When Required Notices Break Down - And How To Fill The Gap

The fastest way to get burned in benefits compliance is believing a notice “counts” just because it was sent. We sit down with Misty Baker, our Director of Compliance and Government Affairs, to talk about why required notices break down in the real world and what brokers and employers can do to make the message actually stick.

We get practical about the pressure points: COBRA timing (including the day-one initial notice), the decision to administer COBRA in-house versus using a third-party vendor, and the messy moments that happen when an employee hits a deadline they never realized applied to them. We also dig into digital delivery fatigue, why employees tune out even important emails, and how that creates extra work, late surprises, and avoidable liability.

Then we zoom out to the filings and deadlines that often get missed because “someone else” is assumed to own them. PCORI is the perfect example: what it is, who needs to file IRS Form 720 in self-funded and level-funded plans, and why July 31 should already be on your compliance calendar. Misty also explains a blunt reality of employee benefits compliance: employers are typically on the hook even when a broker or vendor is the one who dropped the ball.

If you want a clearer way to run client conversations, reduce penalties, and tighten your group health plan compliance process, this one will give you a framework. Subscribe to the CRC Benefits Podcast, share this with a colleague who owns compliance tasks, and leave a review with the notice or filing that causes the most confusion on your accounts.

Read Misty's article here: https://www.crcbenefits.com/tools-intel/why-required-notices-break-down/
Download the compliance doc and more here: https://www.crcbenefits.com/compliance/compliance-resources/

Transcript

Notices Sent Versus Understood

Michelle McCaw 0:00

Welcome back to the CRC Benefits Podcast. I'm Michelle McCaw. And I'm Amanda Knight. And today we are talking about required notices, which on paper feels like one of the more routine parts of benefits admin. They're drafted, they're distributed, they're posted. Most brokers have a checklist and a case. Yep. And most of the time everybody assumes that if the notice was sent, the job's all done, right? Until something doesn't line up. An employee says they didn't realize a deadline applied to them, or a leave situation doesn't work the way that they expected, or that filing date sneaks up, and no one's quite sure who owns it.

Amanda Knight 0:36

And the response is almost always the same. Well, it was in the notice, it was sent. But that doesn't always mean it landed.

Michelle McCaw 0:43

Exactly. And that's why we asked Misty Baker to join us today. So Misty is our Director of Compliance and Government Affairs here at CRC Benefits, and she spends her days helping brokers and clients sort through exactly these kind of questions. This is the CRC Benefits Podcast from CRC Group. This podcast features news and insights from those working with our vast network of 20,000 brokers to deliver employee benefits to more than 200,000 small and medium-sized businesses. Plus, we give you the latest information on what is happening at CRC. This is the CRC Benefits Podcast. And now the hosts of the podcast, Michelle McCall and Amanda Knight. Misty, welcome back. You recently wrote about uh exactly this in a Tools and Intel newsletter uh article. So how required notices don't usually fail because they weren't delivered, but it's because they weren't understood, right?

Misty Baker 1:35

Yeah, that's a hundred percent right. And even for me, the seasoned 25-year-old vet in employee benefits, I still have to use cheat sheets on all the notices that that are required. And it changes for group size, funding, you know, whether you're level funded, self-funded, or fully insured. I mean, it just changes. So for brokers out there, they need to really understand and dig in on why these notices are so important.

Michelle McCaw 2:03

So when we say that these notices are breaking down, what are you actually seeing? Where do you see those gaps start to creep in, Misty?

