1 / 45

Thank you for your business

Learn about the disclosure requirements for plan administrators and how to document disclosures to participants and beneficiaries. Understand general and specific disclosures, methods of disclosure, and governmental reporting obligations. Gain insights into fiduciary responsibilities and the duty to disclose more in certain circumstances. Explore the Summary Plan Description (SPD) and its updates, delivery, and content requirements.

jcrowl
Download Presentation

Thank you for your business

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Thank you for your business

  2. Compliance 101 for Plan Administrators Gregory L. Ash Julia M. Vander Weele November 10, 2009

  3. Presenters Gregory L. Ash, JD Partner gash@spencerfane.com 913-327-5115 Julia Vander Weele, JD Partner jvanderweele@spencerfane.com 816-292-8182

  4. Agenda • Overview of disclosure requirements • Document disclosures to participants and beneficiaries • General disclosures describing overall plan terms (SPD, SMM, SAR, etc.) • Specific disclosures triggered by events or request • Method of disclosure (electronic delivery) • Governmental reporting obligations • Practical issues

  5. Disclosure – Which Plans areCovered by ERISA? • What plans are covered? • Employer-employee relationship required • Employer must “maintain” the plan • Some plans are exempt • Governmental plans • Church plans • Payroll practices exemption • “Voluntary” safe harbor

  6. Who is Responsible for Disclosures? • Generally, the “plan administrator” is responsible for making required disclosures • “Plan administrator” is the person or committee specifically designated by the terms of the plan • Absent a specific designation, the sponsoring employer is the plan administrator • Statutory penalties may be assessed for failure to comply with notice and disclosure requirements

  7. Fiduciary Responsibilities • Participant communications may be a fiduciary act under ERISA • Timely communication of plan changes is a fiduciary duty • Violating fiduciary duties can result in personal liability

  8. Duty to Disclose More? • Fiduciary duty to disclose more, in some circumstances • Duty to act for exclusive benefit of participants and beneficiaries • May require affirmative disclosure • When circumstances could jeopardize eligibility for benefits • Information known to fiduciary, not to participant • Accurate response to participant requests – duty not to lie • Notification of plan changes • Serious consideration test • Affirmative duty to disclose if promise to “follow up”

  9. Disclosure to Participants – SPD • Summary Plan Description • Main source of information to participants about the plan • Summarizes material plan provisions in language that can be understood by the average plan participant • Explains claims procedures, lists ERISA rights • Plan administrator must furnish to participants and beneficiaries • Permitted to have different SPDs for different groups of participants if benefits differ among groups

  10. Disclosure to Participants – SPD • Summary Plan Description – Updates and Delivery • Must be updated once every 5 years if plan is amended, once every 10 years regardless • Must be provided within following deadlines: • 90 days after individual first becomes a participant (120 days if new plan) • 90 days after beneficiary begins receiving plan benefits • 210 days after close of plan year for which SPD is updated • Conflict between plan document and SPD – which one governs? • Delivery by measures reasonably calculated to ensure actual receipt (i.e., hand delivery, but not placing a stack in the break room)

  11. Disclosure to Participants – SPD • Summary Plan Description – Foreign Language • If < 100 employees with > 25% literate only in same non-English language; or > 100 employees with lesser of 500 employees or 10% literate only in same non-English language, then: • Must include prominent notice, in non-English language, offering assistance • Assistance does not need to be in writing

  12. SPDs - Content • Name of the Plan • Name and address of the employer • EIN and Plan number • Type of Plan (e.g., medical, disability, etc.) • Type of administration (e.g., TPA) • Name, address, and phone number of Plan Administrator • Name and address of agent for service of legal process • Name, title, and address of each trustee

  13. SPDs – Content • Eligibility requirements • Description of QMCSO procedures • Disqualification, ineligibility, or denial, loss, forfeiture, suspension, setoff, or recovery of any benefits (including subrogation) • Authority to terminate or amend Plan • Source of contributions and method of calculating contributions • COBRA information

  14. SPDs - Content • Funding medium (e.g., trust or insurer) • Plan year • Claims procedures (can be furnished as separate document) • Statement of ERISA Rights • A description of any cost-sharing provisions, including premiums, deductibles, coinsurance, and copayment amounts • Any annual or lifetime caps or other limits on benefits under the plan

