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Offering a group health plan can be one of the most
challenging, yet rewarding, decisions an employer can make. The
employees participating in the plan, their beneficiaries, and the
employer benefit when a group health plan is in place. Administering a
plan and managing its assets, however, require certain actions and
involve specific responsibilities.
To meet their responsibilities as plan sponsors,
employers need to understand some basic rules, specifically the Employee
Retirement Income Security Act (ERISA). ERISA sets standards of conduct
for those who manage an employee benefit plan and its assets (called
fiduciaries). An ERISA-covered group health plan is an employment-based
plan that provides coverage for medical care, including hospitalization,
sickness, prescription drugs, vision, or dental. A group health plan can
provide benefits by using funds in a plan trust, the purchase of
insurance, or by self-funding benefits from the employer’s general
assets. Understanding Your Fiduciary Responsibilities Under A Group
Health Plan provides an overview of the basic fiduciary responsibilities
applicable to group health plans under the law.
This booklet addresses the scope of ERISA’s
protections for private-sector group health plans (public-sector plans
and plans sponsored by churches are not covered by ERISA). It provides a
simplified explanation of the law and regulations. It is not a legal
interpretation of ERISA, nor is it intended to be a substitute for the
advice of a health benefits professional. Also, the booklet does not
cover those provisions of the Federal tax law or State insurance law
that may impact group health plans.
Each plan has certain key elements. These include:
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A written plan that describes the benefit
structure and guides day-to-day operations;
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A trust fund to hold the plan’s assets;(1)
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A recordkeeping system to track contribution and
benefit payments, maintain participant and beneficiary information, and
to accurately prepare reporting documents; and
-
Documents to provide plan information to employees
participating in the plan and to the government.
Employers often hire outside professionals (sometimes
called third-party service providers) or, if applicable, use an internal
administrative committee or human resources department to manage some or
all of a plan’s day-to-day operations. Indeed, there may be one or a
number of officials with discretion over the plan. These are the plan’s
fiduciaries.
Many of the actions involved in operating a plan make
the person or entity performing them a fiduciary. Using discretion in
administering and managing a plan or controlling the plan’s assets
makes that person a fiduciary to the extent of that discretion or
control. Thus, fiduciary status is based on the functions performed for
the plan, not just a person’s title.
As noted above, group health plans can be structured
in a variety of ways. The structure of the plan will affect who has
fiduciary responsibilities. Most employers sponsoring fully or partially
self-funded group health plans exercise some discretionary authority and
therefore are fiduciaries. If the employer sponsors a fully insured
plan, fiduciary status depends on whether the employer exercises
discretion over the plan.
A plan must have at least one fiduciary (a person or
entity) named in the written plan, or through a process described in the
plan, as having control over the plan’s operation. The named fiduciary
can be identified by office or by name. For some plans, it may be an
administrative committee or a company’s board of directors.
A plan’s fiduciaries will ordinarily include plan
administrators, trustees, investment managers, all individuals
exercising discretion in the administration of the plan, all members of
a plan’s administrative committee (if it has such a committee), and
those who select committee officials. Attorneys, accountants, and
actuaries generally are not fiduciaries when acting solely in their
professional capacities. Similarly, a third party administrator,
recordkeeper or utilization reviewer who performs solely ministerial
tasks is not a fiduciary; however, that may change if he or she
exercises discretion in making decisions regarding a participant’s
eligibility for benefits. The key to determining whether individuals or
entities are fiduciaries is whether they are exercising discretion or
control over the plan.
A number of decisions are not fiduciary actions but
rather are business decisions made by the employer. For example, the
decisions to establish a plan, to determine the benefit package, to
include certain features in a plan, to amend a plan, and to terminate a
plan are employer business decisions not governed by ERISA. When making
these decisions, an employer is acting on behalf of its business, not
the plan, and, therefore, is not a fiduciary. However, when an employer
(or someone hired by the employer) takes steps to implement these
decisions, that person is acting on behalf of the plan and, in carrying
out these actions, may be a fiduciary.
