Thank you for your business Copyright 2009 1. Thank You For Your Participation Kansas City Omaha ...
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Thank you for your business
Copyright 2009 1
Thank You For Your Participation
Kansas City Omaha Overland ParkSt. Louis Jefferson City www.spencerfane.com
www.UBAbenefits.com
Copyright 2009 3
Compliance 101 for Plan AdministratorsGregory L. Ash
Julia M. Vander WeeleNovember 10, 2009
Copyright 2009 4
Presenters
Gregory L. Ash, JDPartner
Julia Vander Weele, JDPartner
Copyright 2009 5
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
Copyright 2009 6
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
Copyright 2009 7
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
Copyright 2009 8
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
Copyright 2009 9
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”
Copyright 2009 10
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
Copyright 2009 11
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)
Copyright 2009 12
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
Copyright 2009 13
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
Copyright 2009 14
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
Copyright 2009 15
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
Copyright 2009 16
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
Copyright 2009 17
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
Copyright 2009 18
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
Copyright 2009 19
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
Copyright 2009 20
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
Copyright 2009 21
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
Copyright 2009 22
Method of Disclosure to Participants
In-hand delivery Mailing Electronic communication Posting on bulletin board not sufficient
Copyright 2009 23
Electronic Distribution
DOL has issued regulations that provide a safe harbor for electronic distribution Format requirement
Disclosure requirement
Consent and notice requirements
Copyright 2009 24
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
Copyright 2009 25
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
Copyright 2009 26
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
Copyright 2009 27
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
Copyright 2009 28
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
Copyright 2009 29
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
Copyright 2009 30
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
Copyright 2009 31
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
Copyright 2009 32
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
Copyright 2009 33
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
Copyright 2009 34
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
Copyright 2009 35
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
Copyright 2009 36
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
Copyright 2009 37
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
Copyright 2009 38
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
Copyright 2009 39
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)
Copyright 2009 40
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
Copyright 2009 41
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)
Copyright 2009 42
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
Copyright 2009 43
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
Copyright 2009 44
Contact Information
Gregory L. Ash, JDPartner
Julia Vander Weele, JDPartner
www.benefitsinbrief.com
This Employer Webinar Series program is presented by Spencer Fane Britt & Browne LLP
in conjunction with United Benefit Advisors
Kansas City Omaha Overland ParkSt. Louis Jefferson City www.spencerfane.com
www.UBAbenefits.com
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.
