Is Your Business Compliant With ERISA?
Is Your Business Compliant With ERISA?
By Jennifer S. Kiesewetter
Jennifer S. Kiesewetter
Compliance is a word thrown around frequently in the business world, and it’s a goal on your to-do list.
Or is it? In the world of the Employee Retirement Income Security Act (ERISA), compliance is not a goal. It is the law – and harsh penalties await the offender.
ERISA is a federal law that governs certain minimum standards for qualified retirement plans, health and welfare plans. Sounds simple enough, but therein lies the rub. The complexity and confusion of ERISA falls within those certain minimum standards.
The complexity is increasing as evidenced, for example, by the passage of the Patient Protection and Affordable Care Act (PPACA or health care reform), which directly impacts ERISA-covered health plans.
Federal agencies such as the IRS and Department of Labor, which oversee and enforce these plans, are paying close attention to plan sponsors’ compliance and non-compliance. In 2009 and 2010, an estimated 70 percent of retirement plans audited by the Department of Labor were fined, with penalties averaging about $450,000 per plan.
How do you ensure compliance?
Plan documents must be in compliance with the law and regulations. All appropriate amendments must be made and signed where applicable. All plan operations must be in compliance with the plan document.
Pay close attention to Summary Plan Descriptions (SPDs), which have specific requirements that must be met. Make sure they are appropriately drafted and distributed at required times.
Appropriately document your Section 408(b)(2) (fee disclosure) notices and updates.
For ERISA health and welfare plans, make sure such plans comply with ERISA. Often, most insurance carriers provide a plan booklet or certificate of coverage outlining eligibility and benefits. They may offer you something that looks like an SPD. However, often these documents do not contain the required ERISA language. You may need a “wrap document” that will contain the required ERISA language and embody the remaining health and welfare documents. Without this, you may not be in compliance with ERISA.
Review your plan for “hot spots,” such as compensation definitions, participant eligibility and enrollment, beneficiary designations, the timing of contribution deposits, the filing of 5500s, audit concerns, Schedule C concerns, hardship distributions, loans and investment policy statements, among others.
Review your health plan for the PPACA requirements to date, such as grandfather status, dependent coverage to age 26, prohibition of rescissions of coverage, the absence of monetary limits on essential health benefits, choice of provider notice, and claims and external reviews. As of late 2012, the DOL began auditing plans for PPACA compliance.
Document all of your processes.
With audits increasing, it is important to be proactive. Begin your document review. Engage ERISA counsel, an accountant/auditor with expertise in employee benefit plans and a qualified third-party administrator. This team of professionals can help you navigate ERISA.
Contact Jenny Kiesewetter, managing member and firm founder of Kiesewetter Law Firm, at 308-6485 or visit www.kiesewetterfirm.com.
The Supreme Court today ruled that the Affordable Care Act, PL111-148, in effect since September 28, 2010, including its individual mandate that virtually all Americans buy health insurance, is constitutional. Congress could use its power to regulate commerce between the states to require everyone to buy health insurance. Five Justices agreed that the penalty that someone must pay if he refuses to buy insurance is equivalent to a “tax” imposed by Congress. The Court held that the provision concerning the increase in Medicaid enrollment is constitutional as long as states would only lose new funds if they didn’t comply with the new requirements, but not lose all of their Medicaid funding.
PPACA, PL11-148, adopted ERISA claim regulations, as written, in their entirety. The new health care law in the U.S. Is based on ERISA for claims adjudication.
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