ERISA Compliance & Surviving DOL Audit. TASC Confidentiality.
ERISA Compliance& Surviving DOL Audit
45 Regional Sales Directors (150 by 2016)
Carolyn McNairy- Sales Development Director of Compliance Services
administration of ERISA. She agency was purchased by TASC in February of 2008.
Rick Jones-Esq. Staff Attorney
● Rick Jones was the Vice President of COBRA Services and the Staff Attorney at HFS Benefits for 10 years.
● HFS was purchased by TASC on July 1, 2011. Rick is currently the Staff Attorney for Total Administrative
Services Corporation (“TASC”). HFS Benefits and TASC provide Section 125 (Cafeteria Plan), HRA, HSA,
Transportation and COBRA Administration services to employers nationwide, including discrimination testing
and 5500 filings.
● In his current role, Mr. Jones advises TASC on product compliance, contractual issues with clients, and any
compliance issues that arise.
● Rick has been in Employee Benefits business since 1989.
Jeb Hennessey- Vice President – Compliance
● Jeb manages a staff responsible for the generation and delivery of ERISA welfare benefit wrap plan
documents/Summary Plan Descriptions, welfare Form 5500 returns (including DFVCP filings), Summary Annual
Reports., Cafeteria and welfare benefit plan nondiscrimination testing including the testing of cafeteria plans,
Flexible Spending Accounts, Health Reimbursement Arrangements, self-insured medical plans and group term
life insurance plans.
● HFS was purchased by TASC on July 1, 2011. Jeb was with HFS from 2003 to until purchase.
● Jeb has been in Employee Benefits Administration since 1992.
DiFelice v. Aetna U.S. Healthcare, 346 F.3d 442, 454 (3d Cir., 2003)
"The Most Glorious Story of Failure in the Business: The Studebaker-Packard Corporation and the Origins of ERISA" by James A. Wooten
… what happened next wasn’t so pretty
And, just days before December holidays, 3,000 laid off with no pension
Source: "The Most Glorious Story of Failure in the Business: The Studebaker-Packard Corporation and the Origins of ERISA" by James A. Wooten
ERISA is governed by the U.S Department of Labor and enforced by the Employee Benefits Security Administration (EBSA).
The EBSA’s primary responsibility is to ensure the integrity and compliance of the private employee benefits plan system in the United States.
EBSA Mission Statement
The mission of the Employee Benefits Security Administration is to assure the security of the retirement, health and other workplace related benefits of America's workers and their families. We will accomplish this mission by developing effective regulations; assisting and educating workers, Plan Sponsors, fiduciaries and service providers; and vigorously enforcing the law.
DOL (Department of Labor)
Failure to comply with ERISA’s requirements can be quite costly
Through DOL enforcement actions
Government Penalties for Non-Compliance
1) $86,500 – Failure to File Complete and Accurate Form 5500
Airport Hospitality, LTD, King of Prussia, Penn., 2010
2) $241,000 – Failure to Provide SPD to Participant
Gorini v. AMP Inc., 117 Fed. Appex, 193 (3d Cir. 2004)
3) $10,780 - Failure to Provide SPD to Participant
Kasireddy v. Bank of America Corp. Benefits Committee,
2010 WL 4168512 (N.D. Ill. Oct. 13, 2010)
4) $13,750 - Failure to Provide SPD to Participant
Latimer v. Wash. Gas Light Co., 2012 WL 2119254 (E.D. Va. 2012)
What are the elements of an ERISA plan?
Five elements of a “plan:”
ERISA Section 3(1). See also 29 C.F.R. Sections 2510.3-1, 2510.3-1(a)(2))
● ERISA Section 3
● 29 C.F.R. Section 2510.3-1
The DOL regulations state that insurance benefit programs offered by an insurer on a voluntary basis (100% employee paid) will not be deemed established or maintainedby an employer, if the following four tests are met:
(1) the employer makes no contributions,
(2) participation is completely voluntary,
(3) the solefunction of the employer is, without endorsing the plan, permitting the insurer to publicize the program and collecting premiums through payroll deductions, and
(4) the employer receives no commissions other than reasonable compensation for administrative services.
Most voluntary programs can easily satisfy requirements # 1, 2, and 4. It is less clear what employer activities under #3 will cause a plan to fall outside the safe harbor and, thus, be subject to ERISA.
● 29 C.F.R. Section 2510.3-1(j)
Permits employees to receive a group discount on individual policies;
Permits employees to receive group rates on group policies;
Serves as policyholder;
Permits the insurer to advertise its policy and distribute information about the policy to employees; or
A Summary Annual Report must be furnished no later than 9 months after the close of the plan year.
SPDs, SMMs and SARs must be furnished in a way “reasonably calculated to ensure actual receipt by all participants covered under the plan.”
Approved methods include:
SPDs, SMMs and SARs can be disclosed electronically to all recipients if:
Responsibility for disclosure remains with the plan administrator.
Healthcare Reform’s Impacton Benefits Plans
Coverage to be offered through a Health Insurance Marketplace (aka, the Exchange)
Premium tax credits to assist individuals in purchasing such coverage
Employer notice to employees of coverage options available through the Exchange
For more details please visit : http://www.dol.gov/ebsa/healthreform/
Competitive, private market for individuals to access affordable healthcare coverage
Open enrollment began October 1, 2013
Access began January 1, 2014
Employers under FLSA:
Employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce
Most firms with an annual dollar volume of sales or receipts in the amount of $500,000 or more
The FLSA also specifically covers the following entities:
hospitals; institutions primarily engaged in the care of the sick, the aged, mentally ill, or disabled who reside on the premises;
schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools, and institutions of higher education; and
federal, state and local government agencies
FLSA Advisor Site: www.dol.gov/elaws/esa/flsa/scope/screen24.asp
Exchange Notice must include the following content:
The existence of an Exchange, with a description of the services provided by the Exchange, and how to contact the Exchange to request assistance
Information regarding eligibility for a premium tax credit or premium through the Exchange if the employer plan's share of the total cost of benefits under the plan is less than 60%
Information notifying employees:
(a) if they purchase a qualified health plan through the Exchange, they may lose the employer contribution toward the cost of employer-provided coverage; and
(b) all or a portion of employer contributions to employer-provided coverage may be excludable for federal income tax purposes
Serves as a guideline template for employers to create their Exchange Notice.
Two Forms Available:
Employers offering health coverage
Employers not offering health coverage
Bottom of page 1 of Model Notice to employees:
“For more information about your coverage offered by your employer, please check your Summary Plan Description or contact_____________.”
This statement refers to an ERISA Summary Plan Description (SPD)
Are you prepared to provide every employee with an ERISA SPD if requested?
Employers have only 30 days to provide an SPD to an employee upon written request
After 30 days, the employee can collect $110/day from the employer until SPD is received
Can you afford to pay $110 per day to each employee requesting an SPD?
Surviving an Audit
• Provides the agency with power to investigate whether “any person has violated or is about to violate any provision of ERISA Title I or any regulation or order issued under Title I.”
• The DOL may commence an investigation and require records whether or not it has reasonable cause to believe any particular violation exists
has violated or will violate ERISA.
actually affected by any matter which is the subject of an investigation
(and to any department or agency of the United States), information
concerning any matter which may be the subject of an investigation.
• In addition to its power to obtain documents in connection with an
investigation, the DOL has the broad general authority to request
production of documents “relating to” an ERISA plan.