benefit compliance risk assessment tool

Annual Benefit Compliance Concerns


We are continually asked by clients with concerns, “What are the compliance actions we need to take every year to ensure we are meeting benefit compliance requirements?”

There are many benefit compliance concerns that, once completed, don’t have to be redone yearly. To know where you are now with benefits compliance, click this link to request a free comprehensive benefit compliance assessment and receive a free risk assessment score and a list of missing compliance steps. If you use HR Service’s Compliance Basics Plus service, this assessment is available by logging in at along with a dashboard. 

The following actions should be taken annually and as needed:

Employee Notices

Send out the following employee notices annually to ensure everyone is notified:

  • COBRA – Initial Notice (If 20+ Federal COBRA; if less than 20, State Continuation / “Mini-COBRA”)
  • CHIP (Child Health Insurance Plan)
  • MHPA (Mental Health Parity & Addiction Equity Act) (If 50+ employees)
  • NMHPA (Newborns & Mothers Health Protection Act)
  • WHCRA (Women’s Health & Cancer Rights Act)
  • Patient Protection
  • HIPAA (Health Insurance Portability and Accountability Act)
  • Wellness Program Disclosure (if offering a wellness program)
  • Grandfathered Plan (if offering a grandfathered plan)
  • Medicare Part D – Send by 10/15 and register with CMS.
  • Health Exchange Notice – Distribute to new hires within 14 days of the hire date
  • FMLA (Family Medical Leave Act) posting and notice (if 50 or more employees within a 75-mile radius)

Summary Plan Descriptions (SPD) or SPD Wraps

Although employers only have to distribute SPDs or SPD Wraps to participants every five years, we recommend running a new document annually to incorporate changes in your benefit plans. Hence, you have a current, accurate document for distribution to new participants and, as needed, existing participants.

Summary of Material Modification

  • Provide participants with a Summary of Material Modification (SMM) any time a benefit plan is materially impacted, such as when the value of the benefit goes up or down. Where possible, provide a 60-day notice of such changes, especially when reduced benefits or Qualifying COBRA Events.
  • Send continuation rights letters to those who lose coverage due to a qualifying event, such as termination of employment or other qualifying events. Notice to plan within 30 days of the event, and notice to the participant within 14 days of notice to prepare.

Annual Reports – ACA 1095/1094 Reports, W-2 Reports & 5500 Reports

  • ACA Reporting: Employers who are Applicable Large Employers (had 50 or more employees the previous year) and those who offer self-funded or partially self-funded plans are required to provide all full-time employees with Form 1095 C/B by January 31 annually, then submit Form 1094 C/B to the IRS with copies of form 1095 by February 28 (if paper reporting) or by March 31 (if filing E-file). NOTE: These dates may be extended one to two days if the date falls on a weekend or if the IRS extends the date.
  • W-2 Health Cost Reporting – Employers with 250 W-2s the previous year must show health insurance costs for group plans on participants’ W-2s on reports due January 31 of each year.
  • 5500 Reporting – Employers with 100 or more participants in any group benefit plans must submit Form 5500 reports to the Department of Labor (DOL) on the last day of the seventh month after the plan year ends (July 31 for a calendar-year plan).
  • SAR – ERISA also requires employers who report on form 5500 to provide participants with a Summary Annual Report (SAR) that includes necessary information from the 5500 reports, such as funding and insurance, essential financial information, and rights to additional information and offer of assistance in non-English.

Nondiscrimination Testing

  •  125 POP and FSA – Employers who allow eligible premiums to be paid pre-tax through either a Premium Only Plan (POP) or Flexible Spending Account (FSA) must conduct annual nondiscrimination testing to ensure they are not favoring highly compensated employees. It is advisable to test early, allowing for any needed adjustments and again later in the year to ensure compliance.
  • Self-Funded Nondiscrimination Testing – All self-funded plans must conduct nondiscrimination testing annually to ensure they do not favor highly compensated employees. It is advisable to test early, allowing for possible corrections and again later in the year to ensure compliance.

Additional Reading

PCORI Reporting

PCORI Reporting: What You Need to Know

PCORI Reporting Notice 2023 for Self-Funded and Level-Funded Plans  The annual PCORI report and payment of the PCORI fee is due by July 31, 2023. …

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Comparing HSA, FSA, and HRA Plans

Comparing HSA, FSA, COBRA AND HRA Plans   Flexible Spending Arrangements (FSA) An FSA is an employer-sponsored and employer-owned benefit that allows employee participants are …

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