1. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC

2. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Department of Labor Audits By Larry Grudzien Attorney at Law 2 3. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Agenda Health Reform Audits, Ongoing DOL Audits, Voluntary Compliance Checklist , and Possible Fines and Penalties for Violations. 3 4. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Health Reform Audits 4 5. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC The Department of Labor has begun requesting, through recent audit requests on health and welfare plans, that employers prove their plans currently comply with the Affordable Care Act (the Act). The DOL audit requests relating to the ACA can be divided into three types: requests as to plans claiming grandfathered status. requests as to plans not claiming grandfathered status. requests as to all health plans regardless of grandfathered status. 5 Health Reform Audits 6. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Requests applicable to grandfathered plans Some of the DOL's attention is focused on whether a plan is properly accorded grandfathered status. DOL inquiries can include: disclosure statements regarding grandfathered status included in material distributed to participants and beneficiaries describing the benefits provided under the plan. records documenting the terms of the plan on March 23, 2010, the Acts enactment date, along with any ancillary documents required to verify the status of the grandfathered plan. 6 Health Reform Audits 7. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Requests applicable to grandfathered plans The DOL audit questions appear to be aimed at substantiating that the plan in question complies with two requirements under the final interim regulations on grandfathered health plans under the Act issued by the departments of Labor, Health and Human Services, and Treasury. Plans must: provide a specific notice, in any materials that describe the plans benefits to participants or beneficiaries, that the plan believes it is a grandfathered health plan; and maintain, and make available upon a government agency's request, records documenting the terms of the plan or health insurance coverage in effect on March 23, 2010, as necessary to verify, explain, or clarify the plan's grandfathered status. 7 Health Reform Audits 8. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Requests Applicable to Nongrandfathered Plans: the plan's choice provider disclosure notice, along with a list of participants who received that notice; documents relating to the plan's emergencies services benefits; documents relating to the preventative services for each plan year on or after Sept. 23, 2010; the plan's internal claims and appeals procedures; notices relating to adverse benefit determinations, the plan's final internal adverse determination notice, and the plan's final external review determination notice; and contracts or agreements with independent review organizations or third-party administrators providing external review. 8 Health Reform Audits 9. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Requests Applicable to Nongrandfathered Plans: The DOL audit requests appear to be aimed at substantiating that the plan in question complies with certain coverage mandates that apply only to nongrandfathered health plans, including to cover certain preventive care services without cost-sharing, as well as that any emergency hospital services must be provided without requiring prior authorization or higher cost-sharing amounts, even for out-of-network services. In addition to these mandates, nongrandfathered health plans must adopt new internal and external claims procedures pursuant to guidance issued under the Act. This guidance provides a safe harbor for compliance with the Act's requirement to offer a binding external review process under the plan, pursuant to which nongrandfathered health plans can contract with three independent review organizations to handle external claims appeals. 9 Health Reform Audits 10. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Requests applicable to all plans for plans with dependent care coverage, a sample of the notice describing enrollment opportunities relating to coverage of children up to age 26. a list of any participants who had coverage rescinded and the reason for such rescission. if the plan imposes or has imposed a lifetime limit since Sept. 23, 2010, documents relating to that limit for each plan year. if the plan has imposed an annual limit since Sept. 23, 2010, documents relating to that limit. 10 Health Reform Audits 11. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Requests applicable to all plans These requests appear to be aimed at eliciting information necessary for the DOL to determine a group health plan's compliance with several primary mandates applicable to all group health plans, regardless of the plan's grandfathered status. First, the Act requires that group health plans and insurance issuers that provide dependent child coverage make that coverage available for children until they attain age 26. 11 Health Reform Audits 12. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Requests applicable to all plans The Act does not permit the rescission of coverage absent fraud or material misrepresentation on behalf of the individual claiming coverage under the group health plan. For this purpose, a rescission is simply the retroactive termination of coverage for any reason other than nonpayment of premiums. The Act does not permit group health plans to impose lifetime dollar limits on benefits deemed to be "essential," a term that needs further definition by the oversight agencies, nor does the Act permit annual dollar limits to be placed on these benefits. 