PrimePay Continuing Education Series CE Approved for One (1) Hour Credit

Transcription

1 PrimePay Continuing Education Series 2016 CE Approved for One (1) Hour Credit

2 CE Instructions Requirements Today s CE Course has been approved for one (1) Continuing Education Credit (Life & Health) in the following states: CA, TX, NC, MD, VA, AR, MO, AL, PA, DE, CT, IN, LA, NJ, NY, OH, OR, RI, WA, ID During the Instructional Period, you may not conduct other business or read materials unrelated to the course. All electronic devices must be silenced. Each State requires attendance for 100% of the approved class hours. If you arrive after the class has begun, or if you are late returning from breaks, you may be denied credit for the course. Upon successful completion of the course, you will be issued a Course Completion Document (Certificate) showing the course approval number, eligible license classes and the number of credits you have received for completing the class. PrimePay LLC 2

3 ERISA 101 Benefits & Employers Subject to ERISA Key ERISA Requirements Case Study Guiding Employers Practical Application Other Considerations Course Agenda PrimePay LLC 3

4 ERISA 101 Key Definitions PrimePay LLC 4

5 ERISA 101 Employee Retirement Income Security Act Passed in 1974 Applies to both Pension Benefit and Welfare Benefit Plans Title 1 of ERISA governs Employee Benefits Plan o Reporting and Disclosure o Fiduciary Responsibility o Administration and Enforcement o COBRA o HIPAA and other disclosures/notices PrimePay LLC 5

6 ERISA 101, cont d For most employee benefit plans, ERISA requires: Detailed disclosure to covered individuals (employees and beneficiaries) Detailed reporting through form 5500 A strict fiduciary code of conduct on plan sponsors and administrators ERISA also creates a federal mechanism for enforcing rights and duties and preempts a large body of state law. PrimePay LLC 6

7 ERISA Reporting and Disclosure Requirements Did You KNOW? ERISA Reporting and Disclosure Requirements Failure to meet even one ERISA reporting and disclosure requirement can cost employers thousands in penalties and lawsuits. Three out of four employers are not maintaining sufficient plan documents or providing employees with SPDs. 7 PrimePay LLC

8 Are You At Risk? ERISA Welfare Benefit Penalties Common ERISA Welfare Benefit Penalties To Avoid $10,560 Penalty Failure to send a summary plan description on a timely basis after the plan participant made three written requests. Kasireddy v. Bank of America Corp. Benefits Committee, 2010 WL WL (N.D. Ill. Oct. 13, 2010) $17,475 Penalty Employer failed to produce an SPD to participant thinking that a Certificate of Insurance wasenough. Sunderlin v. First Reliance Standard Life Ins. Co.,235F.Supp.2d222,232(W.D.N.Y.2002) $55,760 Penalty Employer was cited for incompetence and neglect in delivering plan policies to participants. Amschwand v. Spherion Corp., 505 F.3d 342 (5th Cir. 2007) PrimePay LLC $105,840 Penalty Employer failed to properly follow up with an employee s long term disability claim in a diligent and timely manner. Alfano v. CIGNA Life Ins. Co. of New York, 2009 U.S. Dist. LEXIS (S.D.N.Y. Apr. 2, 2009)

9 Three Basic Elements of an ERISA Welfare Benefit Plan 1. There must be a Plan, Fund or Program 2. That is established or maintained by an employer 3. For the purpose of providing one or more benefits to participants and beneficiaries PrimePay LLC 9

10 ERISA Plan Plan Sponsor ERISA Plan Administrator Participants & Beneficiaries Named Fiduciary Other ERISA Fiduciaries Insurance Companies Third Party Administrators Trustee PrimePay LLC 10

11 Anyone acting in the capacity of performing ERISA fiduciary functions is a fiduciary under ERISA o Exercise discretionary authority over management of Plan o Exercise discretionary authority over Plan assets o Render investment advice o Exercise discretionary authority over Plan administration ERISA 101: Fiduciary Duty PrimePay LLC 11

12 General decisions made by a Fiduciary o Sponsoring one type of benefit Plan versus another o Amending a plan; changing Plan options o Requiring employee contributions o Terminating a Plan or a portion of a Plan o If TPA, does it have discretionary authority? ERISA 101: Fiduciary Duty PrimePay LLC 12

13 Every Fiduciary must be bonded Protects the Plan from losses due to fraud or dishonesty Must be in place at the beginning of the Plan year o At least 10% of the funds handled during the prior reporting year o Subject to minimum of $1,000 and maximum of $500,000 ERISA 101: Bonding Requirement PrimePay LLC 13

14 Benefits & Employers Subject to ERISA Which Plans and Employers must comply with ERISA? PrimePay LLC 14

15 Plans That Must Comply VISION DENTAL PRESCRIPTION MEDICAL ACCIDENT HOSPITAL HEALTH FSA PrimePay LLC 15

16 Medical, surgical or hospital care Dental & Vision Plans Health FSA HRA Health Reimbursement Arrangement Wellness & EAP Programs Sickness, accident, disability, death or unemployment (many exceptions; most are exempt) Severance Insurance Policy Voluntary benefits under IRC 125 Plans that must comply with ERISA PrimePay LLC 16