  15. SPDs – Content • The extent to which preventive services are covered under the plan • Whether, and under what circumstances, existing and new drugs are covered under the plan • Whether, and under what circumstances, coverage is provided for medical tests, devices and procedures • Provisions governing the use of network providers, the composition of the provider network, and whether, and under what circumstances, coverage is provided for out-of-network services • Statement regarding hospital length of stay for mother and newborn child

  16. SPDs – Content • Any conditions or limits on the selection of primary care providers or providers of specialty medical care • Any conditions or limits applicable to obtaining emergency medical care; and any provisions requiring preauthorizations or utilization review as a condition to obtaining a benefit or service under the plan • Listing of providers may be furnished as a separate document that accompanies the plan's SPD, provided that the summary plan description contains a general description of the provider network and provided further that the SPD contains a statement that provider lists are furnished automatically, without charge, as a separate document

  17. Disclosure to Participants – SMM • Summary of Material Modifications • Required if “material modification” to plan or information in SPD has changed • Explain in manner expected to be understood by average participant • Provide within 210 days after end of plan year in which amendment adopted • SMM should accompany SPD when provided to new participants • Not required for terminated participants, beneficiaries if change does not affect them

  18. Disclosure to Participants - SMR • Summary of Material Reduction • Applicable to group health plans only • Sent within 60 days after date of adoption • Material reduction = any modification to the plan or change in the information required to be included in SPD that, independently or in conjunction with other contemporaneous modifications or changes, would be considered by the average plan participant to be an important reduction in covered services

  19. Disclosure to Participants – SAR • Summary Annual Report – • Summarizes information on Form 5500 • Benefits paid • Administrative expenses • Total plan assets • Right to receive Form 5500 • Provide within 9 months after end of plan year (or 2 months after 5500 due date, if extension) • Same foreign language requirements as SPDs

  20. Disclosure to Participants upon Request • Must provide certain documents to participants on request • Latest version of SPD • Latest Form 5500 • Collective bargaining agreements covering plan • Trust agreement • Insurance contracts • Other instruments under which plan is established or operated • May impose reasonable charge for copies • $110/day penalty if no response within 30 days • Disclosure in foreign language may be required

  21. Method of Disclosure to Participants • In-hand delivery • Mailing • Electronic communication • Posting on bulletin board not sufficient

  22. Electronic Distribution • DOL has issued regulations that provide a safe harbor for electronic distribution • Format requirement • Disclosure requirement • Consent and notice requirements

  23. Heads-Up Notice • Indicate the significance of document (if not reasonably evident) • Informs the participant of right to request and receive a paper copy, free of charge • Notice can be provided electronically (e.g., email) or in writing

  24. Electronic Delivery • On-site Access • Participants who can effectively access electronic documents at any location where they are reasonably expected to perform their work duties and for whom access to the employer’s electronic information system is an integral part of those duties • Not a kiosk

  25. Electronic Delivery • Distribution beyond the workplace • Must obtain affirmative consent • Consent must not have been withdrawn • Consent must be provided electronically, in a manner that reasonably demonstrates participant’s ability to access documents in the form in which they are being furnished (not applicable to distribution via CD or DVD) • Participant must have provided an address for electronic receipt

  26. Electronic Delivery – Website • Homepage must contain prominent link • Website must include instructions on how to obtain replacement for lost or forgotten password • Documents must remain on website for reasonable period of time after participants are notified of their availability

  27. Governmental Reporting – Form 5500 • If plan is exempt from Title I, it generally does not file Form 5500 • Welfare plans exempt from filing if cover fewer than 100 participants (as of beginning of plan year) and either fully insured or unfunded (i.e., no trust) • File with DOL, they transmit to IRS • Use form for calendar year in which plan year begins • Electronic filing (“EFAST2”) required effective for 2009 plan years

  28. Form 5500 – Procedures • Audit requirement for large plans (100+ participants) • Due by last day of seventh month after end of the plan year (2½ month extension automatically available) • Penalties for failure to file • IRS - $25 per day up to $15,000 • DOL - $1,100 per day with no max (typically $300/day with $30,000 max per year) • Separate penalties for certain missing items, even if Form 5500 timely filed • Delinquent Filer Voluntary Compliance Program