12 Health Reform Audits 13. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Best practices to prepare for DOL Act-related audits Generally, plan sponsors and administrators should be prepared to demonstrate that their plans comply with every aspect of the Act, which generally requires documentary evidence from plans, recordkeepers and/or service providers. Based on the substance of the recent DOL audit requests, plans will likely be expected to prove they comply with multiple Act-related requirements 13 Health Reform Audits 14. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Best practices to prepare for DOL Act-related audits These requirements include: grandfathered status, notice to participants of grandfathered status, coverage for dependents to age 26 since Sept. 23, 2010, and notice of special enrollment periods for the same, elimination of lifetime and annual limits on essential health benefits, participation and rescission of coverage, internal and external claims procedures, and other coverage mandates, such as those concerning preventive care services and emergency hospital services. 14 Health Reform Audits 15. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Best practices to prepare for DOL ACA-related audits Inadequate responses to these requests could lead to additional inquiries from the DOL, such as requests for additional documents, interviews, information, site visits, investigations and even DOL enforcement actions, and lawsuits by individual participants and beneficiaries. Various penalties could be imposed by the DOL and/or the IRS for failure to implement certain Act-related coverage mandates. For example, the Act levies a penalty of up to $100 a day per affected individual for the failure to provide coverage to adult children who are under the age of 26. 15 Health Reform Audits 16. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Best practices to prepare for DOL ACA-related audits DOL and individual participants could file lawsuits, at least under ERISA, to ensure proper implementation of the Act. For example, they could contend that the Act's coverage mandates were not implemented or were not implemented correctly, or could complain that they were not properly notified. 16 Health Reform Audits 17. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Best practices to prepare for DOL Act-related audits Possible future litigation related to compliance with the ACA includes, but is not limited to, the following: claims to mandated coverages that were or are not being provided; breach of fiduciary duty for failure to provide proper notice of the availability of a mandated coverage; claims for interference with rights to benefits growing from the implementation of a workforce realignment and/or a retiree medical exit strategy; and whistleblower actions brought pursuant to the Act. 17 Health Reform Audits 18. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Best practices to prepare for DOL Act-related audits Given these risks, plan sponsors should prepare now to be able to prove their plans' compliance with the Act. In particular, there are several specific steps that plan sponsors, administrators, fiduciaries, and service providers can take to ensure that compliance can be proven and that such audits go as smoothly as possible: document steps taken to comply with the Act's requirements retain all records of plan design, administration, and maintenance, including contracts with third-party service providers such as HMOs 18 Health Reform Audits 19. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Best practices to prepare for DOL Act-related audits have agreements with entities such as service providers or record keepers to obtain records that are needed to prove compliance have any plan amendments or written policies that were adopted to implement the Act mandates ready to produce upon receiving such an audit request, contact counsel immediately, as the issues are complex, and swift action is often necessary to protect the various rights and interests of the numerous entities involved in administering health and welfare plans. 19 Health Reform Audits 20. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Other areas of concern in the future Distribution of Summary of Benefits and Coverage, Distribution of Medical Loss Ratio Rebate, and Form W-2 Reporting, Notice of the exchange, and Notice of filing to IRS. 20 Health Reform Audits 21. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Ongoing DOL Audits 21 22. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC An audit can be triggered by any number of things, from a participant complaint to certain red flags, and DOL has a duty to investigate them. There are even random audits of auditors. The results of an audit, from DOL's perspective, can range from a finding that everything is as it should be to discovery of serious improprieties and the need for legal action. But even in a best-case scenario where you come away with a clean slate an audit will place demands on your time, energy and organizational resources. 22 Introduction 23. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Fortunately, there are steps you can take now to make it easier to survive an audit. You need to make sure, first of all, that your plan is run properly and that you have complied with all regulatory requirements and documentation. Be sure to educate yourself and keep up to date on DOL requirements, and work with your legal counsel and independent auditors to stay in compliance. DOL has a new Fiduciary Educational Campaign, started in June 2004, which offers free educational materials and a series of seminars for plan professionals, which you can find out about at www.dol.gov/ebsa. 23 What Can You Do? 24. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC You need to have access to your essential documents and to have a plan in place for dealing with the demands an audit will put on you and your organization. The time to prepare is now, and it's not difficult. 24 What Can You Do? 25. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC As part of its responsibility to protect plan participants, DOL relies on the Employee Benefits Security Administration (EBSA) to administer and enforce ERISA's fiduciary, EBSA is the agency responsible for conducting audits and investigations of plans. The audits and investigations can result from a variety of triggers. These can include bankruptcy, participant or vendor complaint, and problems with the Form 5500. 25 Background 26. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC To focus its resources where they will have the greatest impact, EBSA has identified national enforcement projects in which field offices are to place particular investigative emphasis. EBSA also allows its regional offices to formulate and act on their own projects. provisions. 26 Background 27. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC The national enforcement projects include: Multiple Employer Welfare Arrangements (MEWAs) Employee Contributions Project Rapid ERISA Action Team (REACT) Orphan Plans Project Health Disclosure and Claims On Site Reviews of Audit Work Papers 27 National Enforcement Projects 28. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC A MEWA is a welfare benefit plan or other arrangement that is created to benefit employees of two or more employers. EBSA is particularly on the lookout for instances where a small employer that cannot find or cannot afford health care coverage turns to a MEWA that cannot fulfill its obligations, either for lack of funds or for malfeasance. Audits under this program can be triggered by complaints from participants, management whistle blowers or other government agencies. 28 Multiple Employer Welfare Arrangements (MEWA) 29. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC EBSA has aggressively pursued employers that delay remitting employee contributions to the 401(k) and health care plans for their own benefit. DOL regulations require that contributions for a benefit plan become plan assets as soon as they can reasonably be segregated from the employer's general assets, which must occur within 15 business days after the end of the month the contributions are withheld from employees' pay. 90 days for welfare plans 29 Employee Contributions Project 30. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC For multiemployer 401(k) plans, an additional issue to the plan administrator is how to monitor the timeliness of the contributions of various employers participating in the plan. In performing payroll audits for multiemployer plans, timeliness of 401(k) plan contributions should be addressed. Audits under this program have the same triggers as MEWAs. 30 Employee Contributions Project 31. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Because participants and beneficiaries are at special risk in the case of bankruptcy, EBSA has a special team called REACT to protect their benefits. REACT makes sure all available legal actions have been taken to preserve pension plan assets. Investigators will take particular care to look for commingled assets and to determine whether there are plan contributions that have not been paid. They also keep an eye out for assets that should be paid to the plan but which employers may still beholding. REACT investigations are triggered when DOL learns of an impending bankruptcy from whatever sources. 31 Rapid ERISA Action Team (REACT) 32. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC If a plan has been abandoned by its sponsors and fiduciaries, or fiduciaries are not available for reasons of "death, neglect, bankruptcy, or incarceration" (as DOL puts it), EBSA searches for an available fiduciary or one who can be appointed to protect the assets of the plan. The focus of the Orphan Plans Project is not the investigation of a plan's documents and procedures, but maintenance of responsible supervision so participants and beneficiaries can receive their earned benefits. 32 Orphan Plans Project 33. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC EBSA has dedicated substantial resources to identifying fiduciary and criminal violations relating to health benefit plans. Recent statutes, including the Health Insurance Portability and Accountability Act of 1996, the Mental Health Parity Act of 1996, the Newborns' and Mothers' Health Protection Act of 1996 and the Woman's Health and Cancer Rights Act of 1998 have expanded EBSA's role in this area. EBSA investigations primarily focus on ensuring that the plans are financially sound and are run prudently and in the participants' interest. 33 Health Disclosure and Claims 34. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC EBSA's Office of the Chief Accountant performs random audits that do not directly involve you or your fiduciary duties. These are audits of the auditors; their purpose is to make sure the auditors' work is up to standards. If this happens to your plan, you may receive a notice from DOL that such an audit is underway. This does not indicate any shortcoming in your auditors, since they have been selected at random. In most cases, work will be performed in the auditors' office, where DOL will review audit work papers. You may wish to ask your auditor and DOL for a copy of the final report, just for your own peace of mind. 34 On Site Reviews of Audit Work Papers 35. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC When you are notified of an audit, your first step should be to find out what's being investigated. Chances are, your audit will fall into one of the categories discussed above. Knowing what the investigators want will help you gather the information you need and alert the necessary personnel to be available. 35 Steps To Take 36. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Generally, DOL will give you a list of documents they would like you to have available during their visit. If there is something on the list that is unclear to you, call and ask for clarification. Make that call early in the process to give yourself ample time to obtain any documentation required. 36 Steps To Take 37. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC In addition to what is requested, the following is a list of documents you generally should have on hand during the DOL visit: Plan document. Trust agreement. Master trust agreement, if any. Latest IRS determination letter. Form 5500, together with supporting schedules and documentations, including the audit report with the accountant's opinion and financial statements with notes for the period being audited. Board of trustees meeting minutes. Bank and investment custodian statements. Investment guidelines. Independent investment appraisals, if any. Expense allocation methodology documentation (including allocation studies and expense allocation agreements with related plans, if any). Summary plan description. Agreements with service providers. Insurance policies. 37 Steps To Take 38. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Looking at the audit as a process you must participate in, one of your next steps should be to appoint a point person. Make it clear what the extent of this person's authority and responsibility is. Because of an audit's potential impact on the plan and its administrators, this individual should be the plan administrator, attorney or outside accountant. 38 Steps To Take 39. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC He or she should have broad powers indeed, and requests for information should receive the highest priority. The point person's duties will include coordinating with DOL on the timing of the audit, assembling and reviewing the requested documentation, coordinating meetings with appropriate personnel, reporting to the board of trustees and devising recommendations for future audits. 39 Steps To Take 40. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC You should also make the plan's legal counsel and independent auditors aware of the audit from the very beginning. They can provide you with invaluable assistance in responding to DOL inquiries, finding information and interpreting government regulations. You may also want to request their presence during interviews, where they can protect your interests and respond to technical questions quickly and authoritatively. It may be advisable to have the plan's legal counsel and independent auditors review the documents DOL is interested in before meeting with DOL or handing over the documents. 40 Steps To Take 41. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Once these steps have been taken, let other plan personnel know what's going on. At the very least, they should have the name of the point person in charge of responding to the audit, plus directions about what to do if information is requested by DOL investigators. Depending on the size of the plan's staff, you may not need to inform everyone, but anyone who might be approached by DOL should be aware of the protocols. 41 Steps To Take 42. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC In your communications with DOL investigators, do not give them information they do not request. Resist the temptation to try to bury them in unrelated paperwork. The last thing you want is for them to identify a new area into which they should inquire. You will do better to cooperate with DOL and provide documents in a timely manner than to drag your feet and delay, which can raise suspicions of problems. Remember, DOL and you have a common goal to protect the assets of the plan and provide participants with the benefits they are entitled to. 42 Steps To Take 43. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC If the investigation finds problems, you'll have to fix them. Voluntary compliance will generally satisfy DOL and avert any civil lawsuit. You may have to pay amounts to restore losses, disgorge profits or pay penalty amounts, depending on the violation that has been determined. If you don't, DOL will refer the case to its attorneys. In that case, you may be able to settle without going to court, but you're in an unhappy position. 43 Steps To Take 44. