Everything You Need to Know About ERISA

Download Everything You Need to Know About ERISA

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This webinar reviews compliance issues in regards to ERISA, and covers: Document requirements Disclosure requirements Reporting requirements Fiduciary issues

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<ul><li> 1. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC </li> <li> 2. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Basic ERISA Seminar By Larry Grudzien Attorney at Law </li> <li> 3. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC What is ERISA? ERISA stands for the Employee Retirement Income Security Act of 1974 (Pub.L. 93-406, 88 Stat. 829, enacted 1974-09-02. ERISA is comprehensive federal legislation, first enacted in 1974 and amended many times since then. Title I of ERISA is part of the labor laws of the United States and governs the structure of employee benefits plans. For most plans, it requires detailed disclosure to covered individuals, employees and beneficiaries). For many plans, it requires detailed reporting to the government (mainly on Form 5500). 3 </li> <li> 4. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC ERISA Title I also imposes a strict fiduciary code of conduct on many of those who sponsor and administer ERISA plans. In addition, there is a federal mechanism for enforcing rights and duties with respect to ERISA plans, and it preempts a large body of state law. The Department of Labor (DOL) enforces ERISA Title I, mainly through its Employee Benefits Security Administration (EBSA) (formerly called PWBA). Failure to comply with ERISAs requirements can be quite costly, either through DOL enforcement actions and penalty assessments or through employee lawsuits. 4 What is ERISA? </li> <li> 5. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Virtually all private-sector employers are subject to ERISA - there is no size exemption. This includes corporations, partnerships, and sole proprietorships. Remember, non-profit organizations are covered as well. However, the plans of governmental employers and of churches are exempt from the application of ERISA Title I. 5 Who must comply? </li> <li> 6. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC If an employer sponsors a plan subject to ERISA, it must comply with its many requirements, but it also enjoys many protections. Advantages of ERISA status Employees and beneficiaries may not sue in state court. Courts apply a standard of review more favorable to the plan. 6 Why is it important to determine if employer sponsors an ERISA plan? </li> <li> 7. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Many employee benefit arrangements that provide non-pension fringe benefits are employee welfare benefit plans covered by ERISA. However, there are important exemptions and safe harbors provided for certain categories of employee benefits. The definition of ERISA welfare benefit plan contains the following three basic elements: there must be a plan, fund or program; that is established or maintained by an employer, and for the purpose of providing the specified benefits to participants and beneficiaries. 7 What Plans must Comply? </li> <li> 8. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC In determining whether there is a plan, fund or program within the meaning of the ERISA definition, the courts ask whether from the surrounding circumstances a reasonable person could ascertain: the intended benefits; a class of beneficiaries; the source of financing; and the procedures for receiving benefits In addition, under Fort Halifax Packing Co. v. Coyne (482 U.S.1, 8 EBC 1729(1987) S. Ct. provides that a plan exists only when there is a commitment to pay benefits systematically, including an ongoing administrative responsibility or scheme to determine eligibility and calculate benefits. 8 Is There a Plan, Fund, or Program? </li> <li> 9. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Some Arrangements Do Not Qualify Even though it is easy to satisfy the basic plan, fund or program test, some arrangements do not qualify. For example, where an employer offered only a one-time, lump-sum severance bonus, there was no ongoing administrative scheme and therefore the bonus was not an ERISA benefit . Written Document Is Needed to Create a Plan, Fund or Program It should be recognized that no document is necessary for a plan to exist under ERISA, if from the surrounding circumstances the above elements of a plan, fund or program can be ascertained . When the necessary elements of a plan can be ascertained, however, maintaining the plan without a written document is a violation of ERISA. 9 Is There a Plan, Fund, or Program? </li> <li> 10. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC An Employer need not to do much to establish or maintain a plan. Issue is resolved in self-insured arrangements. Issue is more uncertain in insured arrangements Purchasing Insurance is employer maintenance. Effect of Voluntary Plans Safe Harbor. Individual insurance policies can create an ERISA plan. 10 Is the Plan, Fund, or Program Employer- Established/Maintained? </li> <li> 11. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Specified listed benefits include: medical, surgical or hospital care or benefits benefits in the event of sickness, accident, disability, death or unemployment, vacation benefits apprenticeship or other training benefits, daycare centers scholarship funds pre-paid legal services holiday and severance benefits and housing assistance benefits 11 Does the Plan Provide the Type of Benefits Listed in ERISA? </li> <li> 12. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Who are Participants and Beneficiaries? Current employees. Beneficiaries a person designated by a participant . Retired employees and COBRA qualified beneficiaries can be if they are entitled to benefits. Plans Covering Self-Employed Individuals or partners: Not considered an ERISA plan. Plans Covering Only One Employee (or Former Employee: Can be if covers non-executive. 12 Does the Plan Provide the Type of Benefits Listed in ERISA? </li> <li> 13. