Employee Health Benefits Compliance Explained

When you hear “Open Enrollment,” what comes to mind as a staffing agency business leader? Do you immediately think of health plan offerings? Or does your mind wander to compliance, deadlines, or even regulations at state and federal levels?

Managing health benefits goes beyond offering different plan options. It also requires adhering to the latest regulations, deadlines, and staying on top of what formal documents must be disclosed to employees.

 Ultimately, compliance and both administering and managing these offerings go hand-in-hand. Things like state-specific disclosures and federal filings are just the tip of the iceberg, and every missed deadline or skipped notice exposes your business to unnecessary risk.

Especially as business leaders prepare for Open Enrollment, brushing up on the rules and regulations around employee health benefits will help you stay compliant while feeling empowered to make the best decisions for your employees. Here’s a breakdown of key compliance responsibilities you must stay on top of to avoid costly pitfalls.

Annual Notices Required to Distribute to Employees

As an employer, you are required to provide eligible employees with certain notices each year. These notices inform them of the different health offerings that exist, and which ones they are eligible for based on their own needs and qualifications.

A snapshot of notices required to be shared with employees include:

• CHIP Notice (Children's Health Insurance Program): The CHIP notice is a communication designed to inform employees if they are eligible for premium assistance through their state’s Medicaid or CHIP program if they can’t afford the employer-sponsored coverage. This notice must be distributed annually to all employees eligible for the employer’s health plan.
• Medicare Part D Notice of Creditable Coverage: For employees that are eligible for Medicare, employers are required to provide an annual notice of Creditable Coverage. This notice deems whether the prescription coverage under the employer-sponsored plan is creditable, or as good as what is offered through Medicare Part D, or non-creditable.
• Women’s Health and Cancer Rights Act (WHCRA) Notice: This notice provides information about the WHCRA, which offers protection to employees seeking breast reconstruction with regard to a mastectomy. Employers are required to provide the notice when an employee enrolls in the plan, and annually thereafter.
• HIPAA Special Enrollment Rights Notice: This notice informs employees that meeting certain criteria during the plan year may qualify them for a special enrollment period. There are several types of special enrollment which must be requested within specific timelines of the event, prompting this enrollment. Employees are required to provide this notice by the time the employee is eligible for coverage.
• Summary of Benefits and Coverage (SBC): This summary provides clear, standardized information about the health plan’s coverage and costs. Employers must provide this notice to employees who are eligible for coverage at the time of eligibility, and during open enrollment periods thereafter.
• Summary Plan Description (SPD): The summary plan description is a comprehensive communication to employees that not only discusses plan benefits, but also how the plan works, and employee rights and obligations under the plan. The employer is required to provide this to enrolled employees within 90 days of the employee’s coverage start date.
• Summary of Material Modifications (SMM): Any significant plan changes must be communicated within set timelines with the SMM. This makes employees aware of any changes that could affect their benefits during the plan year, and before the next plan year where the changes will be written into the plan summaries. If a plan change results in a reduction of benefits, the SMM must be distributed to all participants within 60 days of the date the change was adopted. If a change does not reduce benefits, the SMM must be provided within 210 days after the end of the plan year in which the change was made.
• COBRA Continuation Notices/Portability Notices: Employers are required to provide employees of these notices within 90 days of the employee’s coverage start. These notices describe employee rights to continue coverage once employer-sponsored benefits conclude. Notices must be provided within 14 days after the plan administrator is notified of a qualifying event. Employees would then have 60 days to enroll in COBRA, which allows them to temporarily maintain their health insurance during events such as reduced work hours, job termination, etc.
• Marketplace Exchange Notice (Notice of Coverage Options): This notice is a required disclosure that explains the existence of the Health Insurance Marketplace and options if they do not enroll in an employer-sponsored plan. It must be given to employees when they first become eligible.

It is important to stay informed on any updates made to these notices to avoid any potential compliance penalties.

Stay On Top of Compliance Filings

As a staffing agency, your organization is also responsible for handling and submitting compliance filings to prove that you are operating within regulatory requirements. This same principle extends to managing health benefits for employees. There is a lot to juggle, and failure to complete just one of these compliance filings can make your agency more susceptible to risk. Below are a few forms to have on your radar.