Fiduciaries have important responsibilities and are
subject to standards of conduct because they act on behalf of
participants in a group health plan and their beneficiaries. These
responsibilities include:
-
Acting solely in the interest of plan participants
and their beneficiaries and with the exclusive purpose of providing
benefits to them;
-
Carrying out their duties prudently;
-
Following the plan documents (unless inconsistent
with ERISA);
-
Holding plan assets (if the plan has any) in
trust; and
-
Paying only reasonable plan expenses.
The duty to act prudently is one of a fiduciary’s
central responsibilities under ERISA. It requires expertise in a variety
of areas. Lacking that expertise, a fiduciary will want to hire someone
with that professional knowledge to carry out those functions. Prudence
focuses on the process for making fiduciary decisions. Therefore, it is
wise to document decisions and the basis for those decisions. For
instance, in hiring any plan service provider, a fiduciary may want to
survey a number of potential providers, asking for the same information
and providing the same requirements. By doing so, a fiduciary can
document the process and make a meaningful comparison and selection.
Following the terms of the plan document is also an
important responsibility. The plan document serves as the foundation for
plan operations. Employers will want to be familiar with their plan
document, especially when it is drawn up by a third-party service
provider, and periodically review the document to make sure it remains
current. For example, if a plan official named in the document changes,
the plan document must be updated to reflect that change.
Limiting Liability
With these fiduciary responsibilities, there is also
potential liability. Fiduciaries who do not follow the basic standards
of conduct may be personally liable to restore any losses to the plan,
or to restore any profits made through improper use of the plan’s
assets resulting from their actions.
However, fiduciaries can limit their liability in
certain situations. One way fiduciaries can demonstrate that they have
carried out their responsibilities properly is by documenting the
processes used to carry out their fiduciary responsibilities.
A fiduciary also can hire a service provider or
providers to handle fiduciary functions, setting up the agreement so
that the person or entity then assumes liability for those functions
selected. If an employer contracts with a plan administrator to manage
the plan, the employer is responsible for the selection of the service
provider, but is not liable for the individual decisions of that
provider. However, an employer is required to monitor the service
provider periodically to assure that it is handling the plan’s
administration prudently.
Other Plan Fiduciaries
A fiduciary should be aware of others who serve as
fiduciaries to the same plan, since all fiduciaries have potential
liability for the actions of their co-fiduciaries. For example, if a
fiduciary knowingly participates in another fiduciary’s breach of
responsibility, conceals the breach, or does not act to correct it, that
fiduciary is liable as well.
Bonding
As an additional protection for plans, every person,
including a fiduciary, who handles plan funds or other plan property
generally must be covered by a fidelity bond. A fidelity bond is a type
of insurance that protects the plan against loss by reason of acts of
fraud or dishonesty on the part of persons covered by the bond. Many
persons dealing with group health plans that pay benefits from the
general assets of an employer or union (unfunded) or group health plans
that are insured (benefits are paid through the purchase of a group
health insurance contract from a licensed insurer) may be eligible for
exemptions from the fidelity bonding requirements.
Even if employers hire third-party service providers
or use internal administrative committees to manage the plan, there are
still certain functions that can make an employer a fiduciary.
Employee Contributions
If a plan provides for salary reductions from
employees’ paychecks for contribution to the plan or participants make
payments directly, such as the payment of COBRA premiums, then the
employer must deposit the contributions in a plan trust in a timely
manner. The law requires that participant contributions be deposited in
the plan as soon as it is reasonably possible to segregate them from the
company’s assets, but no later than 90 days from the date on which the
participant contributions are withheld or received by the employer.(2)
If
employers can reasonably make the deposits sooner, they need to do so.
For participant contributions to cafeteria plans
(also referred to as (Internal Revenue Code) Section 125 plans), the
Department will not assert a violation solely because of a failure to
hold participant contributions in trust. Other contributory health plan
arrangements may obtain the same trust relief if the participant
contributions are used to pay insurance premiums within 90 days of
receipt.