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Statutory and Regulatory exemptions include: Government, Church and Other Statutory Exemptions These include programs maintained solely to comply with state law requirements: Workers Compensation; Unemployment; or Disability Laws. 13 Important Statutory and Regulatory Exemptions </li> <li> 14. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Statutory and Regulatory exemptions include: Payroll Practice Exemptions - This includes payment of: wages, overtime pay, shift premiums, and holiday or weekend premiums ; unfunded sick-pay or income replacement benefits ;and vacation, holiday, jury duty and similar pay. To qualify for this exemption, the amounts must be paid out of the employers general assets. 14 Important Statutory and Regulatory Exemptions </li> <li> 15. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Important Statutory and Regulatory Exemptions Statutory and Regulatory exemptions include: Voluntary Employee-Pay-All Exemption - The employer allows an insurance company to sell voluntary policies to interested employees who pay the full cost of the coverage. Permits employees to pay their premiums through payroll deductions and permits the employer to forward the deductions to the insurer. However, the employer may not make any contribution toward coverage and the insurer may not pay the employer for being allowed into the workplace. The employer may not endorse the program - This element is the key element in treating the program as an ERISA benefit. What makes up an endorsement? Selecting insurers Negotiating terms or design Linking plan coverage to employee status Using employers name Recommending plan to employees Doing more than permitted payroll deduction 15 </li> <li> 16. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Cafeteria Plan No, but Health FSA is covered Insured Major Medical Coverage - Yes HMOs - Yes Dental coverage - Yes DCAP - No AD&amp;D Coverage -Yes GTL coverage -Yes LTD Coverage - Yes PTO Coverage No, payroll practice Adoption Assistance - No Educational Assistance - No STD Coverage Maybe if not payroll practice Severance Coverage - Yes Voluntary Insurance - no 16 Examples of Benefits: Are They Subject? </li> <li> 17. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Plan document must exist for each plan. Plan terms must be followed . Strict fiduciary standards must be followed. Fidelity bond must be purchased to cover every person who handles plan funds. Summary plan description (SPD) must be furnished automatically to plan participants. Summary of material modification (SMM) must be furnished automatically to plan participants when a plan is amended. Copies of certain plan documents must be furnished to participants and beneficiaries on written request. 17 Key ERISA Requirements </li> <li> 18. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Form 5500 must be filed annually for each plan (subject to important exemptions, especially for small plans). Summary annual report (summarizing Form 5500 information) must be furnished automatically to plan participants for a plan that files a Form 5500 (except totally unfunded welfare plans). Claim procedures must be established and carefully followed when processing benefit claims and when reviewing appeals of denied claims. Plan assets, including participant contributions, may be used only to pay plan benefits and reasonable administrative expenses. For a few welfare plans, plan assets may have to be held in trust. Group health plans must conform to applicable mandates like COBRA and HIPAA. 18 Key ERISA Requirements </li> <li> 19. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Plan must be established and maintained through a written document. ERISA requires that every welfare plan be established and maintained pursuant to a written instrument. A written instrument does the following: Participants are on notice of benefits and their own benefits under the plan. Plan administrator is provided guidelines by which to make decisions ERISA does not provide specific format or content requirements. Insured benefit requirements use of wrap documents. A wrap document fills in missing ERISA requirements. Can a single document serve as both plan document and SPD? 19 Plan Document Requirements </li> <li> 20. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Consequences of Failure to Comply: No Specific Penalties Inability to Respond to Written Participant Requests Benefits Lawsuits May Be Based on Past Practice and Similar Evidence Less Favorable Standard of Review in Benefits Lawsuits Limited Ability to Amend or Terminate Plan Fiduciary Duty to Follow Plan Document 20 Plan Document Requirements </li> <li> 21. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC ERISA Required Plan provisions: Named Fiduciary Procedures for allocation of responsibilities Funding policy How payments are made Claims procedures Amendment procedures Distribution of assets on plan termination Required provisions for group health plans: COBRA &amp; USERRA rules HIPAA Portability, Special enrollment and nondiscrimination rules HIPAA Privacy and Security Minimum hospital stays after childbirth QMCSO rules Disclosures regarding remaining Federal Mandates and other Laws 21 Plan Document Requirements </li> <li> 22. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC ERISAs fiduciary rules are distinguished from many other rules of behavior by the following major characteristics: the rules incorporate a broad, functional definition of the term fiduciary, which sweeps in all kinds of individuals and business entities depending on the duties they actually perform in connection with ERISA plans; the standard of behavior expected from ERISA fiduciaries is very high; broadly-defined fiduciary responsibilities apply to every act taken in a fiduciary capacity; certain specifically-enumerated transactions between an ERISA plan and persons acting in connection with the plan are absolutely prohibited; and ERISA fiduciaries who breach their duties can be personally liable for damages to the ERISA plan and for DOL penalties imposed in connection with fiduciary breaches. 22 Fiduciary Requirements </li> <li> 23. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Automatic Fiduciaries: Named Fiduciaries Plan Administrators Trustees Others A plan must prov...</li></ul>

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