17 Generally, all employers will be subject to ERISA Exemptions: o Government o Church o Programs maintained solely to comply with state law requirements for workers compensation, unemployment compensation, disability insurance or Plans maintained outside the US for non resident aliens Employers that must comply with ERISA PrimePay LLC 17

18 Voluntary Plans Exemption ERISA regulations also exempt certain voluntary employee payall arrangements Employees to pay their premiums through payroll deductions and Permits the employer to forward the deductions to the insurer The employer may not endorse the program beyond premium/payroll deductions ERISA Exemptions PrimePay LLC 18

19 Key ERISA requirements Required Documentation, Disclosure & Notices & Annual 5500 Filing Requirement PrimePay LLC 19

20 Written Plan document Document varies with type of benefit Insured benefits require a Plan Document and an SPD OR a Wrap (Umbrella) Document Contains: o Available benefits o How they will be funded o Standard of review for benefit decisions o Named Fiduciary o Plan amendment and termination procedures o Required provisions for COBRA, HIPAA, Special Enrollments, USERRA, etc. Required ERISA Documentation PrimePay LLC 20

21 Probably the most important document? The Summary Plan Description To the following: o Participants covered under the Plan(s) o COBRA QBs o Parent or guardian of a child under a QMCSO o Spouse of a deceased retiree who remains entitled to benefits Within 90 days after a participant first becomes covered under the Plan No small plan exception Required ERISA Documentation PrimePay LLC 21

22 Summary Plan Description Summary of Material Modification Summary of Benefit and Coverage GHPs subject to ACA Summary Annual Report generally, 100 employees Additional Notices for: o COBRA o Claim procedures o HIPAA o WHCRA & QMCSO o ACA Notices and Disclosures PrimePay LLC 22

23 Form 5500 filed annually with the DOL Applies to each ERISA plan; with some exemptions: o Small Plans with fewer than 100 covered participants at the beginning of the Plan year o Applies to small unfunded, insured or combination of Plans o EE Count is different for WRAP Plans Annual 5500 Filing Requirement PrimePay LLC 23

24 Deadline? o Last day of the seventh month after the end of the Plan year (i.e. 7/31 for calendar year Plans) o 2 ½ month extension can be granted through Form 5558 o Filed electronically through EFAST2 o Schedules A, C, I (small), H (large) and G (certain prohibited transactions) Annual 5500 Filing Requirement PrimePay LLC 24

25 Failure of Non Compliance ERISA s general enforcement provisions allow suit to be brought where no document exists, criminal penalties per conviction could be $100K or imprisonment, fines can be upwards of $500K if against an entity Failing to provide a copy of the SPD within 30 days of request $110 per day ERISA Fiduciary Breach o Personally liable for any damages caused to the plan because of breach o Other penalties may apply (equal to 20% of the amount recovered by the DOL in a settlement) and/or criminal penalties Form 5500 o $10/Plan/day to a maximum of $2,000 per year or $4,000 per submission (for multiple years) for each failure; no statute of limitations o DOL offers a Delinquent Filer Voluntary Compliance Program PrimePay LLC 25

26 Common ERISA Penalties to Avoid $10,560 Penalty Failure to send a summary plan description on a timely basis after the plan participant made three written requests. Kasireddy v. Bank of America $17,475 Penalty $62,250 Penalty Case Summary: Employer posts SPDs on the company s intranet site. Judgment: SPD distribution at time of hire is Employer failed to produce an SPD to participant thinking that a Certificate of Insurance was enough. Sunderlin v. First Reliance Employer failed to provide a summary plan description to the participant in an appropriate manner required by the DOL. Leyda v. Allied Signal 29 U.S.C. 1132(c)(1) states the following: Any administrator... who fails or refuses to comply with a request for any information inadequate which such administrator is required by this subchapter to furnish to a participant or Verdict: beneficiary Plaintiff (unless such failure or refusal results from matters reasonably beyond the control of the administrator) by mailing the material requested to the last known address of the requesting participant or beneficiary within 30 days after such request may in the court's discretion be personally liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure or refusal, and the court may in its discretion order such other relief as it deems proper. PrimePay LLC 26

27 Case study Bring it to Life PrimePay LLC 27

28 ABC Company Under a cafeteria plan employees can elect: o Major Medical ABC pays 75% or the premium, employee responsible for 25% o Dental Insurance ABC pays 75% of the premium, employee responsible for 25% o HRA Arrangement to reimburse 50% of the deductible o Optional Health FSA o DCAP 100% ER paid GTL, AD& D and LTD STD paid from general assets (not insured) Voluntary insurance (cancer, critical illness, etc. EE paid) PTO paid from general assets Educational Assistance Program paid from general assets PrimePay LLC 28

