Benefits Compliance Basics: The Main Rules Employers Should Know

Which benefits rules apply to you depends on how many employees you have, what you offer, whether your plan is insured or self-funded, and your state. This guide is a plain-language map of the main federal rules, based on official government pages. It is not a full list. Use it to know what to ask, then confirm details with a benefits attorney, broker, or plan administrator.

Important: Rules vary by employer size and by state. Always check your own situation.

Quick map by employer size

Each item has its own counting rules, explained below.

ERISA: the base layer

The Department of Labor (DOL) says ERISA sets minimum standards for most voluntarily established health and retirement plans in private industry. Government plans and church plans are generally not covered. Among other things, ERISA requires:

• Plan information for participants
• Fiduciary duties for people who manage plans and their assets
• A claims and appeals process
• The right for participants to sue for benefits and breaches of fiduciary duty

ERISA has been amended over time by laws such as COBRA, HIPAA, and the Affordable Care Act (ACA).

Key ERISA documents (from the DOL)

• Summary Plan Description (SPD): Give it within 90 days after someone becomes a participant.
• Summary of Material Modifications (SMM):
• Generally due no later than 210 days after the end of the plan year in which a change is adopted.
• If a change materially reduces group health benefits, it is generally due within 60 days of adoption.
• Documents on request: If a participant asks in writing for plan documents, they must be provided within 30 days.
• Form 5500: Many plans must file this annual return/report electronically through the DOL's EFAST2 system. There are versions for different plan sizes (5500, 5500-SF, 5500-EZ). Check the instructions for exceptions that may apply to small plans.

Summary of Benefits and Coverage (SBC)

Group health plans must give an SBC for each plan option with enrollment materials. If coverage renews automatically, it is due at least 30 days before the new plan year. See Open enrollment communication.

HIPAA special enrollment

The DOL explains that, under HIPAA, employees who lose other coverage, or who gain a new spouse or child through marriage, birth, or adoption, may have a special enrollment right to join your group health plan outside open enrollment. They generally must ask within 30 days.

COBRA

According to the DOL, federal COBRA generally applies to group health plans of private employers that had 20 or more employees on more than 50% of typical business days in the prior year. Part-time employees count as a fraction of a full-time employee. Church and federal government plans are not covered.

Key points from the DOL's employer guide:

• Premiums: Qualified beneficiaries can be charged up to 102% of the plan's cost. During a disability extension, it can be up to 150%.
• How long coverage lasts:
• Generally 18 months after job loss or reduced hours.
• Up to 36 months for other events, such as divorce or a dependent child aging out.
• Up to 29 months with a disability extension.
• Notice deadlines:
• General notice to new plan participants within 90 days after coverage starts.
• The employer tells the plan administrator about a qualifying event (like termination) within 30 days.
• The election notice goes out within 14 days after the administrator is told.
• Qualified beneficiaries get at least 60 days to elect coverage.
• They have 45 days after electing to pay the first premium, and a 30-day grace period for later payments.

Some states have their own continuation coverage laws, which may reach smaller employers. Check your state.

FMLA

The DOL's Wage and Hour Division says the Family and Medical Leave Act (FMLA) covers:

• Private employers with 50 or more employees in 20 or more workweeks in the current or prior year
• Public agencies and schools, regardless of size

Eligible employees can take up to 12 workweeks of job-protected leave for certain reasons. The employer must keep their group health coverage on the same terms during leave. State laws may give more.

The ACA for applicable large employers (ALEs)

The IRS says you are an ALE if you averaged at least 50 full-time employees, including full-time equivalents, in the prior year.

• Full-time: 30 or more hours a week, or 130 hours a month.
• Related companies: these may be counted together.
• Small employers: the IRS notes that "the vast majority of employers will fall below the ALE threshold."

Employer shared responsibility

An ALE may owe a payment if it doesn't offer affordable, minimum-value coverage to at least 95% of its full-time employees and their dependents. A payment is triggered only if at least one full-time employee gets a premium tax credit for Marketplace coverage. The IRS says it will contact an employer about any potential payment (Letter 226J), and that employers should not make a payment before being contacted.

Reporting

ALEs file Forms 1094-C and 1095-C with the IRS.

• Deadlines: For calendar year 2025, the IRS instructions list a filing deadline of March 2, 2026 (March 31, 2026 if filed electronically).
• Furnishing employee copies: Under a 2024 law, the IRS says employers may, in some cases, post a clear notice that employees can request a copy instead of automatically sending Form 1095-C to everyone.
• Self-funded small employers: Self-funded employers that are not ALEs may need to file Form 1095-B instead.

Check the current year's instructions, because dates and rules can change.

Small Business Health Care Tax Credit

The IRS says you may qualify if you have:

• Fewer than 25 full-time equivalent employees
• Average wages below a yearly limit (the IRS lists $62,000 for tax year 2023)
• Coverage bought through the SHOP Marketplace
• Payment of at least 50% of employee-only premiums

The credit can be up to 50% of premiums paid (35% for tax-exempt employers), for 2 consecutive years. You claim it on Form 8941.

Medicare Part D notices

The Centers for Medicare & Medicaid Services (CMS) says employers whose plans include prescription drug coverage must:

• Tell Medicare-eligible people whether the coverage is "creditable" before October 15 each year.
• Report to CMS online within 60 days after the start of the plan year.

Equal treatment in benefits

The Equal Employment Opportunity Commission (EEOC) says it is illegal for covered employers to discriminate in benefits based on:

• Race, color, or religion
• Sex (including pregnancy)
• National origin
• Age (40 or older)
• Disability
• Genetic information

State and other rules

The Small Business Administration (SBA) notes some benefits are required by law for most employers, such as:

• Workers' compensation
• Unemployment insurance, which varies by state
• Disability insurance in California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico

The SBA also notes that a number of states have paid leave laws. Check your state labor and insurance agencies.