Employee Assistance Programs (EAPs) have become increasingly vital for businesses, especially since the COVID-19 pandemic highlighted the need for employee well-being support. These programs aren’t new, but the recent emphasis on mental health and employee support has made them a critical benefit. EAPs offer a way for employers to help employees deal with personal issues, including mental health challenges, that can affect their job performance. The core idea is simple: healthier, happier employees are more productive, take less time off, and contribute to lower healthcare costs for both themselves and the company. For businesses considering implementing or improving their EAPs, it’s crucial to understand both the benefits for employees and the legal requirements, particularly concerning the Affordable Care Act (ACA).
Understanding EAPs: More Than Just Referrals
An EAP is an employer-sponsored benefit designed to boost employee health, both physical and mental. They achieve this by offering services like counseling and educational resources, or by connecting employees with the right support for personal problems. EAPs are flexible; they can be broad, addressing a range of issues, or focused on specific areas. Common services include counseling and referrals for:
- Fitness and Nutrition Guidance
- Stress Management Techniques
- Mental Health Support and Counseling
- Grief and Bereavement Resources
- Family and Relationship Issues (childcare, elder care, marital support)
- Substance Abuse Support (alcohol and drug use)
- Financial and Legal Consultations
In recent years, EAPs have played a crucial role in helping employees navigate mental health challenges brought on by the COVID-19 pandemic. Issues like social isolation, adapting to remote or return-to-office work, childcare challenges, financial worries, and grief have all been addressed through EAP services. Many employers expanded their EAPs to include remote therapy and online counseling, a change that has largely remained due to its convenience and flexibility.
Navigating Legal and Compliance for EAPs
The legal requirements for an EAP depend heavily on its design and how it operates. Certain EAP benefits can be classified as “medical care” or fall under the definition of a “group health plan,” which triggers more stringent federal regulations. Another factor is whether the employer manages the EAP directly or uses third-party administrators. Here are the key legal areas to consider when setting up or reviewing an EAP:
ERISA (Employee Retirement Income Security Act) Considerations
If an EAP provides “medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment,” it’s likely considered a “welfare benefit plan” under ERISA. This triggers various compliance obligations. While the definition is wide-ranging, the Department of Labor (DOL) clarifies which EAPs fall under ERISA. Generally, EAPs offering more than just referrals, particularly counseling services, are usually considered ERISA welfare benefit plans. The DOL has specifically identified EAPs offering on-site counseling (including mental health) or those administered by third parties providing assistance for issues like substance abuse, stress, anxiety, and marital problems as ERISA-covered.
However, EAPs that only provide referrals, whether through staff without counseling expertise or national hotlines, and don’t offer medical benefits or treatment, are typically not considered ERISA welfare benefit plans. The key distinction is whether the EAP treats conditions or simply directs employees to external resources.
If ERISA applies, the EAP must meet reporting and disclosure rules, including having a written plan document and a summary plan description. These documents must detail eligibility, benefits, and claims procedures. ERISA also imposes fiduciary duties on employers, requiring them to act in the best interest of plan participants. Reporting requirements include filing Form 5500 annually and providing a summary annual report to participants.
ACA (Affordable Care Act) and Group Health Plan Rules
Employers must also determine if their EAPs qualify as “group health plans” under the Affordable Care Act. If an EAP provides benefits for medical care, it’s generally a group health plan unless it qualifies as an “excepted benefit” (explained below). As a group health plan, it must comply with ACA rules, such as providing minimum essential coverage and avoiding annual dollar limits. Group health plan status also brings additional ERISA requirements, including expanded claims procedures and COBRA continuation coverage.
Similar to ERISA, the DOL has provided guidance on when an EAP is a group health plan under the ACA. EAPs limited to referrals without medical or counseling services are not group health plans. However, EAPs that offer counseling or medical care, such as substance abuse or depression counseling, are typically considered group health plans and must meet ACA requirements.
COBRA (Consolidated Omnibus Budget Reconciliation Act) Implications
If an EAP is deemed a group health plan and provides medical care, it becomes subject to COBRA’s health plan continuation coverage rules. Employers must offer COBRA to beneficiaries, allowing them to continue EAP coverage (specifically the medical care portion) after qualifying events, and provide all required COBRA notices.
HIPAA (Health Insurance Portability and Accountability Act) Privacy
EAPs that provide medical care, particularly direct counseling, must comply with HIPAA’s Privacy and Security Rules if they handle employees’ Protected Health Information (PHI). For self-insured EAPs, the employer is usually responsible for HIPAA compliance, which involves creating and implementing HIPAA policies to manage the use and disclosure of PHI.
EAPs as Excepted Benefits Under the ACA
Structuring an EAP as an “excepted benefit” can significantly reduce compliance burdens, allowing it to avoid many group health plan requirements. An EAP qualifies as an excepted benefit if it meets specific criteria, essentially acting as a supplemental benefit:
- Non-Significant Medical Benefits: It must not provide significant medical care, considering the amount, scope, and duration of services.
- Non-Coordination with Other Health Plans: EAP benefits cannot be dependent on or coordinated with other group health plans. All employees should be eligible for the EAP regardless of enrollment in other health plans.
- No Employee Premiums: No premiums or contributions can be required from employees for the EAP.
- No Cost-Sharing: The EAP cannot impose cost-sharing requirements like copays or deductibles.
Regulations offer examples of excepted benefit EAPs, such as those providing short-term, low-cost counseling for mental health and referrals, or wellness programs focused on fitness and illness prevention that are separate from health plan coverage costs.
It’s important to note that excepted benefit EAPs, while simplifying compliance, do not independently fulfill the ACA’s employer mandate for coverage. Additionally, they are not subject to the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). However, EAPs can still indirectly affect an employer’s MHPAEA compliance. For instance, requiring employees to use EAP mental health services before accessing medical plan benefits can violate MHPAEA if similar limits aren’t applied to medical/surgical benefits under the main health plan.
Next Steps for Employers Considering EAPs
When deciding whether to implement or expand an EAP, employers should first define the EAP’s goals and understand the primary needs of their workforce. Consider using anonymous employee surveys to identify desired support services. Promoting the EAP and educating employees about its confidential services is essential for ensuring utilization. Confidentiality (with standard health and safety exceptions) should be a key message in EAP communications.
For most employers, structuring an EAP as an excepted benefit is often the most practical approach to balance legal compliance and effective employee support. This model allows for counseling and referral services, offering impactful assistance. Employers must decide between internal administration or using a third-party administrator. Third-party administrators can streamline operations and enhance employee confidentiality. It’s crucial to ensure EAP counselors are qualified professionals and that services are accessible through various platforms, including in-person and remote options, to maximize effectiveness. To determine the best EAP approach for your organization, consult with benefits consultants or third-party administrators to assess workforce needs and navigate legal considerations effectively.
| 2023 Deadline Reminders | |
|---|---|
| Anticipated End of COVID-19 “Outbreak Period” (assuming May 11, 2023 end to National Emergency) | July 10, 2023 |
| PCORI Fee | July 31, 2023 |
| Annual Medicare Part D Notice of Creditable (or Non-Creditable) Coverage to Eligible Individuals | October 14, 2023 |
| Health Plans Must Submit Gag Clause Attestations | December 31, 2023 |
| *While some deadlines are the same date for all plans (“fixed deadlines”), many important deadlines are different for each plan depending on, for example, when the plan year ends. The above is a snapshot of upcoming fixed deadlines that apply to many plans and plan sponsors. Contact your benefits consultant regarding important reporting and disclosure deadlines specific to your plan(s), including deadlines for the Forms 5500 and Summary Annual Reports. |
