Using the rebate for benefit enhancements.
The Department of Labor guidance states a plan may use a rebate for benefit enhancements instead of paying cash. The enhancement should serve the participants the rebate belongs to.
What the letters and the guidance say.
Named in the Guidance
The Department of Labor states the plan may use rebates for benefit enhancements instead of paying cash.
Participants Only
The guidance states a rebate from one plan cannot be used to benefit participants of another plan, so the enhancement should serve the same covered group.
Plan Changes Need Review
A benefit enhancement can change the plan. Confirm with your carrier and your plan documents what is allowed and how the change is documented.
Three steps for the employer.
Pick an Enhancement With Your Adviser
Consider what benefit would serve the covered group and whether it can be added without changing the policy.
Update the Plan Documents
If the change is made, update the plan document and the summary plan description so they match what employees receive.
Tell Employees
Explain what was added, why, and that it was funded by the carrier rebate.
Three questions to settle first.
Can the Plan Add This Benefit?
Ask your carrier and attorney whether the policy and plan allow the enhancement.
Does It Benefit the Right People?
Ask whether the enhancement serves the same participants who paid premium.
Who Documents the Change?
Ask who will update the plan document and the summary plan description.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
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