5901A Peachtree Dunwoody Rd., Suite 140, Atlanta, Ga., toll free: , local

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1 ERISA COMPLIANT HEALTH & WELFARE PLAN DOCUMENTS Wrap Plan Documents Summary Plan Descriptions (SPD) Form 5500s Summary of Material Modifications (SMM) Summary Annual Reports (SAR) 5901A Peachtree Dunwoody Rd., Suite 140, Atlanta, Ga., toll free: , local

2 The Employee Retirement Income Security Act of 1974 A Political History What is ERISA? A Federal Law to protect individuals covered by welfare benefit plans. It requires employers of all sizes to provide participants with plan information including important plan features through written plan descriptions. It also establishes fiduciary responsibilities for those who manage the plan.

3 Why Comply 3 Take Away Value Points Plan & SPD Contains Employer s Rights 1. Establishes Operating Control 2. Insurance for Employee Benefit Plans 3. Reduces DOL Audit Response Time All Employers Regardless of Size are Required to Comply:

4 Who Governs ERISA? ERISA is governed by the U.S Department of Labor and enforced by the Employee Benefits Security Administration (EBSA). The EBSA ensures the integrity and compliance of the private employee benefit plan system in the United States. DOL s Authority Is Expanded Under PPACA

5 What Documents are Required under ERISA? A Plan Document for Each Welfare Benefit: Plan Operating Conditions & Administration of the Plan Legal Language of Benefits drafted by Lawyer Client Makes Available for Participant or DOL SPD SPD An SPD Summary Plan Description per Plan: Main Document for Explaining Plan Rights Language Supposed to be in Laymen's Terms Formatted to be Easier to Read & Understand

6 Most Employers are Not In Compliance, Why? Lack of Awareness in the Market Carrier Certificates not Compliant A Very Complex Area of the Law Limited Previous Enforcement Compliance is Not An Option It s the Law!

7 Carrier Documents Do Not Comply! Master Contract Defines Employer Relationship: Grace Period and Due Date Contestability Clause Total Premiums to be Paid MASTER CONTRACT Certificates Defines Employee Relationship: Terms and Conditions of Coverage Explains Co-Pays and Deductibles Identifies Covered & Excluded Items CERTIFICATE OF INSURANCE Pertains to Insured Plans!

8 Why is Compliance So Important Now? Increased Enforcement by EBSA EFAST2 Form 5500 Reporting Healthcare Reform Disclosures New Penalties under PPACA Heightened Participant Expectations The Government is making it easier than ever to File Complaints

9 There are over 30 Possible Disclosures Required: Employer Plan Sponsor s TAX ID # Plan Administrator s Name & Address Plan Number for 5500, e.g., 501, 502 Agent for Service of Legal Process Plan Eligibility, Effective Dates Contribution / Funding of Plan Insurance Company Refund (MLR) Right to Amend Statement Claims Procedures (PPACA) Definition of Employee Additional PPACA Notices

10 What Is the Plan Year? Selected by Plan Sponsor Typically Aligns with Employer s Business Year Not Required to Align with Benefit Policy Year Should Be Consistent Between Plan, SPD Form 5500

11 The Plan Establishes Operating Control SPD Contains Employer s Rights Right to Change or End Plan Right to Interpret Plan Right of Reimbursement Legally Binding Language Establishing Employer Control

12 Disclosing Eligibility Reduces Liability

13 What is the Insurance Company Refund? Applies to Insured Medical Benefits Requires Refunds Be Used in 90 Days Small Company Without MLR Language Can Lose 5500 Exemption ERISA Pros SPD Outlines Allocation Per DOL Recommendations Employer May Retain Distribution With Proper Disclosure

14 Updated Claims Procedures in SPD Expanded Requirements Under PPACA Applies to Fully Insured and Self Funded Internal Appeals Procedures External Review Process Potential for Excise Tax Penalty Ensures Highest Probability That Denied Claim Would be Paid

15 What Benefits are Subject to ERISA? Most Common: Medical, HMO, PPO Dental Care Vision Plans Prescription Drug Health FSAs Life Insurance Disability Insurance Other Plans: Severance Pay Employee Assistance Business Travel Wellness Programs Pre-paid Legal Retiree Medical Voluntary Benefits

16 What Subjects a Benefit to ERISA? When an Employer Endorses a Plan by: Selecting the Insurer, Negotiating Terms, Assisting with Claims Linking Coverage to Employment or Recommending the Plan When an Wellness Plan Includes: Medical Care, Risk Assessment or Onsite Clinic Biometric Screening, Smoking Cessation or Flu Shots Benefits Fall Under Safe Harbor Provisions: Funded through Insurance and are Completely Voluntary No Employer Contribution or Endorsement

17 The Function of a Wrap Document - Gain Efficiency Wraps Around Benefits: Establishes One Welfare Benefit Plan Layers all ERISA Notices Around Certificates Provides Health Care Reform Language Discloses Eligibility Requirements Allows One Form 5500 Filing

18 What are Distribution and Reporting Time Frames? Plan Year Time Months Renewal Wrap SPD New SPD SMM SPDs are Required within 90 days of Enrollment/Update An SPD must be Furnished within 120 days the Plan is Established 30 days upon Request, 60 days upon Reduction Note: Many Modifications are Material Reductions which Triggers 60 Day Rule

19 How Do You Distribute ERISA Documents? Create two Distribution Lists for: Employees with Work-Related ( Computer Access Employees ) All Other Participants ( Non-Computer Access Participants ) Place a link on Employer s Home Page: Retain Proof of Posting Documents for period of Time Requiring Username and Password is Recommended Paper Distribution is Required if no Consent: First or Second Class Mail with up-to-date Mailing List By Hand through Method likely to Assure Receipt

20 What is the Value of Being Compliant? No Plan Document: De Novo Review Inadequate Documents Court May Interpret Plan Document: Deferential Review Proof of Documentation Documents Control Like an Insurance Policy for Providing Employee Benefits

21 What Triggers a DOL Audit? Participant Complaints are Primary Indicator Lack of or Inconsistent Form 5500 Reports Department s Internal Initiatives Such As HBSP Information Shared Among Government Agencies Recent Press or Public Visibility of Employer HBSP Health Benefits Security Project

22 What Do They Ask for in a DOL Audit Notice? Plan Document Summary Plan Description All Contracts with Insurance Companies A Copy of Plan s Rules for Eligibility Written Claims and Appeals Procedures Materials Describing Wellness Programs Terms in Effect as of March 23, 2010 Grandfathered Health Plan Disclosures Affordable Care Act Notices Summary of Benefits & Coverage

23 To Wrap it Up: The Benefits of Being in Compliance! Protects both Parties with Clear Communication of Benefits Reduces the Risk of Participant Lawsuits Against Employer Gives Employer Control with Right to Amend Statement Reduces Potential for Penalties from DOL / EBSA Audits Tim Gunter tgunter@erisapros.com or