The 21-Page Notice Reality

COBRA Notices And Who Owns Them

Misty Baker 2:11

I see the gap beginning from prior to day one of insurance, if I'm really honest with you. Um there are so many different notices. As a matter of fact, uh we we have an internal or we have an we have a checklist. It's 21 pages long, and it's a pretty amazing piece of collateral for our broker partners. It talks about notices all the way from like a marketplace model notice, Medicare Part D notices, um, your SBC, your uniform glossary, um, Michelle's Law. Anybody remember Michelle's Law? I do. I mean, it's just, yeah. Well, not now, not because you're Michelle McCall. There is such a thing called Michelle's Law. Um, but yeah, it it really is important to know that the federal government and sometimes your state government is gonna put all these rules on health plans, right? We want you to offer, you know, affordable coverage. We want you to offer, you know, all these different mandates in your particular state, or we want you to offer what the Affordable Care Act says you should offer. And the only way you're gonna be able to know that you're doing that is by a notice or some kind of guidance from the federal government. Let me give you an example. Cobra is really, really one of those things that I see a ton of mistakes made. Now, Cobra um has a lot of little gotchas, right? There's an initial notice. So that means when I first start working for an employer that has more than 20 employees, um, I now am entitled to Cobra. And you have to tell me the rules of Cobra when I first start working for you. Not in 60 days, not the day my coverage kicks in. I mean, you really have to tell me here's your notice. Um, here are your rights as a Cobra participant. So that's like day one, right? Of of being uh an insured employee, and an employer has to do that. Now, we're taking another fork in the road. So, does your group administer Cobra on their own, or do they use a third-party vendor to help you with these things? Um, and I think that's gonna be the theme that we're gonna talk about a lot today on this podcast is do you have a trusted partner who is going to provide the notices timely and factually and correctly to your employees? Or are you guys gonna do it, or is that employer gonna do it all on their own? So, yeah, I see, you know, the minute someone says, Hey, look, I want to offer this really cool health insurance plan. I had 25 employees. I'm like, great, game on. I got a 21-page checklist for you, my friend.

Michelle McCaw 4:57

Is that not the truth? The gift that keeps on giving. Well, and just like you said, notices have always really been part of the process. Um, but I feel like it's the environment around them that's really changed. Like benefits are a lot more layered now, enrollment is a lot more digital, the decisions are moving faster. Do you think maybe part of the issue is that the delivery stayed the same, but everything else evolved?

Digital Burnout And Missed Deadlines

Misty Baker 5:22

You know, I think that the delivery is in most cases has gotten easier because of the electronic ability to deliver all of these notices electronically. But I want you as a broker or just a consumer in general, like if you all ordered Bath and Body Works one time, like you bought a candle for your wife or your mom or something, now you're gonna get 8,000 emails from that company saying, hey, look, we have new candles out, right? It's it's the same thing where people get so desensitized to reading their email. They get so desensitized to opening their mail. I mean, I opened an EOB today of my own. It was four pages long, and I really, really went through it line by line. Like, who does those things? That's the same thing. So when an employer gets this 21-page checklist of all the notices, they're like, well, when did that happen? Why do I have to, you know, why do I have to collect collect RXDC information? Um, why do I have to tell my employees that they need to know about Michelle's law or they have to have an SBC? And most of the time the answer is you have to tell the employees what the rules are ahead of time. You know, I see this a lot when it comes to like paid family leave and paying Cobra premiums. I mean, we got a question this morning. You know, this employer really wants to pay for the 18 months of Cobra for this employee and they want to bridge this gap before he turns Medicare eligible. Can the company just pay their COBA? Can the company just pay this guy's Cobra premiums for 18 months? I mean, the technical answer is anybody can pay pay cobra premiums, right? I've seen dialysis, I've seen hospitals pay cobra premiums. So technically your employer could pay for 18 months of Cobra, but now we're getting into a discrimination issue. If you're gonna do it for one dude, you gotta do it for all the dudes, right? You can't just do it for one person because that's when you really start getting into that penalty box. So I know you asked the, you know, the question of like, is it, is it, you know, are we moving a little faster? Is there like a gap in the digital content? And I'd say that everyone's burned out digitally. Everyone gets so many emails every day, they think it's not a big deal, and they skip it until they really, really need to access care. Maybe they have a question about why something wasn't covered. Maybe they had a pre-authorization, they had the surgery, and then the insurance company denied the claim afterwards. And so we just have to give the rules of the road. And that's what employers need to realize. It's not to be mean, um, it's just to make sure that your employees are treated fairly and that you as an employer are not discriminating against your population.