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC If you find problems before or apart from a DOL audit, you should know about the Voluntary Fiduciary Correction Program (VFCP). This program allows plan officials to make corrections on prohibited transactions such as purchase of assets from party in interest, sale of assets to party in interest, payment of excessive compensation and 12 other specified prohibited transactions. If you document an acceptable correction, DOL will issue a no action letter. A no action letter reports EBSA's decision to take no civil action against you and not to impose certain penalties on the amount you have repaid to the plan. 44 Problems Apart From the Audit 45. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC If your plan is late in filing its Form 5500, DOL also has a Delinquent Filer Voluntary Compliance (DFVC) program. This program allows plans to file their late Form 5500 before a DOL late-filing notice with far lower penalties than if DOL found their failure to file and requested the missing forms. The maximum penalty per late filing is $750 for a small plan and $2,000 for a large plan. There is also a new per plan cap of $1,500 for small plans and $4,000 for large plans. The per plan cap is designed for plans with multiple late filing years. 45 Problems Apart From the Audit 46. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Voluntary Compliance Checklist 46 47. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Plan Document What: written document(s) describing plan terms and conditions, including some general ERISA-required provisions When: distributed upon request (within 30 days after written request, to avoid penalties) Summary Plan Description (SPD) What: written document(s) summarizing plan; often drafted as a wrap for insured benefits; must contain specific information and language as required by ERISA When: distributed upon plan enrollment and at least every 5/10 years thereafter, and upon request; generally within 90 days after enrollment Who: participants, beneficiaries entitled to benefits 47 ERISA 48. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Summary of Material Modification What: written document summarizing changes to SPD When: distributed (unless updated SPD is distributed) when modification is adopted and upon request; generally within 210 days after plan year end Who: participants, beneficiaries entitled to benefits Summary of Material Reduction in Covered Services/Benefits (for health plan) What: written document summarizing reductions When: distributed after adopting reduction; generally within 60 days Who: participants, beneficiaries entitled to benefits 48 ERISA 49. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Annual Report What: IRS Form 5500 series; reporting requirements depend on size of plan and type of plan and funding method (e.g., insured, self-insured, trust or general assets); exception for certain small plans (generally less than 100 participants) When: filed annually; distributed upon request to participants Who: filed with DOL Summary Annual Report (SAR) What: written document summarizing Annual Report When: distributed automatically and upon request; within 60 days after Annual Report is filed Who: participants, beneficiaries entitled to benefits 49 ERISA 50. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Claims Notices/Explanation of Benefits What: written document describing claim determinations; requirements vary depending on type of plan/claim When: distributed upon claim determination; specific time periods apply depending upon type of plan/claim and whether initial claim or appeal of denial Who: participant/beneficiary claimants Note: Patient Protection and Affordable Care Act (PPACA) changes to internal and external claims and appeal procedures are effective first day of plan year beginning on or after September 23, 2010 or July 1, 2011 (for those provisions which were delayed). 50 ERISA 51. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Initial COBRA Notice What: advises new participants/beneficiaries regarding COBRA rights When: distributed upon commencement of plan coverage Who: covered employees and spouses/dependent children COBRA Election Notice What: advises participants/beneficiaries regarding right to elect COBRA coverage When: distributed upon qualifying event; generally within 14 or 44 days Who: covered employees and spouses/dependent children 51 COBRA 52. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Notice of Unavailability of COBRA What: advises participants/beneficiaries that COBRA is unavailable When: distributed upon qualifying event; generally within 14 or 44 days Who: employees, spouses or dependent children who are ineligible for COBRA coverage Notice of COBRA Early Termination What: advises participants/beneficiaries of early COBRA termination When: distributed prior to termination of coverage; as soon as practicable Who: employees, spouses or dependent children for whom COBRA coverage will terminate early 52 COBRA 53. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Certificate of Creditable Coverage What: documents creditable coverage under previous group health plan When: distributed upon loss of coverage (including loss of COBRA) Who: participants and beneficiaries who lose coverage General Notice of Preexisting Condition Exclusion What: describes group health plan preexisting condition exclusion When: distributed with enrollment materials Who: participants 53 HIPAA 54. