Is Your Health Plan Breaking the Law?

As you know ERISA, Employee Retirement Income Security Act of 1974, is a federal law that regulates group-sponsored benefits, often called welfare benefit plans. But did you know that failure to comply with all of the requirements under ERISA often subject employers to severe penalties?

Court cases, awards and Department of Labor (DOL) fines have been levied on employers ranging from tens of thousands to hundreds of thousands of dollars. ERISA trumps state law and if a beneficiary or participant brings a bad faith claim to court, it can be costly for the employer.

ERISA can be summarized in 3 words: TIMELY EMPLOYEE COMMUNICATION!

Employers, both large and small, must comply with ERISA as it relates to their group-sponsored welfare benefits. Besides requiring specific plan documentation, such as Plan Documents, Summary Plan Descriptions (SPD), and Summary of Benefits of Coverage (SBC) to name a few, ERISA law mandates that employers comply with requirements for disclosing plan information to all eligible employees, including not just active employees, but COBRA and FMLA participants as well. These requirements include the when and how often plan information must be given to plan participants.

A few quick questions to easily determine if your client is in compliance with ERISA:

  • Do you have a SPD for your medical, dental, and/or vision plans? If the carrier provided SPD is the only SPD on file, you are not in compliance. This is one of the most common misconceptions; carrier SPDs are not ERISA compliant.
  • When was the last time the SPD or SBC was shared with plan participants?
  • If benefits have changed, do you have a Summary of Material Modification on file? Additionally, if it was a reduction in benefits, how quickly was it communicated to the participants?
  • If you are required to file a Form 5500, was the Summary Annual Report (SAR) made available to plan participants?

These are just a few of the many questions to ask yourself to determine your compliance levels.

Using a "Wrap Document" to bundle benefits into one plan makes it much easier for employers to document benefits for legal compliance and to effectively communicate with employees.

Enforcement of ERISA has also increased in recent years. We have received word that 3,000 new auditors have recently been hired with the intent of increased enforcement of ERISA law. Furthermore, the DOL has created an online webpage for participants to ask questions as well as report violations.

alt Bentley Yates is the perfect partner to help you clients remain in ERISA Compliance. We are now offering ERISA Compliant Wrap Documents and an accompanying Compliance Binder, which will outline in detail ERISA regulations.

If you have any questions relating to our ERISA Wrap Document and Compliance Binder or pricing for these benefit options, please let us know.