New California legislation takes effect January 1, 2020 affecting your benefit plans. Here is a quick reminder of these important changes.
Notice of Deadline to Withdraw FSA Funds - Employers must notify participants in an FSA that have a mid-year run out period of any deadline to withdraw funds before the end of the plan year. Notice must be provided in two different forms, one of which may be electronic. Please review your FSA summary plan descriptions to ensure that this information is included.
Domestic Partnerships – A new law removes the limitations on who may form domestic partnerships by allowing opposite-sex couples under the age of 62 to be eligible to form domestic partnerships. You will need to evaluate how this may affect your plans’ costs, enrollment process and administration and that the definition of Registered Domestic Partner (RDP) is consistent the new state law.
Individual Mandate – California has enacted a mandate requiring all state residents to have qualifying health coverage throughout the year beginning January 1, 2020. Penalties for failure to have coverage are substantial but there are exemptions available. This mandate requires sponsors of self-insured plans and health insurance carriers to report coverage to the California Franchise Tax Board (FTB) by March 31, 2021 for the 2020 taxable year.
Air Ambulance Balance Billing – A participant’s liability for medically necessary covered services by an out-of-network air ambulance will now be limited to the same cost sharing amount that the enrollee would pay for the same covered services received from an in-network air ambulance.
Worker Status: Employees and Independent Contractors – California has enacted a new test for determining worker status. The Legislature has codified a much stricter test for classifying certain workers as independent contractors. The provisions include numerous exemptions which involve complex requirements. Considering this new measure, addressed in a recent Keenan Briefing, we suggest you examine how you classify employees and determine whether there are contractors that should be reclassified as employees.
For more about these provisions, and additional state employee benefits legislation, please refer to our recent California Legislative Summary Briefing.