PCORI Fee Filing And July 31

Michelle McCaw 8:27

So let's let's make this even more real for our brokers that are listening. Let's talk about PCORI. This one's not really a notice. That's an actual filing. There's a deadline, it has to be done, and a lot of the time brokers assume that someone else is handling it. The TPA, the client, payroll. Where do you see that one sometimes go sideways?

Misty Baker 8:49

Yeah, I see a lot of folks who have never heard of PCORI, um, which, you know, I mean, I can I can get that. I I see that PCORI hasn't been around forever. And PCORI is one of those weirdos that um it is a filing that an employer has to do, whether they're level-funded, self-funded, HRAs, if they have an ICRA. Um, and PCORI, by the way, stands for Patient-Centered Outcomes Research Institute fee. This particular fee was introduced when ACA was first born 16 years ago. ACA is now a nasty driving teenager. That's how I like to remind brokers. I like that comparison. So make sure you have good insurance on the car. But, you know, there's a separate filing that has to be done for PCRI. Um, and this one was supposed to go away a few years ago. And the federal government said, hey, wait, wait, wait, we love cashing these checks. So we're gonna keep cashing these checks on PCORI, and we're gonna keep, you know, funneling money into it. Um now basically that PCORI is is there's not a notice of the employee that's required, but there is an IRS form number 720, um, where you have to um cut the government a check, basically. Now, if you're self-funded, there's a certain amount of days. Um, if you are fully insured, regardless of group size, those PCORI rates have already been like baked into your overall rate, so you don't have to do anything extra. But if you're self-funded or level funded, you may actually have to write a PCORI check. And remember that that that is due by July 31st of each year. So, yeah, little little tiny little gotchas like that. And there's so many examples of you know, PCORI fees. Um, we see RXDC, we see Medicare's credible coverage notices, we see a bunch of them. Um, so it's really important to remember, you know, to have some kind of a cadence because some of these notices um you may have never heard of before, to be honest with you. But you know, PCORI is just a really good, um, a really good example of that.

Michelle McCaw 11:08

It is, it is. It's such a common dynamic too. It's not that anyone's ignoring it, it's just not clear sometimes who's supposed to own it, right?

Compliance Calendar And Real Penalties

Misty Baker 11:16

So I'm gonna give you two messages. If you are a broker or a consultant or an agent, I haven't read I've read very few laws on the federal level that actually direct an agent to be responsible for something. Now, employers, if employers are listening to this podcast, you are responsible for everything. So, employers, you get out of no, you get out of nothing. You're always responsible. As a matter of fact, let me give you another example. Let's say there's there's something called broker compensation disclosure. We have a notice for that, it's on our compliance page. It also was started when ACA was first born a few years after it went into effect. Agents have to disclose their commission to their clients if they make more than $1,000 annually. Okay. If the employer group is um not audited, but if uh if they're investigated, um the employer is penalized because the broker did not disclose their commissions. Now how bizarre is that, right? So I mean it's just another example of if you're an employer, you're responsible for everything. You're always on the hook. If you're a broker, you're responsible for almost nothing. Um and it's just the way the the law is written, right? It's crazy.

Michelle McCaw 12:46

Well, and when you step back and look at the full year, the core is just one item. You and the team pulled together the 2026 compliance calendar for group health plans. And when you see everything laid out like that, what does it show?

Misty Baker 12:59

It shows that probably most of your employer groups are not in compliance. And I don't say that out. Yeah, yeah. It it's one of those things where there are so many requirements, and sometimes insurance carriers will give you some of those, but an employer is not gonna know. Okay, look, I know my SBC, because I'm fully insured, was prepared by I'm gonna throw a name by Aetna. So I know that I have my SBC, and I know that attached to that SBC, there's a you know, a glossary, a uniform glossary. So it makes it easy for my employees to understand when something like a birth or diabetes or or an patient hospital stay is happening. Um, so sometimes the carriers do give you the information that you need, but employers really have a hard time finding where that is. There needs to be like a central depository. Um and quite frankly, if you if you use our 21-page checklist, uh, I know I keep saying that because it's overwhelming the amount of information that's in there. If you were you to use that with your groups, I think you would probably, as a broker, find a couple of different things that you probably were not doing. Um and remember that you know, these all have penalties, you know. So if you're not offering broker compensation disclosure annually to your client, and your client is investigated, that means that you know they could they could be penalized. You know, there's penalties for 1094, 1095, a failure to file penalty um is one, and then a failure to furnish, that's a second penalty. So these these numbers can be you know pretty extensive. They can get up there in dollar amount. I mean, I think the biggest fine I've worked on at least in the last year is like $1.7 million. So that's real money. Yeah, yeah. Yeah. And that's because the employer forgot or the employer didn't code something correctly on an IRS form. That's, I mean, that's that's a lot of money.

