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Key takeaways:
- Compliance requirements keep getting more complex for benefits.
- HR teams are responding by adopting new processes for reviewing benefits and conducting internal audits.
- VCD vision plans make internal reviews easier with a transparent structure and great support.
Are your benefits audit-proof?
Compliance requirements are getting harder to meet, and it’s easy to overlook important documents, especially if your HR team is managing multiple benefits.
The best way to prepare for audits is to adopt a strong plan review process that incorporates the latest rules for Oklahoma employee benefit compliance in 2025.
What to Know About Section 125 Vision Plan Rules in 2025
Understanding IRS pre-tax benefit rules is crucial if you offer Section 125 or cafeteria plans. These benefits usually include group health plans, as well as vision and dental perks.
If your Section 125 fails to follow IRS rules, you could face serious consequences, including a loss of tax benefits. Compliance requirements begin when employees enroll:
- Employees must enroll before the year during which the plan is in effect.
- They can’t change their enrollment status for the duration of the plan.
- There are exceptions to this rule, including new hires and employees who undergo a life event, such as getting married, welcoming a child, or becoming eligible for SoonerCare.
- The IRS doesn’t have any specific requirements for when the enrollment period should take place, as long as it happens before the year the plan goes into effect.
When enrolling for the first time, employees must opt in and choose their Section 125 plan. Passive enrollment is possible for the years that follow, as long as you notify employees that they’ll keep the same plan if they don’t take action.
These rules for Section 125 vision plans haven’t changed in a while, but you should be aware of the No Surprises Act introduced in 2022:
- This new regulation calls for more transparency regarding pricing for health plans.
- It means you have to select plans that disclose their prices upfront and provide some self-service tools for price comparisons.
- It doesn’t apply to dental or vision benefits, but it creates new expectations for all benefits.
- For your HR team, applying the same transparency compliance requirements for all your benefits is easier.
Once your HR team understands these rules well, it’s time to build a strong documentation process.
How to Make Your Benefits Process Audit-Proof
In case of an audit, you’ll have to show your benefits program is following all the Section 125 rules outlined above. Having an internal process for verifying that you follow these rules and documenting it makes a real difference.
This process starts with creating your Section 125 plan documentation, along with a Summary of Plan Description (SPD). These documents should:
- Identify the company offering the plan.
- Include the dates during which the plan is in effect.
- Describe the benefits available.
- Outline any eligibility requirements and the election process.
- List any contribution limits and employer contributions, if applicable.
The purpose of the SPD is to summarize this information and make the benefits easier to understand for your employees.
On top of keeping these two important documents up-to-date, you should keep records of the following:
- Employees opting into the plan, their acknowledgment of your passive enrollment policy, if applicable, and notifications of enrollment.
- If employees make mid-year changes due to qualifying events, you should document these changes and the events in question.
- Your records should also include enrollment forms.
- Your HR team should keep track of communication materials and proof of coverage for the plans you offer.
- Tracking reimbursements made through your health plans and keeping financial records of employee contributions is another important aspect of this process.
Once a year, your HR team should review documents to make sure you’re keeping track of everything that matters. You should add the findings of this internal audit to your compliance documents.
How Prepaid Vision Plans Simplify Plan Reviews and Audits
Conducting annual benefits reviews is time-consuming and makes your HR team’s job more complex. Prepaid vision plans make this process much easier.
Here’s how VCD plans make compliance easier:
- Because it’s a prepaid plan, employees get savings at the optometrist. There are no claims and reimbursement processes to track, and your HR team doesn’t have to step in in case of a denied claim.
- The plans have a simple structure and are easy to navigate. Enrollment is easier for employees who understand exactly what they’re getting, and your plan documentation and SPD are easier to manage.
- You have the option to let employees pay for their VCD vision plan with pre-tax contributions or to cover all or a part of this benefit. If you choose the first option, you won’t have to track employer contributions.
- VCD’s support team is here to help if your HR team needs to supplement plan documentation.
Make Oklahoma Employee Benefit Compliance for 2025 Easier With VCD
Use this vision plan compliance checklist to review your current benefits. If you ever face an audit or need to add new benefits to your offering, having a strong review and documentation process in place will be an advantage.
VCD makes vision benefits transparent and easy to understand for a simpler auditing and review process. Learn more about VCD vision plans and providing valuable benefits to your employees.
FAQ
What is a Summary Plan Description (SPD)?
A summary Plan Description (SPD) is a document outlining a benefit you offer. It should include the name of the company offering the plan, the benefits available, who is eligible, and more.
Does the No Surprises Act of 2022 apply to vision plans?
No, the No Surprises Act of 2022 applies to health plans. If you offer a group health plan with vision or dental perks, the transparency requirements only apply to the health portion. However, applying the same transparent pricing requirements to all your benefits has some advantages.
What’s changing for vision plan compliance in 2025?
HR teams are facing an environment with increased scrutiny. Employees expect more transparency for their benefits, and many employers are building updated compliance processes to audit-proof their benefits.