29 What Plans Are Subject to ERISA? Cafeteria Plan POP (documents required) o No Major Medical o Yes Dental o Yes Health FSA o Yes DCA (documents required) o No GTL, AD&D, LTD o Yes STD o No PTO o No Voluntary o Yes PrimePay LLC 29

30 Key ERISA Requirements for ABC Plan documents for each plan Summary Plan Description (SPD) Group health plans SBC (includes HRAs) Amendments changing plan terms (SMM) Form 5500 Filing Summary Annual Report (SAR) Fiduciary responsibilities Fidelity bond to cover fiduciary Welfare plans trust accounts Claim procedures must be established Group Health Plans subject to COBRA &HIPAA W 2 reporting DCA and potentially ER sponsored health coverage? PrimePay LLC 30

31 Sample ERISA Actions ERISA Umbrella Plan ABC Benefits Plan o Combines all insurance policies, designates ABC as the ERISA plan administrator and ERISA plan number assigned. Includes non ERISA plans Summary Plan Description Document o Combined with policy booklets is SPD because certificates of coverage doesn t have all required ERISA information Section 125 POP document for pre tax payroll deductions (not subject to ERISA SPD issued to EEs) Allocation policy for participant plan assets o Added to mega wrap document o Described in wrap document Health Insurer handles HIPAA compliance and annual disclosures (WHCRA, etc.) PrimePay LLC 31

32 Sample ERISA Actions Written description of the tuition reimbursement, although not subject to ERISA SBC provided by carrier, but not for the HRA plan SBC created for HRA plan Over 100 participants need to file Form 5500 for mega wrap (501) with all schedule As, health dental, LTD, GTL, AD&D SAR Over 250 W 2s need to report the aggregate cost of ER sponsored medical coverage for each EE PrimePay LLC 32

33 Sample Fees, Testing & Refunds HRA PCORI Fees, Non Discrimination Testing Section 105(h) FSA 3 Non Discrimination Tests Potential Premium Refund due to MLR PrimePay LLC 33

34 Guiding Employers Through It All Failure of non compliance reduced using an ERISA checklist PrimePay LLC 34

35 Perform Due Diligence NOW with your Employer Sponsored Benefits PrimePay LLC 35

36 ERISA DOCUMENT PLAN MATRIX Plan Type ERISA COBRA (20 or >) Can offer in 125? Include on Wrap? Include on SPD? Funding options Tax Status Health Yes Yes Yes Yes Yes ER only, EE only, or Both* ER Pre/Post; EE Pre/Post Dental Yes Yes Yes Yes Yes ER only, EE only, or Both* ER Pre/Post; EE Pre/Post Vision Yes Yes Yes Yes (if sep. contract) Yes (if sep. contract) ER only, EE only, or Both* ER Pre/Post; EE Pre/Post Pres. Drug Yes Yes Yes Yes (if sep. contract) Yes (if sep. contract) ER only, EE only, or Both* ER Pre/Post; EE Pre/Post Life Yes No Yes Yes Yes ER only or EE only Pre or Post AD&D Yes No Yes Yes Yes ER only or EE only Pre or Post STD Yes No Yes Yes Yes ER only or EE only LTD Yes No Yes Yes Yes ER only or EE only ER & EE Pre/Post (affects distr.) Wellness Plan Yes ⱡ Yes ⱡ Yes ⱡ Yes ⱡ Yes ⱡ ER only Pre (ER) Group Vol Life Yes No Yes Yes Yes EE only Post (50K Post) Group Dep Life No No No Yes Yes EE only Post 125 (Caf. Plan) No No N/A No No N/A N/A HRA Yes Yes No Yes Yes ER only Pre (ER) FSA Yes Yes Yes Yes Yes EE only or Both* Pre (limited) HSA No No Yes No No EE only Pre DCAP No No Yes Yes Yes EE only Pre Archer MSA No Maybe No No No EE only OR ER only Pre Pre Paid Legal No No No No No EE only Post Adoption No No Yes No No ER only, EE only or Both* Pre Assistance Transit/Comm. No No No No No EE only Pre and/or Post VolMedical No No No No No EE only Post Voluntary Life No No No No No EE only Post Vol. Dep Life No No No No No EE only Post Voluntary AD&D No No No No No EE only Post Voluntary LTD No No No No No EE only Post Voluntary STD No No No No No EE only Post Vol Long Term No No No No No EE only Post Care Voluntary Crit. Illness/Cancer No No No No No EE only Post PrimePay LLC 39

37 What is the next move for Employers? Comply Communicate Distribute Do you offer any health and welfare benefits? Do you have a Plan Document? Do you have an SPD and have distributed them to your employees? Have you ever amended your Plan(s)? Have you ever filed Form 5500 and are you considered a large employer Have you ever been subject to a DOL audit? PrimePay LLC 37

38 Thank you for your attendance!! Attendance sheets must be complete. Please write legibly and provide sign in and out time QUESTIONS? PrimePay Contact: Broker Concierge That s easy. PrimePay LLC 38