Hiring A Service Provider
Hiring a service provider in and of itself is a
fiduciary function. When considering prospective service providers,
provide each of them with complete and identical information about the
plan and what services you are looking for so that you can make a
meaningful comparison.
Some actions fiduciaries need to consider when
selecting a service provider include:
-
When searching for a firm, get information from
more than one provider;
-
Compare firms based on same information –
services offered, experience, costs, etc.;
-
Obtain information about the firm itself:
financial condition and experience with group health plans of similar
size and complexity;
-
Evaluate information about the quality of the firm’s
services: the identity, experience, and qualifications of professionals
who will be handling the plan or providing medical services; any recent
litigation or enforcement action that has been taken against the firm;
and the firm’s experience or performance record; ease of access to
medical providers and information about the operations of the health
care provider; the procedures for timely consideration and resolution of
patient questions and complaints; the procedures for the confidentiality
of patient records; and enrollee satisfaction statistics; and
-
Ensure that any required licenses, ratings or
accreditations are up to date (insurers, brokers, TPAs, health care
service providers).
An employer should document its selection (and
monitoring) process, and, when using an internal administrative
committee, should educate committee members on their roles and
responsibilities. Read, understand, and keep a copy of all contracts.
Fees
Fees are just one of several factors fiduciaries need
to consider in deciding on service providers. When the fees for services
are paid out of plan assets, fiduciaries will want to understand the
fees and expenses charged and the services provided. While the law does
not specify a permissible level of fees, it does require that fees
charged to a plan be "reasonable." After careful evaluation
during the initial selection, the plan's fees and expenses should be
monitored to determine whether they continue to be reasonable.
In comparing estimates from prospective service
providers, ask which services are covered for the estimated fees and
which are not. Some providers offer a number of services for one fee,
sometimes referred to as a “bundled” services arrangement. Others
charge separately for individual services. Compare all services to be
provided with the total cost for each provider. Consider whether the
estimate includes services you did not specify or want. Remember, all
services have costs.
Some service providers may receive additional fees
from third parties, such as insurance brokers. Employers should ask
prospective providers whether they get any compensation from third
parties, e.g. finder’s fees, commissions, revenue sharing.
Who pays the fees? Plan expenses may be paid by the
employer, the plan, or both. In any case, the plan document should
specify how fees are paid, and the fiduciary must ensure that those fees
and expenses are reasonable, necessary for the operation of the plan,
and not excessive for the services provided.
Monitoring A Service Provider
An employer should establish and follow a formal
review process at reasonable intervals to decide if it wants to continue
using the current service providers or look for replacements. When
monitoring service providers, actions to ensure they are performing the
agreed-upon services include:
-
Reviewing the service providers’ performance;
-
Reading any reports they provide;
-
Checking actual fees charged;
-
Asking about policies and practices (such as a TPA’s
claims processing systems);
-
Ensuring that plan records are properly
maintained; and
-
Following up on participant complaints.
Maintaining the Plan’s Benefits Claims Procedure
Group health plans must establish and maintain
reasonable claims procedures that allow participants and beneficiaries
to apply for and receive the plan’s promised benefits. Fiduciaries
must maintain the plan’s procedures. The Department of Labor issued
rules setting minimum standards for benefit claims determinations for
ERISA plans (including insured and self-funded plans). While many plans
hire benefits professionals or insurance companies to process claims, it
is important for an employer to understand the requirements before
selecting a service provider who can comply with the standards.
A claim for benefits is a request for a plan benefit
made in accordance with the plan’s procedures by a claimant
(participant or beneficiary) or a claimant’s authorized
representative. Questions concerning plan benefits, coverage and
eligibility questions, and casual inquiries are generally not considered
claims for benefits.
The key issues to become familiar with are the
timeframes for deciding claims, the contents for the notices of benefit
denials, and the standards for appeals of benefit denials.
