New challenges deepen the divide between employee benefits regulations and reality
One of the highest costs of outdated regulation in employee benefits is the additional burden it places on HR professionals.
Employee benefits administration is a tangled web. From education to ever-changing coverage options, plan managers and HR leaders face a myriad of challenges. While regulations were initially written to safeguard participants, the reality is now outpacing these protections, complicating the role of those who oversee these programs.
Related: What to expect from the Biden administration on the regulatory front
Facing increased digitazation and pandemic-fueled adjustments to the way companies work, the question now is, will the necessary changes happen to assist human resource departments?
Communication challenges
One of the most timely and straightforward regulatory issues needing administrator relief and potential solutions is required participant disclosures.
The main challenge for remaining compliant and working efficiently is the battle between paper versus digital communication. Most often, employees want information and the ability to manage their benefits via digital touchpoints, whether shared over email or easily accessible on their mobile device. Electronic communications are easier to navigate because of a linked table of contents and the ability to use word search functions.
Unfortunately, that may not align with antiquated rules that could require the converse if an employee does not predominantly work using a computer. Specifically, these guidelines are outdated because the electronic delivery rules that apply to health and welfare plans come from 2002 Department of Labor guidance, which was crafted before Apple started developing the iPhone, and so the world has since changed significantly when it comes to digital delivery and the use of technology in employee communications
In these instances, HR teams must either find a way to get consent for electronic distribution or provide the disclosures in paper form, which can result in hundreds of pages of printed material. Both options add additional burden to hard-pressed HR teams. The environmental impacts of printed communications must also be considered, now that many corporations are placing greater emphasis on environmental, social, and governance (ESG) standards and best practices.
The scenario above is indicative of a more significant problem: human resource professionals spend too much time focusing on staying compliant rather than on how to best serve employees and meet their needs.
Amplifying the push for digital communication is how the American population has been seeking medical care over the past year. Telehealth is enjoying its highest levels of popularity, expected to grow at a CAGR of 15.1% from 2021 to 2028. As this continues, the schism between health care delivery and communication will appear even further disconnected.
New pandemic-era challenges
As the vaccine rollout continues, many businesses are returning to a more normal or pre-pandemic standard as employees come back to the workplace. With this comes new hurdles. For example, some employers are trying to expedite a safe return-to-work by exploring the potential of bringing a vaccine provider on-site, much like many already do with the flu shot.
However, vaccination programs offered to all employees, and not just those on an employer’s health plan, exist in a gray area of health and welfare compliance. Is the employer creating a stand-alone group health plan? If yes, does the vaccination program have to comply with the ACA, ERISA, and COBRA requirements, to name a few?
Employers can mitigate some of these issues by only providing vaccinations to those on the group health plan or charging for the total cost of the vaccine to those that are not on the group health plan, but these solutions often stand in the way of the goal of creating a safe workplace and helping to bring about the end of the pandemic.
Change is on the way
The good news for plan managers is that relief could be on the horizon. Health care is a priority for the current administration after running on the promise to protect and build on the Affordable Care Act (ACA). With more eyes on the ACA and regulatory rollbacks enacted as part of the pandemic response to lower certain care delivery barriers, there could be a simplification of the regulatory environment forthcoming. The current administration has also placed a high emphasis on employers assisting their employees and their family members with access to vaccinations. Agency guidance could exempt employee vaccination programs and other similar programs from some of the onerous health and welfare regulations that put these programs into legal limbo.
One final sign of progress has been the adaption of electronic communication guidelines in other similar benefit areas. For example, last year the Department of Labor updated the electronic distribution rules for retirement plans, which previously had to comply with the same requirements as health and welfare plans, making it easier for electronic distribution of retirement plan documents. There remains hope in the industry that health and welfare plans will receive the same updating soon.
One of the highest costs of outdated regulation in employee benefits is the additional burden it places on HR professionals. Better communication, evolved practices to accommodate a post-pandemic world, and the continuation of common-sense regulation rollbacks will benefit employers and employees. However, in the meantime, the key is to work smart and ask for help. Benefits managers should meet with their insurance brokers to talk about the best options for improving efficiency until the day that the regulatory environment can catch up with the times.
Nicholas Karls is vice president of regulatory and legislative strategy at Hays Companies, part of the Brown & Brown Team.
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