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Individual Notice of Preexisting Condition Exclusion What: notifies individual regarding specific preexisting condition exclusion and determination of creditable coverage When: distributed after determination of creditable coverage Who: participants and beneficiaries who are subject to preexisting condition exclusion Notice of Special Enrollment Rights What: notice describes special enrollment rules (e.g., birth, adoption, loss of other coverage) When: distributed prior to or during enrollment Who: covered employees 54 HIPAA 55. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Womens Health and Cancer Rights Act Notices. Note: WHCRA also applies to non-electing church plans and governmental plans, under laws other than ERISA. What: describes required benefits for mastectomy and reconstructive surgery When: distributed with initial enrollment materials and annually Who: initial notice to covered employees; annual notice to participants Newborns and Mothers Health Protection Act Notice. Note: NMHPA also applies to non-electing church plans and governmental plans, under laws other than ERISA. What: describes rights regarding minimum length of hospital stay during childbirth When: distributed with enrollment materials Who: covered employees 55 Miscellaneous ERISA and Related Requirements 56. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Medical Child Support Order (MCSO) Notices. Note: Although not subject to the ERISA MCSO requirements, non-electing church plans and governmental plans are subject to medical child support orders. What: notices acknowledging receipt of MCSO, describing MCSO qualification procedures, and acknowledging qualification of MCSO When: distributed upon receipt of MCSO and upon qualification of MCSO Who: participant subject to MCSO USERRA Notice. Note: USERRA also applies to nonelecting church plans and governmental plans. What: describes continuation of health plan coverage during military service When: notice generally posted at workplace; need not be distributed to individual participants if posted Who: participants 56 Miscellaneous ERISA and Related Requirements 57. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC 57 Miscellaneous ERISA and Related Requirements FMLA Notice and Written Guidance. FMLA also applies to non-electing church plans and governmental plans. Exception for private employers with (generally) less than 50 employees. What: describes continuation of health plan coverage during FMLA leave When: notice generally posted at workplace; notice need not be distributed to individual participants if posted; written guidance must be distributed to individual participants if notification of need for FMLA leave Who: participants CHIPRA Notice What: notification of potential opportunity for premium assistance subsidy (if covered under Medicaid or CHIP) for employer-sponsored plan coverage When: distributed annually Who: employees 58. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC HIPAA Wellness Program. Note: HIPAA also applies to governmental plans. What: disclose the availability of an alternative standard, if reward based on outcome When: in all materials describing the wellness program Who: employees Michelles Law Notice What: describes the terms of the continuation of coverage during medically necessary leaves of absence from student status When: at same time that plan requires a certification of student status Who: participants with student status coverage 58 Miscellaneous ERISA and Related Requirements 59. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC HIPAA Privacy and Security What: (i) notice of privacy practices; (ii) notice of breach of unsecured PHI When: (i) at enrollment and every 3 years; (ii) within 60 days following discovery of breach Who: (i) participants; (ii) affected individuals, HHS and, in certain cases, the media PPACA Grandfather Notice What: notification that plan is being treated as grandfathered from certain PPACA requirements When: whenever plan information is provided Who: participants 59 Miscellaneous ERISA and Related Requirements 60. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Form W-2 Reporting of Health Insurance What: report aggregate cost of employer-sponsored health coverage on annual Form W-2 When: beginning January 2013 for coverage in effect in 2012 Who: employees Summary of Coverage and Advance Notice of Mid-Year Changes What: use 8 page chart provided by insurer or created by employer When: beginning at first annual enrollment after September 23, 2012. For all other enrollments for first Plan beginning after September 23, 2012. January 1, 2013 for all other enrollments. Must be provided an annual enrollment, initial enrollment , special enrollment and upon request. Must also provide 60 days before any change made during plan or policy yeear Who: all enrollees 60 Miscellaneous ERISA and Related Requirements 61. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC A new safe harbor rule amends the participant contribution rules to create a safe harbor period under which participant contributions to a small pension or welfare plan will be deemed to comply with the law if those amounts are deposited with the plan within seven business days of receipt or withholding. The safe harbor applies to only pension and welfare plans with fewer than 100 participants. 61 Participant Contribution 62. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Possible Fines and Penalties for Violations 62 63. