Why is compliance so important?
The government has established internal initiatives like the Health Benefits Security Project and is making it easier than ever to file complaints. The DOL is increasing its audit staff — your need to be in compliance.
What triggers an audit? – Participant complaints are the primary indicator, recent press or public visibility of the employer, lack of or inconsistent form 5500 reports, etc…; and to make matters worse, information is shared among Government agencies
Results show that three out of four audits have an ERISA violation, 70% of audits result in fines for the employer. Failure to provide an SPD or Plan Document within 30 days of receiving a request from a plan participant can result in a penalty of up to $110/day per participant for each violation. Having documentation in order protects against disgruntled employees who believe they are entitled to coverage or benefits.
What are the Requirements? – ERISA-covered plans must be maintained in accordance with a written Plan Document. ERISA also requires that employers/plan administrators provide an SPD to each plan participant.
Most employers do not comply with the SPD or Plan Document requirements. – Why? Companies mistakenly assume that insurance contracts, certificates of insurance and benefits summaries fulfill the ERISA requirements—but they don’t.
What benefits are subject to ERISA? Most Common are medical – HMO & PPO, dental, vision, prescription drug, health FSAs, HSAs, HRAs, Life Insurance, Disability Insurance. Other plans subject to ERISA include severance pay, employee assistance, business travel, wellness programs, pre-paid legal, retiree medical, voluntary benefits, etc…
As if that wasn’t enough, there are over 30 possible disclosures required with distribution and reporting time frames. Complicated is an understatement. If you are a LARGE employer, you probably have internal council meeting the demands. At the very least you have a law firm retained. – Think your corporate / transaction attorney can keep you in compliance? Odds are they won’t want to touch this. Did we mention it’s complicated?
Employee Benefit Advisors generates both a Wrap SPD and a Wrap Plan Document which wrap around existing insurance certificates, policies, contracts and benefit plan booklets. Our ERISA attorneys have developed documents to provide the necessary provisions to comply with ERISA.
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