-tax reimbursement through a cafeteria plan, simple post-tax reimbursement, or non-taxable employer payments through an HRA.
A new law makes Illinois the first state in the nation to put in place a mandatory, state-run retirement savings program for private-sector Illinois employers. Just before leaving office last month, former Illinois Governor Pat Quinn signed into law a measure to create the Illinois Secure Choice Savings Program.
The law takes effect on June 1, 2015 and requires the program to be implemented within 24 months. This program is subject to two things: 1) favorable determination this program is not subject to ERISA; 2) initial program funding by the state.
This new law and program will not impact or apply to private-sector Illinois employers who are offering an employer-sponsored retirement plan at the time the law is implemented.
Below are FAQs covering the highlights of the new law and how it impacts employers.
What are the highlights of this new Illinois law?
Private-sector employers in Illinois must offer this Illinois operated retirement savings program to their employees upon implementation of the law if the employer:
- Has been in operation for at least two years, and
- Has at least 25 employees, and
- Does not offer an employer-sponsored retirement plan
Is my company/our organization exempt from this new Illinois law because we offer an employer-sponsored retirement plan?
Illinois employers are exempt from the new law if an employer-sponsored plan (assuming you continue to maintain your plan throughout the implementation of the law). An Illinois employer will be exempt from this law if they offer a 401(k), an ERISA 403(b) plan, any other type of ERISA retirement plan, or a SIMPLE or SEP, and that plan is operational on and after June 1, 2017.
Will this new law impact or make any new requirements on our current retirement plan’s provisions, design or operation?
There is no impact on employers who currently offer a plan. You must simply continue to offer your employer-sponsored retirement plan to be exempt from this new law and program.
How will this new law apply to my company/our organization if we do not have an employer-sponsored retirement plan when the law goes into effect?
- Illinois employers not exempt from this law must automatically enroll their employees in this new state retirement savings plan upon implementation of the law. Employees may individually opt out.
- Employers must make a 3% of pay IRA deduction and send it to each employees’ IRA under this program; participants will be able to adjust the percentage of their pay they have deducted.
- IRA deductions under this program will be sent into a new state-run pooled investment fund; a Board is being established under this law to design and oversee this new Illinois pooled investment fund.
- At least once a year employers not exempted from this program must offer an open enrollment period to allow employees who opted out of the program to enroll.
- Employers who do not offer an employer-based retirement plan AND who fail to offer the Secure Choice program will subject to annual fines; fines start at $250 per employee in year one for those not automatically enrolled (unless they opt out), and increase to $500 per employee in year 2 and thereafter for those employees not annually automatically enrolled (unless they annually opt out).
What should my company/organization do if we not currently offer an employer-sponsored retirement plan and do not want to be subject to the new Illinois mandate?
Employer initiated, designed and sponsored employee benefits are more flexible, effective and attractive than government-mandated alternative programs. Contact BPC at 800-355-2350 for a no-cost complementary retirement plan design conversation and cost estimate.
Where can I read more about this new Illinois law?
BPC is always ready to help guide employers through matters related to your current retirement plan or a prospective new plan. Contact us at 800-355-2350.
We all know that when an employee terminates, he should be offered COBRA. Beyond that, it starts to get complicated. That is why BPC offers comprehensive COBRA administration services to save you time and keep your company in compliance.
COBRA notice requirements begin long before an employee loses coverage. Let's start with a brief refresher on the beginning of the COBRA process and Qualifying COBRA Events.
What is an Initial COBRA Notice?
Also known as the General Notice, this is a short description of a participant’s rights and obligations under COBRA. It is to be furnished when a participant first becomes covered under a plan, to ensure that the participant is aware of the right to elect COBRA if they terminate employment or experience another qualifying event at some point in the future.
When must an Initial COBRA Notice be sent?
The Department of Labor’s COBRA regulations specify that the Initial COBRA Notice should be delivered within 90 days after the coverage begins. In order to ensure this deadline is met, BPC asks that employers inform BPC of new coverage for employees or spouses within 30 days from the start of coverage.