Form 5500

• What it is: This is a disclosure for employers that offer retirement, health, and welfare plans. The report provides transparent information about the plan, financial information, and answers to common employee questions. The purpose of the document is to provide information on the overall wellness of the plan.
• Who files: Employers of large plans (100+ participants), small plans (<100 participants that meet certain conditions), or have a plan that covers a business owner and/or their dependents.
• Deadline: Filed by the last day of the seventh month after the plan year ends. For example, if a plan year ends 12/31/25, the Form 5500 is due by 7/31/26.
• Extensions: A one-time extension of 2.5 months is available by filing Form 5558 before the original due date.

SAR Report (Summary Annual Report)

• What it is: A SAR is a document that summarizes the detailed information contained in the Form 5500. This report must be distributed to all participants within nine months after the plan year ends.
• Extensions: If an extension via Form 5558 was filed, the SAR is due within two months after the Form 5500 filing date.
• Delivery Note: ERISA’s electronic delivery rules apply—so it’s not as simple as emailing a PDF.

PCORI Fee (Form 720)

• What it is: This worksheet collects basic plan information that employers use to calculate their annual fee, which funds research on effective medical treatments. It applies to employers offering self-funded health plans.
• Extensions: N/A
• Deadline: Due annually on July 31.

State-Specific Notices and Reporting

Employee benefits compliance doesn’t stop at federal regulations. Certain states also have their own unique requirements. If you have employees working in states outside of the one your agency operates in, staying informed on these state-specific reporting requirements is critical.

Let’s look at Illinois as an example. All employers offering group health insurance coverage to in-state employees are required to provide employees with a list of Illinois-regulated essential health insurance benefits due to the Illinois Essential Health Benefit (EHB) Notice. This notice also applies to employers whose group health insurance plan is not regulated by the state. The notice informs employees which essential health benefits are covered under the employer’s group plan, which assists the employee in making a more informed decision.

The Massachusetts Health Insurance Responsibility Disclosure (HIRD) is another example of a state-specific filing. This form gathers information about employer-sponsored insurance offerings. It essentially helps MassHealth pinpoint members who have access to qualifying employer-sponsored insurance who may also be qualified for the MassHealth Premium Assistance Program.

Each state has its own unique rules and regulations when it comes to HR compliance, and health benefits are no exception. Staying up-to-date on state-specific notices and reporting requirements is an insurance policy on your own agency’s operations.

The “Under the Radar” Employee Benefits Compliance Checklist

So far, we have walked through the main notices and filings required to be disclosed to employees, but there are many smaller (but no less important) details to manage as a staffing agency business owner. These include, but are not limited to:

• Ensuring ERISA-compliant electronic delivery for all required documents.
• Tracking eligibility and notification timelines for special enrollment events.
• Monitoring plan modifications and ensuring SMM delivery deadlines.
• Keeping up with evolving federal and state disclosure requirements.
• Staying audit-ready for Department of Labor (DOL) inquiries.
• Handling COBRA administration and notices with precision timing.
• Ensuring ACA reporting (Forms 1094/1095) compliance for applicable large employers (ALEs), or employers who offer MEC or MVP plans.
  • ACA reporting can also be for small employers who offer MEC or MVP plans (1094B/1095B).
• Managing plan documents and amendments in line with ERISA disclosure obligations.

While these are less obvious, they are equally important to keep tabs on to maximize compliance and mitigate risk.

ESSG Is Here To Help

With endless deadlines, evolving laws, and multi-agency oversight (DOL, IRS, CMS, state agencies), staying compliant is not just paperwork—it is a constant chase. Missing one notice or filing can lead to hefty fines and increased audit risk.

That is why ESSG exists: to take this entire compliance burden off your plate. We manage every requirement behind the scenes, ensuring your business stays protected and penalty-free, so you can focus on growing, not worrying.

You put your trust in us, and we have you supported the entire way. Are you ready to take the leap? Let’s get in touch.