ERISA Requirements for Employee Welfare Benefit Plans. Presented By: Judy Griffith Kegel Kelin Almy & Lord LLP

Transcription

1 ERISA Requirements for Employee Welfare Benefit Plans Presented By: Judy Griffith Kegel Kelin Almy & Lord LLP

2 Judy Griffith Introduction Employee Benefits and ERISA attorney at Kegel Kelin Almy & Lord 22 years experience working with employers on issues relating to employee welfare benefit plans, including HIPAA, COBRA, ERISA, ACA, FMLA and others. Extensive knowledge of both insurance and self-funding. 2

3 Disclaimer This presentation is intended to present a basic overview of the rules and requirements for health and welfare plans under ERISA. Information which is not applicable to the audience or which applies only in limited circumstances is not included in these slides but may be mentioned during the presentation. August

4 ERISA Employee Retirement Income Security Act Federal Law Enacted in 1974 Title 1 governs the structure, reporting and communication required for employee benefit plans Requires disclosure to covered individuals Requires reporting to the federal government Imposes strict fiduciary requirements on those who sponsor and administer ERISA Plans Imposes mechanism for enforcing employee rights and employer duties with respect to ERISA Plans

5 ERISA In addition to retirement plans, regulates employee welfare benefit plans Enforced by the Department of Labor s Employee Benefits Security Administration or EBSA Does not apply to Church or Government Plans Definition of welfare benefit plan: 1. Plan, fund or program 2. Established by an employer to 3. Provide participants or their beneficiaries medical and/or other specified benefits August

6 Not a single payment 1. Plan, fund or program Most employer sponsored benefits meet this requirement August

7 2. Established by an Employer Includes employee organizations (unions) and groups or associations acting on behalf of the employer Be careful that plan does not cover the employees of more than one employer Certain related employers (under common control) are considered a single employer Subsidiary Brother/sister But if not a single employer, plan is considered a MEWA multiple employer welfare arrangement - and is subject to additional laws August

8 3. Provides Medical and/or Other Benefits ERISA generally applies to the following benefit Plans and fringe benefits, whether they are fully insured or self-insured: Medical, Surgical, Hospital, or HMO Group Insurance Plans Health Reimbursement Accounts (HRAs) Health FSAs (Flexible Spending Accounts) Group Dental Insurance Plans Group Vision Insurance Plans Prescription Drug Plans Group Sickness, Accident, and Disability Insurance Plans Group Life and AD&D Insurance Plans Group Long Term Care Insurance Plans Group Employee Assistance Plans (EAPs) (if providing counseling, not just referrals) Severance Pay Plans Group Business Travel Accident Insurance Plans Prepaid Legal Services Unemployment Benefit Plans Apprenticeship or other Training Plans Scholarship Plans Holiday Plans Housing Assistance Plans Wellness plans that provide or reimburse for health care August

9 Plans not Subject to ERISA HSAs (if limited employer involvement) Premium only plans (and cafeteria plans) Certain self-insured plans, such as sick pay, short term disability, paid time off, overtime, jury duty, and vacation pay, may be exempt if benefits are paid: as a "normal payroll practice," to currently employed individuals (i.e., not retirees, COBRA Participants, or dependents), without prefunding or using insurance, entirely from the employer's general assets, AND without employee contributions. August 2015

10 Plans not Subject to ERISA Most voluntary plans (whether group or individual), if: Employee pays the entire premium Employer has limited involvement employer cannot endorse the plan Can be exempt from ERISA, even if premiums paid through cafeteria plan August 2015

11 ERISA Requirements for Welfare Plans Plan Document Summary Plan Description must be given to participants automatically Summary of Material Modifications (Amendments) Summary of Benefits and Coverage Notices August

12 ERISA Requirements for Welfare Plans Form 5500 must be filed annually for each Plan with 100 or more participants on the first day of the plan year Summary Annual Report (only if 5500 is filed) August

13 ERISA Requirements for Welfare Plans Strict fiduciary standards No prohibited transactions relating to plan funds Must follow terms of the plan Additional requirements with plans that have plan assets Fidelity bond Assets must be held in trust August

14 Plan Document and SPD

15 Plan Document and SPD ERISA benefits must be provided through written plan document Employer can design benefits, but must include mandates ERISA Plan can exist without a document Other laws dictate certain content requirements HIPAA COBRA Summary Plan Description summarizes the plan document August

16 Plan Document and SPD When must the Plan Document be distributed? Within 30 days of request Penalties of $ per day for each day after the deadline that it is not provided May charge reasonable amount for providing documents, not to exceed.25 cents per page

17 Plan Document and SPD When and how must the SPD be distributed? Timing New plan must provide to participants within 120 days Provide to newly enrolled participants within 90 days Update every 5 years if changes and every 10 years if no changes Delivery Options In hand Mail Electronic Delivery August

18 Plan Document and SPD What are the requirements for electronic distribution? Employees who can Receive Electronic Distribution Employees with work-related access to computer Other employees if they provide consent after appropriate notification they provide an address for delivery Other Electronic Distribution Requirements Notice provided at the time of delivery that includes: importance of the document the right to request a paper copy, which must be furnished without cost Read receipt or notice of undeliverable mail so that the Employer can ensure actual receipt of the document. August

19 Plan Document and SPD Who must receive a copy of the SPD? Employee-participants Not spouse or child, unless Spouse or child has a separate address (if known) COBRA participants Parent or guardian under a QMCSO Spouse or dependent of deceased retiree who remains covered August