Michelle McCaw 15:16

It's a lot of money for for a yeah, for missing something like that, right? I mean, and I feel like the compliance calendar that you did pull together um really makes everything visible, which is a huge value add. There are just so many required touch points across the entire year. It's crazy.

Misty Baker 15:35

It is, it is, and it's one of the things that, you know, I I run into, you know, our broker partners, they, you know, they they write business from two lives, one life, you know, to the thousands of lives. And I I will tell you that nine times out of ten, the small groups are the worst offenders when it comes to compliance. You know, if you're fully insured, small group, you probably are missing so much because you think the insurance carrier has done everything for you. Right. And that's probably the scariest group of folks.

Michelle McCaw 16:11

So if a broker hasn't used something like that compliance calendar before, how should they think about it? Is that is it about planning, assigning ownership, a way to sort of structure conversations with clients?

Misty Baker 16:24

Yeah, that is exactly what this document is for. This document is so a broker can go in to a prospect or a current client, they can go through all these different touch points and just remind them, hey, do we need to file a 5,500? Have you done your Form 720? Did you electronically file your 1095s last year? You know, little tiny things like that. And if it's a prospect and you go in with this checklist, um, and your client is like, I've I've never filed a 5,500 before in my whole life. I have 200 employees, you know, as a broker, you look like a champion because now you're gonna help this client or this prospect. Not only are you gonna win the business, but you're also gonna be assisting them and really shutting off those penalties pretty quickly. So I love this as a client conversation starter, a prospect conversation starter. Um, I had the absolute privilege of being on a call like that last week where we have a uh prospect, and the prospect was just kind of beside themselves with all these different questions. And so the broker brought us in from a compliance standpoint. We started asking a few questions, and the employer is like, Whew, I didn't know all that. Um that that's an eye-opener for them, and that that person is gonna win the business. I I firmly believe that.

Liability When Rules Are Not Clear

Michelle McCaw 17:53

Yep, they look like a hero, right? Yeah, they do. Um, there's another part of the article that that stuck with me. We've talked about the penalties, um, but it doesn't always show up as a penalty. Sometimes it shows up as extra work, right? Like repeated explanations or or issues that surface late. Uh, how should brokers think about that kind of impact?

Misty Baker 18:18

Um, yeah, I'm very cynical about this this particular issue because most of it feels like time wasting to an employer. They're gonna think, why in the world do I have to tell my employee about this particular law? It seems redundant. Nobody's gonna read it, they're just gonna put it in the trash. Well, yeah, most of them are gonna put it in the trash. Most of them are never gonna read this, you know, employee handbook that you make everyone sign saying they received a copy of it until there's a problem. See, that's the other thing about you know having an employee handbook or a checklist like this, it's gonna identify areas where your employer group has opened themselves up to liability. You know, I made that comment earlier about Cobra. Um, and so you have to have an initial notice and you have to have a notice when the person leaves your employment. If those are not done on time, you can be sued as an employee and as an employer, you can be sued. I see that a lot. Um, I see that a ton. Where you have a disgruntled employee, maybe you had someone who um went out on family medical leave or asked for FMLA, and you know, you have to protect the job during that time. If there are no rules and the employer just lets this employee stay on the insurance month after month after month, that's really not the right thing to do. So you have to know the rules of the road in order to be successful and limit your liability as an employer. That's what you really want to do.

Michelle McCaw 19:56

So if someone is listening and thinking, Misty, I send, we send everything we're supposed to send. What is one shift that makes those notices more likely to make sense when they actually matter?