Once a claim is received by the plan, the timeframe
for making and providing notice of the claim determination varies based
on the type of claim filed -
-
urgent care, as soon as possible but not later
than 72 hours after the plan receives the claim;
-
pre-service claims, within a reasonable period of
time not later than 15 days after the plan receives the claim;
-
post-service claims, within a reasonable period of
time not later than 30 days after the plan receives the claim; and
-
disability claims, within a reasonable period of
time not later than 45 days after the plan receives the claim.
In the case of pre- and post-service claims, 15 day
extensions may be available.
For claims that are appealed, the timeframe also
varies based on the type of claim –
-
urgent care claims, as soon as possible but not
later than 72 hours after the plan receives the request to review a
denied claim;
-
pre-service claims, within a reasonable period of
time not later than 30 days after the plan receives the request to
review a denied claim;
-
post-service claims, as soon as possible but not
later than 60 days after the plan receives the request to review a
denied claim; and
-
disability claims, within a reasonable period of
time but not later than 45 days after the plan receives the request to
review a denied claim.
No extensions are available for making decisions on
appeals unless the claimant consents.
The notice of a claim denial, referred to as an
adverse benefit determination, must contain the following information:
-
Specific reasons for denial (for example, not
medically necessary, not covered by the plan, or reached maximum amount
of treatment permitted under the plan);
-
A reference to the specific plan provision(s)
relied upon for the denial;
-
If denied for a lack of information, the notice
must include a description of any additional material(s) needed to
perfect the claim and an explanation of why such additional material is
necessary;
-
A description of the plan’s review procedures
(for example, how appeals work);
-
If used, either a description of rules,
guidelines, or protocols relied upon in denying the claim, or that a
copy of such items will be provided free upon request;
-
If denial is based on medical necessity or
experimental treatment or similar exclusion or limit, an explanation of
the scientific or clinical judgment for the denial, applying the terms
of the plan to the claimant’s medical circumstances, or a statement
that an explanation will be provided free of charge upon request; and
-
A description of the claimant’s right to go to
court to recover benefits due under the plan.
The notice of a claim denial on appeal must include
the same information as noted above (except the description of the plan’s
appeal process) as well as:
-
A statement of the claimant’s right to receive,
free of charge, relevant documents (documents and records upon which the
decision is based and other documents prepared or used during the
process); and
-
A description of any voluntary processes offered
by the plan to resolve claims disputes.
The plan’s claims procedure must provide for a full
and fair review of a benefit claim if a claimant files an appeal of the
denial. The minimum standards for appeals are:
-
Claimants must be given 180 days to file an
appeal;
-
A de novo review, that is, a review that affords
no deference to the initial determination, must be conducted;
-
When the denial is based on determinations of
whether a particular treatment, drug or other item is experimental,
investigational, or not “medically necessary,” the reviewer must
consult with a qualified health professional (and others as needed);
-
No more than 2 appeals levels are allowed; and
-
Mandatory binding arbitration of claims is
generally prohibited. However, non-binding arbitration would be
permissible if done within the required timelines.
For more information, request a copy of Compliance
Assistance - Group Health and Disability Plans Benefit Claims Procedure
Regulation (see Resources).
Certain transactions are prohibited under the law to
prevent dealings with parties who may be in a position to exercise
improper influence over the plan. In addition, fiduciaries are
prohibited from engaging in self-dealing and must avoid conflicts of
interest that could harm the plan.
Prohibited Transactions
Who is prohibited from doing business with the plan?
Prohibited parties (called parties in interest) include the employer,
the union, plan fiduciaries, service providers, and statutorily-defined
owners, officers, and relatives of parties in interest.
Some of the prohibited transactions are:
-
A sale, exchange, or lease between the plan and
party in interest;
-
Lending money or other extension of credit between
the plan and party in interest; and
-
Furnishing goods, services, or facilities between
the plan and party in interest.