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC ERISA fiduciaries that violate their duties are personally liable for any damages caused to the plan or for any profit realized by the fiduciary through its breach. A breaching fiduciary may also be liable for special fiduciary penalties assessed by the DOL (equal to 20% of the amount recovered by the DOL under a settlement agreement or through an adverse court decision). Such fiduciaries may also be removed from their fiduciary positions and may even be subject to criminal penalties. 63 ERISA 64. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC On written request by a participant or beneficiary, the ERISA plan administrator must furnish a copy of the latest SPD and SMMs, the latest annual report, any terminal report, any bargaining agreement, any trust agreement, any contract, and any other instrument under which the plan is established or operated. Penalties of $110 per day may be assessed for each day after the deadline that the plan administrator does not respond. The penalty period begins on the 31st day after the written request is made The requesting participant or beneficiary can sue to recover these penalties. 64 ERISA 65. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC In addition to possible criminal penalties for willful Form 5500 failures, the plan administrator is also subject to penalties of up to $1,100 for every day a Form 5500 is missing or incomplete (participants and beneficiaries are not entitled to sue for imposition of these penalties; only the DOL may assess these penalties). The penalties are cumulative (i.e., they are assessed separately for each missing or incomplete Form 5500), and there is no statute of limitations. While it is unusual to see full penalties assessed, imposition of even reduced penalties can make the cost of non-compliance very high. For this reason, the DOL offers a program for voluntary correction of Form 5500 problems. 65 ERISA 66. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Failure to provide the certifications can result in penalties under ERISA, the Internal Revenue Code, and the Public Health Service Act (PHSA). For plans sponsored by private employers, penalties can include: Under ERISA, plan participants and the Department of Labor can sue the plan administrator, which is often the employer, to force the plan to provide the certifications; and The IRS can impose an excise tax on the employer equal to $100 per day per violation for failure to provide the certification (in the case of a multi-employer plan, the tax is imposed on the plan rather than the employer). For plans sponsored by governmental employers, the states are charged with enforcing the requirements. However, if the states fail to do so, the Secretary of Health and Human Services has the authority to impose a penalty on the employer of up to $100 per day per violation for failure to provide the certification. 66 HIPAA 67. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC The potential penalties for failure to comply with HIPAA's portability and nondiscrimination requirements range from the requirement to take administrative actions (such as issuing a new HIPAA Certificate or summary of material modifications describing PCE limitations or special enrollment rights) to costly provision of retroactive coverage. DOL investigations typically probe into HIPAA portability and nondiscrimination compliance issues. Moreover, statutory penalties may be imposed for failing to satisfy the various HIPAA legal requirements. The penalties include excise taxes under the Code of $100 per day for each violation that may be assessed by the IRS against the employer sponsoring the plan, and civil penalties of up to $100 per day that may be assessed by CMS against an issuer of a health insurance policy that is subject to CMS enforcement 67 HIPAA 68. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Excise tax penalties may be assessed under the Code for each day's failure to comply with COBRA, in amounts described below. Statutory penalties of up to $110 per day may be recovered under ERISA for failures by nongovernmental plans to provide certain notices under COBRA. Qualified beneficiaries under nongovernmental plans may sue to recover COBRA coverage under ERISA. Such suits carry the potential for large damages, which, in the case of an insured plan, might not be covered by the plan's insurance. 68 COBRA 69. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Qualified beneficiaries under governmental plans may sue to recover COBRA coverage under the PHSA. In addition to the up to $110 per day penalties mentioned above, failure to provide adequate initial and election notices by a nongovernmental plan can create exposure to other relief, including extra-contractual damages. In all suits under ERISA, the court is permitted to award attorney's fees and interest to the prevailing party. COBRA lawsuits will also present procedural issues. 69 COBRA 70. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Consequences of Failing to Provide the SBC A penalty of up to $1,000 per failure can be assessed on plan administrators and insurers (for insured health plans) and plan administrators (for self-insured health plans) that willfully fail to timely provide the SBC. A failure with respect to each participant or beneficiary constitutes a separate offense. The fine cannot be paid from plan or trust assets. 70 Other Penalties 71. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Questions? 71 72. Copyright 2014- Not to be reproduced without express permission of Benefit Express Services, LLC Larry Grudzien Phone: 708-717-9638 Email: larry@larrygrudzien.com Website: www.larrygrudzien.com 72 Contact Information