Employee Benefit Plans- What Do HR Representatives and Managers Need To Know?

1. Employee Benefit Plans- What Do HR Representatives and Managers Need To Know? Robin Soderblom BA 638 Bellevue University September 5, 2013

2. ERISA Employee Retirement Income Security Act • Administered by the Employee Benefits Security Administration (EBSA) • “The provisions of Title I of ERISA cover most private sector employee benefit plans” • “ERISA sets uniform minimum standards to ensure that employee benefit plans are established and maintained in a fair and financially sound manner” • “Employers have an obligation to provide promised benefits and satisfy ERISA's requirements for managing and administering private retirement and welfare plans” • “EBSA, together with the Department of the Treasury’s Internal Revenue Service (IRS), has the statutory and regulatory authority to ensure that workers receive the promised benefits”

3. EBSA Employee Benefits Security Administration • “EBSA, together with the Department of the Treasury’s Internal Revenue Service (IRS), has the statutory and regulatory authority to ensure that workers receive the promised benefits • EBSA has principal jurisdiction over Title I of ERISA, which requires persons and entities that manage and control plan funds to: • Manage plans for the exclusive benefit of participants and beneficiaries • Carry out their duties in a prudent manner and refrain from conflict of interest transactions expressly prohibited by law • Comply with limitations on certain plans' investments in employer securities and properties • Fund benefits in accordance with the law and plan rules • Report and disclose information on the operations and financial condition of plans to the government and participants • Provide documents required to conduct any investigations necessary to ensure compliance with the law”

4. Types of Employee Benefit Plans • “Retirement plans are established and maintained to provide retirement income or to defer income until termination of covered employment or beyond” • Other employee benefit plans (also called welfare plans) include, but are not limited to: • Health Benefits • Disability Benefits • Some other benefits that may be offered to employees: Death benefits, prepaid legal services, vacation benefits, day care centers, scholarship funds, apprenticeship and training benefits, etc.

5. Health Benefits • COBRA (The Consolidated Omnibus Budget Reconciliation Act of 1985) • HIPAA (Health Insurance Portability and Accountability Act of 1996)

6. COBRA • “COBRA contains provisions giving certain former employees, retirees, spouses, former spouses, and dependent children (“qualified beneficiaries”) the right to temporary continuation of health coverage at group rates • Coverage is only available when coverage is lost due to certain specific events (“qualifying events”) such as termination of employment.  • Group health coverage for COBRA participants is usually more expensive than health coverage for active employees • Ordinarily less expensive than individual health coverage • Plans must give covered individuals an initial general notice informing them of their rights under COBRA and describing the law. • The law also obliges plan administrators, employers, and qualified beneficiaries to provide notice of certain "qualifying events." (In most instances of employee death, termination, reduced hours of employment, entitlement to Medicare, or bankruptcy,) • The employer must provide a specific notice to the plan administrator. The plan administrator must then advise the qualified beneficiaries of the opportunity to elect continuation coverage”

7. HIPAA • “The Act grants employees several important rights: • The right to receive information about their pension or health benefit plans • The right to participate in timely and fair processes for benefit claims • The right to elect to temporarily continue group health coverage after losing coverage • The right to receive certificates verifying health coverage under a plan • The right to recover benefits due under the plan”

8. Compliance • There are many notices that must be posted in the workplace concerning health benefits • When in doubt research www.dol.gov – specifically; • Health Benefits Advisor interactive Website assists employers in understanding and complying with federal group health plan laws • Health Benefits Laws Self Compliance Tools • Understanding Your Fiduciary Responsibilities Under A Group Health Plan • “ERISA contains several notice requirements for retirement plans, such as the summary plan description, individual benefit statements, and the summary annual report”

9. COMPLIANCE ASSISTANCE • www.dol.gov - Reporting and Disclosure Guide for Employee Benefit Plans • “EBSA has numerous general publications designed to help employers and employees understand their obligations and rights under ERISA. A list of EBSA booklets and pamphlets is available from EBSA's Home Page and through EBSA's toll-free publications line at 1-866-444-EBSA (1-866-444-3272)” • Field office help is also available – consult www.dol.gov for details and locations

10. Penalties/Sanctions • ERISA gives the Department of Labor authority to: • Bring a civil action to correct violations of the law • Investigate to determine whether any person has violated ERISA laws • Imposes criminal penalties on any person who willfully violates any provision(s)

11. Summary • ERISA is the “code” which sets the standards by which employee benefit plans are “handled” • ERISA works with the IRS, Department of the Treasury, Department of Labor and various other government agencies to protect employees in relation to their benefit plans • Retirement and Health Benefit plans are the most common types of employee benefit plans • HIPAA and COBRA are the most common compliance items an HR department will deal with concerning health benefit plans • Failure to comply with ERISA regulations can lead to fines and/or sanctions for the employer • An HR specialist should consult www.dol.gov specific regulations, forms, and help when dealing with employee benefit plans

12. Reference • 2013. www.dol.gov