Other prohibitions relate solely to fiduciaries who
use the plan’s assets in their own interest or who act on both sides
of a transaction involving a plan. Fiduciaries cannot receive money or
any other consideration for their personal account from any party doing
business with the plan related to that business.
Exemptions
There are a number of exceptions (exemptions) in the
law that provide protections for the plan in conducting necessary
transactions that would otherwise be prohibited. The Labor Department
may grant additional exemptions.
Exemptions are provided in the law for many dealings
that are essential to the ongoing operations of the plan. One exemption
in the law allows the plan to hire a service provider as long as the
services are necessary to operate the plan and the contract or
arrangement under which the services are provided and the compensation
paid for those services is reasonable.
The exemptions issued by the Department can involve
transactions available to a class of plans or to one specific plan. Both
class and individual exemptions are available at www.dol.gov/ebsa under
Compliance Assistance. For more information on applying for an
exemption, request a copy of Exemption Procedures Under Federal Pension
Law (this publication and the procedures also apply to group health
plans -- See Resources).
ERISA requires plan administrators to furnish plan
information to participants and beneficiaries and to submit reports to
government agencies.
Informing Participants And Beneficiaries
The following documents must be automatically
furnished to participants and beneficiaries.
The Summary Plan Description (SPD) -- the basic
descriptive document -- is a plain language explanation of the plan and
must be comprehensive enough to apprise participants of their rights and
responsibilities under the plan. It also informs participants about the
plan features and what to expect of the plan. Among other things, the
SPD must include basic information such as:
-
Plan name, address, and contact information;
-
What the plan benefits are;
-
How to get the benefits; and
-
Duties of the plan and/or employee.
More specific information must also be provided,
including:
-
The plan’s claims procedure (either in the
document or as separate attachment);
-
A participant’s basic rights and
responsibilities under ERISA (model language is provided in the SPD
rules);
-
Information on any applicable premiums,
cost-sharing, deductibles, co-payments, etc.;
-
Any caps (annual or lifetime) on benefits;
-
Procedures for using network providers (if PPO/HMO)
and composition of network;
-
Conditions regarding pre-certification;
-
A description of plan procedures governing
Qualified Medical Child Support Orders (see below); and
-
Notices and descriptions of certain rights under
the Health Insurance Portability and Accountability Act (HIPAA) and
other health coverage laws, described below.
This document is given to employees within 90 days
after they are covered by the plan. SPDs must also be redistributed
every 5th year and provided within 30 days of a request. The SPD must be
current within 120 days.
The Summary of Material Modification (SMM) apprises
participants and beneficiaries of material changes to the plan or to the
information required to be in the SPD. The SMM or an updated SPD for a
group health plan must be furnished automatically to participants within
210 days after the end of the plan year in which such material change
was adopted. However, if the changes to the plan or changes to the
required information in the SPD result in a material reduction in
covered services or benefits, then the SMM must be distributed no later
than 60 days from the date the change was adopted. A material reduction
is any plan change that eliminates benefits, reduces benefits payable,
increases premiums, deductibles, coinsurance or co-payments, reduces the
service area covered by an HMO, or establishes new conditions or
requirements (such as pre-authorization) for obtaining services or
benefits.
A Summary Annual Report (SAR) outlines in narrative
form the financial information in the plan’s Annual Report, the Form
5500 (see below for those plans required to file this report), and is
furnished annually to participants in plans that are required to file
the Form 5500.
Other Group Health Plan Notices
There are notices required under other provisions in
ERISA (i.e., the Consolidated Omnibus Budget Reconciliation Act (COBRA),
the Health Insurance Portability and Accountability Act (HIPAA), the
Newborns’ and Mothers’ Health Protection Act (Newborns’ Act), the
Womens’ Health and Cancer Rights Act (WHCRA), and the Mental Health
Parity Act (MHPA)). Some of these notices may be included in the SPD and
others must be provided separately due to the timeframes for when they
are required to be provided. For more information on these notices, see
the Resources section to obtain a copy of the Reporting and Disclosure
Guide for Employee Benefit Plans. For more information on COBRA, HIPAA,
and the other provisions in ERISA related to group health plans, see
Resources for publications on these provisions.
