Section 125 plans for small companies
New Minnesota law aims to increase Section 125 Plans
Employers who do not offer health coverage are required to consider implementing Section 125 Plans.
Effective July 1, 2009, certain employers must comply with Minnesota’s Health Care Reform Initiative (Statute 62U.07), which mandates employers with 11 or more full-time employees to establish and maintain a Section 125 Plan that allows employees to purchase individual and employer-sponsored health coverage with pretax dollars.
Qualified employers must allow employees to both:
• Purchase individual coverage for themselves and their dependents through any licensed insurance producer
• Deduct premium amounts on a pretax basis and remit payment to the health plan
Employers must notify employees that individual market plans are not employer-sponsored or administered. Employers shall be held harmless from claims related to the individual market health plans purchased by employees under a Section 125 Plan.
Employers who do not currently maintain a Section 125 Plan may be eligible for up to $350 in grants from the Department of Employment and Economic Development (DEED). To be eligible for this grant, an employer must meet these conditions:
• Must not have offered any employer-sponsored health coverage in the 12 months prior to submitting the grant application
• Must have established a Section 125 Plan within 90 days prior to submitting the grant application
• Must not have offered a Section 125 Plan within nine months of establishing the current Section 125 Plan
Employers are not required to establish a Section 125 Plan if they do any of the following:
• Offer group health coverage to employees
• Have no employees eligible to participate in a Section 125 plan
• Opt out of the requirement by submitting the MN Section 125 Opt-Out Form to the Commissioner of Commerce, which certifies that they have received education and information on the advantages of a Section 125 plan.
The opt-out form is available at www.commerce.state.mn.us/Section125/Section125.html
For more information, contact Kari Rosand Scanlon, RJF HR Consultant, at 763-746-8219 or scanlonk@rjfagencies.com.
Disclaimer
This document is provided for informational and educational purposes only. It is not intended to, nor does it, provide any form of legal advice regarding the subject matter of the documents. You should not take any actions on the basis of this document, but instead should seek legal advice regarding your issues.
See more Legal Updates here.