  29. COBRA – General Notice • Timing: 90 days from the coverage effective date or the deadline for providing election notice, if earlier • Can use SPD for this notice, but: • Must be sent to covered employee and spouse, and • Must be sent within time frame for providing general notice

  30. COBRA - General Notice • Single notice addressed to employee and spouse is OK if • They reside at same location, and • Spouse’s coverage commences before deadline for providing general notice • Model notice contained in regulations

  31. COBRA – Election Notice • Timing: • 14 days after notice of qualifying event received, or • If employer is COBRA administrator, 44 days after occurrence of qualifying event • Must be furnished to each qualified beneficiary • May use single notice, addressed to covered employee and spouse, if all reside at same location • Model notice contained in regulations

  32. Other COBRA Notices • Notice of Unavailability • If administrator receives notice of divorce, legal separation or child’s loss of dependent status – but individual is not entitled to COBRA coverage – administrator must provide notice explaining why not • Timing – same period as would be required for providing election notice • Notice of Early Termination • Timing: As soon as practicable • Contents: • Reason for early termination • Effective date of coverage termination • Alternative coverage options (e.g., conversion) • May be combined with certificate of creditable coverage

  33. Delivery of COBRA Notices • Mailing by certified mail or 1st class regular mail to last known address is generally sufficient • Example – Mailing notice to couple’s post office box sufficient • Example – Mailing notice to employee’s home, even though employee was in hospital and no one was checking his mail, was sufficient

  34. Delivery of COBRA Notices • Good faith effort to provide notice is sufficient, even if notice is not actually received • Example – Good faith effort demonstrated where employer sent notice via certified mail, even though employer knew it had been returned unclaimed • Example – Good faith effort not demonstrated where employer did not send another notice after employee called to inquire

  35. Some Specific Participant Notices • Women’s Health and Cancer Rights Act • HIPAA Special Enrollment • Medicare Part D Notice of Creditable or Non-Creditable Coverage • Notice of Pre-existing Condition Limitations • HIPAA Notice of Privacy Practices • Michelle’s Law

  36. Women’s Health and Cancer Rights Act Notice • Must be provided at initial enrollment and each year thereafter • Notice regarding availability of mastectomy-related benefits • Practice tip: provide with annual open enrollment materials

  37. Notice of Special Enrollment Rights • Must be provided at or before the time that individual is offered opportunity to enroll • Might need to amend to comply with CHIPRA (60 days vs. 30 days) • SPD insufficient

  38. Medicare Part D Notice • Must be provided to “Part D-eligible” individuals • Timing: • Prior to each Medicare Part D annual election period (beginning November 15 of each year) • Prior to the effective date of coverage for any Medicare-eligible individual who joins the plan (may be included in new hire package) • Whenever there is a change in creditable coverage status • Upon request (personalized notice may be used)

  39. General Notice of Pre-existing Condition Limitations • Cannot impose pre-existing condition limitation until notice has been provided • Must be provided as part of any written application materials or by the earliest date following a request for enrollment that the plan or issuer, acting in a reasonable and prompt fashion, can provide it • Stand-alone notice recommended

  40. HIPAA Notice of Privacy Practices • Initial notice upon enrollment • Reminder regarding availability of the notice and how to obtain it at least once every three years • Reminder can be included with other plan communications (e.g., SMM)

  41. Michelle’s Law • Notice of availability of continued coverage for students who would otherwise lose coverage due to medically necessary leave of absence • Must be included in any materials relating to certification of student status • Timing will depend upon when plan typically requests certification

  42. Practical Issues – Record Retention • ERISA requires certain records to be maintained for at least 6 years • May need to keep past versions of SPDs and SMMs for longer period of time in order to accurately determine benefits

  43. Contact Information Gregory L. Ash, JD Partner gash@spencerfane.com 913-327-5115 Julia Vander Weele, JD Partner jvanderweele@spencerfane.com 816-292-8182 www.benefitsinbrief.com

  44. Thank you for your participation in the Employer Webinar Series. To obtain a recorded version of this or any other webinar presentations and to qualify for HRCI credits, contact your local UBA Member Firm.

More Related