Misty Baker 20:11

It it's really hard to say, but doing the right thing every day for every employee and explaining the rules of the road is mundane. It is not that sexy for sure, right? But it does matter. And you never want to be brought in a court of law as an employer. You really don't ever want to be in that position. So if you're gonna, you know, bring someone on board to help you with all the compliance requirements in your health plan, just make sure they understand, you know, things from Cobra, like I've explained all the way to FMLA. What is the what is your employer's leave policy? What is your employer's, you know, kind of idea about offering coverage? Are we just gonna slap some coverage together or are we going to, you know, really look at it and focus on it? So every time doing the right thing the same way, every time, makes it actually matter because it's gonna protect the employer um in the long run.

What Misty Watches Next

Michelle McCaw 21:16

Perfect. So before we wrap uh on this, we've covered notices pretty well, I think. Um, but in the compliance space overall, what's on your radar? What are you watching right now?

Fast Three With Misty

Misty Baker 21:28

Okay, I'm totally nerding out on PBMs. I'm totally nerding out on different um court cases that are happening right now and being dismissed. That has a really big potential in our um space just to figure out what's going to happen to some of these employer groups. Um, the other thing I've been studying today, at least, is executive orders and what those actually mean to employers. How that kind of like high level trends. translates down into okay you know this administration wants posted signs about prices when I go see my obigen right so is it gonna matter if the obigen posts on there that my exam is $500? How is that gonna change my behavior as a patient? You know right you know what I mean like bringing that down to what does that mean to me as a patient? Um and and why yeah why is it getting so hard to be a patient? There's so much red tape. Yeah you know I just I I'm just you know I take care of my my 84 year old mother and so just just thinking about all the things you have to do with Medicare um and as a patient how do these things transplant themselves into better care cheaper care and thorough care as a as a patient.

Closing And How To Get Help

Michelle McCaw 22:53

Valid questions well it sounds like we're gonna have to have you yeah we're gonna have to have you back to uh have a conversation about EOs it sounds like it's kind of fun it is it is well before we let you go you know by now at the end of every episode uh we have our fast three so it's just three quick questions just to get to know you better that has nothing to do with compliance. I love this. Yeah we love it too because after talking through regulations and deadlines it's nice to remind everyone there's an actual person behind the title. Okay so Misty you've had no prep right these are just going to be the first uh first thing that comes to mind okay yep all right if you had to live in one decade forever which one would you choose well can I be a princess or do I have to be sure okay no you are a princess yeah well I okay so I love Bridgerton and so I want to be a rich Bridgerton beautiful they're not princesses but they're you know what I mean like that's where I want to live I want to dress a fancy lady yeah I that's where I would like to be yes I love it I love it I I agree uh okay so if you had to swap lives with someone for a week it could be anyone who would you pick President Trump I think she might have already answered yeah well it could be President Trump are you kidding me for a week I want to find out if the aliens are real so I would love to swap is it's a week long enough to know is a week long enough I don't know the only thing I couldn't do is I could not eat McDonald's okay I can't eat McDonald's okay but you know everything else like heck yeah let's let's trade for a week yeah I I kind of like that any president really good job at it any president what hobby this is your last one what hobby would you take up if you suddenly had five free extra hours a week that no one could interrupt a hobby that I would do you know I would probably sit in silence no one can call me no one can email me is napping a hobby oh for sure it could be a hobby we can make it one it's your five free hours that's right so I did I did text a friend uh this weekend and I said I just want to win the lottery and be able to take a nap every day that is like my that's my wish for my life and so far that never happened no well and you never stop uh compliance never stops right so it would be nice to have an extra five hours but I would waste it oh it's not wasted I don't think at all I think that's a good way to spend it uh thank you so much Missy for your time today this really is uh one of those areas where um the requirement is clear but the experience is not always clear right and for brokers that's where we find the opportunity is making sure what's sent actually makes sense later. Yeah so if you want to walk through the compliance calendar or talk through ownership timing for your clients our compliance team is always here for you. Thanks for listening to the CRC Benefits podcast. We'll see you next time.

Misty Baker 26:26

Thank you