20 Plan Document and SPD What information must be in the SPD? ERISA requires that the Plan Docs/SPDs include specific information (highlighted items may not be in the insurance certificate or may not be correct): Statement of Rights Overview of benefits provided by plan Source and method of funding How benefits may be reduced or lost Plan Sponsor, plan administrator and named fiduciary Plan funding information Eligibility Claims and appeals Events that will cause loss or reduction of coverage Allocation for insurance carrier refunds or rebates Plan year August

21 Wrap Plan Document and SPD What is the purpose of a Wrap Plan Document and SPD? Wrap the SPD around carrier or administrator documents Wrap documents contain information not included in those documents Create consistency when multiple benefits and multiple carriers Leave provisions each insurer or administrator will define based on their own templates and preferences Effective date and termination provisions Combine more than one benefit into a single plan May subject employer to 5500 requirements for benefits not otherwise subject to them But will allow for a single 5500 filing August

22 Wrap Plan Document and SPD Add provisions, exclusion or other information ACA waiting period and eligibility details Spousal exclusion Coverage of domestic partners Eligibility audits Wellness Plan requirements August

23 Summary of Material Modifications August

24 Summary of Material Modifications Amendment to terms of the plan Only required if changes are material Distribution methods same as SPD Timing Most changes - within 210 days after the end of the Plan Year in which the change was made Material reduction in coverage or benefits no later than 60 days after the date of the adoption of the change New Plan Year if new SPD is distributed, do not need an SMM August

25 Summary of Benefits and Coverage August

26 Summary of Benefits and Coverage What information must be included in an SBC? Benefits and coverage information Participant expenses, including deductibles and co-pays Common medical events and services Other covered services and excluded services Information about right to continue coverage Claims and appeals information As of plan years after 9/23/12, whether plan is minimum essential coverage and whether it provides minimum value Coverage examples: Having a baby Managing type 2 diabetes August

27 Summary of Benefits and Coverage Which SBCs must be distributed and when? Employee first eligible SBC for all coverage options, along with enrollment materials Enrolled employees At open enrollment, provide SBC for plan in which employee is enrolled, with enrollment materials or 30 days prior to plan year Plan change outside of open enrollment, 60 days prior to change becoming effective Employees with qualifying events For example newborn or marriage, within 90 days after enrollment August

28 Summary of Benefits and Coverage Who must receive an SBC? Eligible and enrolled employees Dependents residing at a separate address COBRA participants Participating retirees August

29 Summary of Benefits and Coverage How should SBCs be distributed? Standalone document or within SPD, as long as the SBC is prominently displayed. If an individual is eligible but not enrolled - online but only if the employer notifies the individual that the SBC is available online and provides instructions for how to view it hard copy or electronic distribution For all others hard copy (via hand-delivery or mail) electronic if the employee has regular access to electronic documents at work or opts in to receiving an electronic-only copy. August

30 Summary of Benefits and Coverage What happens if employer does not distribute SBCs? Penalties can be up to $1,000 per enrollee August

31 Notices August

32 Notices New Employees Notice of Coverage Options New Plan Participants HIPAA Special Enrollment Rights Notice Notice of Privacy Practices COBRA General Notice Medicare Part D Notice (by October 14th each year) Women s Health and Cancer Rights Act Notice CHIPRA Notice Patient Protection Notices Open Enrollment Yes Notice of Availability No Yes Yes Yes Yes August

33 5500 Filing Requirements August

34 What is a 5500? 5500 Filing Requirements Annual Return required for all plans, unless exempt from ERISA Provides information to DOL about employee benefit plans Used for enforcement and research Provides info on operations, funding, assets, investments August

35 5500 Filing Requirements Which plans must file a 5500? 100 or more participants on the first day of the plan year (count employees, COBRA, retirees) less than 100 participants at the beginning of the plan year that are funded UNLESS, Exempt from ERISA August

36 5500 Filing Requirements What benefits must be included? Group health and welfare benefits that are part of the same plan Check the plan documents Medical HRA Health FSA Dental Life Vision Disability Severance pay plans EAP (if subject to ERISA) No filing for benefits that are not subject to ERISA August

37 5500 Filing Requirements How do employers comply? File 5500 or 5500-SF (less than 100 participants and funded) Must be filed electronically (as of 1/1/10) Gather Schedule A s from Insurance Carriers due within 120 days after end of plan year Gather Schedule C s from Service Providers If plan pays the provider more than $5,000 per year Obtain filing PIN from DOL File within 7 months after the end of the plan year Or file for a 2 ½ month extension (for 2016 plan year will be 3 ½ months) Keep signed original in plan records August

38 5500 Filing Requirements What are the penalties for not filing? Because the filing is required by ERISA To avoid penalties - $1,100/day for each day late - per plan THIS IS OVER $400,000 PER YEAR August

39 5500 Filing Requirements What if the employer failed to file for a number of years? DFVC Program SMALL PLANS - Penalties are limited to $10/day or $750/report not to exceed $1,500 per plan LARGE PLANS Penalties are limited to $10/day or $2,000/report not to exceed $4,000 per plan August

40 Summary Annual Report August

41 Summary Annual Report Summary of 5500 filing financial information Must be distributed by the last day of the 9 th month following the end of the plan year Or within 2 months after filing the 5500 Required for insured plans only August

42 Questions & Answers August