Disclosures Upon Request
In addition to the SPD, participants can also request
the plan document, insurance contracts, and other documents under which
the plan is operated. A reasonable copying fee may be charged.
Qualified Medical Child Support Orders (QMCSO)
Plans may receive either private Medical Child
Support orders (MCSO) or an order from a state agency regarding an
employee’s medical child support obligations. Plans must have
procedures to receive, process, and implement qualified medical child
support orders. If a plan receives an MCSO, the plan administrator has
to provide a notice to the participant and any child named in the MCSO
(and the child’s representative) of the receipt of the MCSO and the
plan administrator’s determination whether the MCSO is qualified. The
notice must be furnished within a reasonable time period after receipt
of the MCSO. For more information on QMSCOs and the standards plans
must use to determine whether MCSOs are qualified, request a copy of the
Qualified Medical Child Support Orders (see
Resources).
Reporting To The Government
Plan administrators generally are required to file a
Form 5500 Annual Return/Report with the Federal Government. The Form
5500 reports information about the plan, its finances, and its
operation. This information is used by the U.S. Department of Labor, the
Internal Revenue Service (IRS), other government agencies,
organizations, and the public. Participants and beneficiaries can
receive a copy of the Form 5500 upon request from the plan. Depending on
the number of participants covered and plan design, there may be
exemptions from the full filing requirements. A group health plan with
fewer than 100 participants that is either fully insured or self-funded
(or a combination of both) does not need to file an annual report. Plans
with 100 or more participants that are fully insured or self-funded (or
a combination) can file a limited report. Plans that have relief from
the trust requirement discussed in Employee Contributions above are
treated as self-funded.
The form is filed and processed under the ERISA
Filing Acceptance System (EFAST). For more information on the forms,
their instructions, and the filing requirements, see www.efast.dol.gov
and request the publication Reporting and Disclosure Guide for Employee
Benefit Plans. See the Resources section to obtain a copy.
Administrators of multiple employer welfare
arrangements (MEWAs) generally are required to file a Form M-1 Report
with the Federal Government. The Form M-1 reports information about
compliance by MEWAs with the requirements of Part 7 of ERISA (which
includes HIPAA, the Newborns’ Act, WHCRA, and MHPA). This one-page
form is generally required to be filed once per year. For more
information on the Form M-1, see www.dol.gov/ebsa and request the
publication Multiple Employer Welfare Arrangements under the Employee
Retirement Income Security Act (ERISA): A Guide to Federal and State
Regulation.
There are penalties for failing to file required
reports and for failing to provide required information to participants.
As noted above, there are other provisions in ERISA,
as well as other Federal and State laws that affect group health plans.
A fiduciary’s responsibilities include making sure the plan complies
with ERISA, which includes the COBRA, HIPAA, and other group health plan
provisions in the law.
The COBRA continuation coverage provisions require
that participants and their covered dependents have the opportunity to
maintain coverage under their group health plan for a limited period of
time, which they may be required to pay for, upon the occurrence of
certain qualifying events that would otherwise result in a loss of
coverage. For a more detailed discussion of COBRA requirements, see An
Employer's Guide to Group Health Continuation Coverage Under COBRA –
The Consolidated Omnibus Budget Reconciliation Act of 1986 (See Resources to
obtain a copy).
The HIPAA provisions place limits on preexisting
condition exclusions; provide for special enrollment rights for certain
events; and prohibit discrimination in eligibility, benefits, or
premiums based on a health factor. Other group health plan provisions in
ERISA include the Newborns’ and Mothers’ Health Protection Act,
which provides protections for mothers and their newborn children
relating to the length of their hospital stays following childbirth; the
Women’s Health and Cancer Rights Act, which provides protections for
individuals who elect breast reconstruction or certain other follow-up
care after a mastectomy; and the Mental Health Parity Act, which
provides for parity in the application of annual or lifetime dollar
limits on mental health benefits with dollar limits on medical/surgical
benefits. For more detailed information on these provisions, see the
Resources section to obtain a copy of Health Benefits Coverage Under
Federal Law.
With respect to other laws, ERISA generally
supersedes State laws as they relate to employee benefit plans. However,
State insurance laws applicable to health insurance coverage often
continue to apply. Therefore, if health coverage is offered through an
HMO or insurance policy, check with your State insurance department for
more information on that State's insurance laws.
Can A Fiduciary Terminate Its Fiduciary Duties?
Yes, but there is one final fiduciary responsibility.
Fiduciaries who no longer want to serve in that role cannot simply walk
away from their responsibilities, even if the plan has other
fiduciaries. They need to follow plan procedures and make sure that
another fiduciary is carrying out the responsibilities left behind. It
is critical that a plan has fiduciaries in place so that it can continue
operations and participants have a way to interact with the plan.
What Help Is Available For Employers Who Make
Mistakes In Operating A Plan?
The Department of Labor’s Voluntary Fiduciary
Correction Program (VFCP) encourages employers to comply with ERISA by
voluntarily self-correcting certain violations. The program covers 19
transactions, including failure to timely remit participant
contributions and some prohibited transactions with parties in interest.
The program includes a description of how to apply, as well as
acceptable methods for correcting violations. In addition, the
Department gives applicants immediate relief from payment of excise
taxes under a class exemption.
In addition, the Department’s Delinquent Filer
Voluntary Compliance Program (DFVCP) assists late or non-filers of the
Form 5500 in coming up to date with corrected filings.
For an overview of both programs, visit Corrections
Programs at www.dol.gov/ebsa.
Tips For Employers With Group Health Plans
Understanding fiduciary responsibilities is important
for the security of a group health plan and compliance with the law. The
following tips may be a helpful starting point:
-
Have you identified your plan fiduciaries, and are
they clear about the extent of their fiduciary responsibilities?
-
If you are hiring third-party service providers,
have you looked at a number of providers, given each potential provider
the same information, and considered whether the fees are reasonable for
the services provided? Have you documented the hiring process?
-
Are you prepared to monitor your plan’s service
providers?
-
Are you aware of the schedule to deposit
participant contributions and payments by participants to the plan and
forwarding them to the insurance company, and have you made sure it
complies with the law?
-
Have you reviewed your plan document in light of
current plan operations and made necessary updates? After amending the
plan, have you provided participants with an updated SPD or SMM?
-
Does your plan have a reasonable claims procedure
that is being followed by plan fiduciaries?
-
Does your plan have a procedure for handling QMCSO’s?
-
Have you identified parties in interest to the
plan and taken steps to monitor transactions with them?
-
Are you aware of the major exemptions under ERISA
that permit transactions with parties in interest, especially those key
for plan operations (such as hiring service providers)?
-
Have required reports (i.e. Form 5500) been filed
timely with the government?
The U.S. Department of Labor’s Employee Benefits
Security Administration offers more information on its Web site and
through its publications. The following are available by contacting EBSA
at 1.866.444.EBSA (3272) or on the EBSA Web site (www.dol.gov/ebsa).
For Employers
For Employees
-
If a plan is set up through an
insurance contract, then the contract does not need to be held in
trust. If a plan is self-funded (paid from the employer’s general
assets), those funds are not plan assets except for any participant
contributions withheld or received.
-
A proposed rule provides a safe
harbor period for plans with fewer than 100 participants. If the
salary reduction contributions are deposited with the plan no later
than the 7th business day following withholding by the employer,
they will be considered contributed in compliance with the law.
Pending the adoption of a final rule by the Department of Labor, the
Department’s Employee Benefits Security Administration (EBSA) will
not assert a violation of ERISA regarding participant contributions
where such contributions are deposited with a small plan within 7
business days. Because the final rule may change, periodically check
www.dol.gov/ebsa for the publication of the final rule.
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