Introducing ERISAEdge to Manage Your ERISA Health and Welfare Benefit Plan Compliance
ERISA…It’s the Law!
Right now, you are probably asking, what is ERISA?
ERISA is the Employee Retirement Income Security Act of 1974 (ERISA) that sets minimum standards for most voluntarily established pension and health plans in private industries to provide protection for individuals in these plans.
ERISA is a federal law that sets minimum standards for pension plans in private industry. ERISA requires plans to provide participants with plan information including important information about plan features and funding; provide fiduciary responsibilities for those who manage and control plan assets; and establish a grievance and appeals process for participants to get benefits from their plans. ERISA also gives participants the right to sue for benefits and breaches of fiduciary duty.
Do I Need to Comply?
If you have a group-sponsored benefit or retirement plan then, yes, you must comply!
Employers face strict deadlines for disclosing plan information to all eligible employees, and all sponsors who administer ERISA plans must follow a strict fiduciary code of conduct.
You may be at risk and not even know it! Failure to comply with ERISA’s requirements can mean costly government penalties, even employee lawsuits.
Many employers do not fully understand ERISA, how it impacts business and employees, and the possible risks it presents.
The information below offers a basic breakdown of the reporting requirements under ERISA (governing health and welfare benefit plans).
Important Note: Governmental agencies (such as charter schools) and churches are not subject to ERISA.
Employers’ Compliance Obligations
ERISA requires a plethora of communications, forms, and record-keeping for employers to remain fully compliant with ERISA regulations:
- Plan Documents: Employers must have a written plan document in place for each benefits plan offered to one or more employees. This document must include ERISA plan numbers.
- Summary Plan Description (SPD): All participating employees must receive a copy of the SPD within 90 days of plan enrollment.
- Summary of Material Modification (SMM): When there is a material change to any benefits plan (i.e., carrier change, eligibility change, benefit structure change), all participating employees must receive a copy of the SMM within 210 days after the plan year-end in which the change occurred.
- IRS Form 5500: Employers must file a Form 5500 with applicable schedules every plan year for each plan where they have 100+ participating employees. *See below Medical Loss Ratio (MLR) potential requirement for small plans.
- Summary Annual Report (SAR): This report must be completed by the employer and distributed to all participating employees in any plan that files a Form 5500. Employees must receive the SAR within 9 months after plan year-end, or 2 months after Form 5500 is filed.
- Medical Loss Ratio (MLR) (Affordable Care Act): Employers must determine if the rebate is a plan asset under the ERISA Plan and add those terms to the plan document/SMM so they can retain a prorated portion of the rebate equal to the percent of premium paid by the employer.
- Group health insurance MLR rebates only affect fully-insured major medical plans. Both grandfathered and non-grandfathered plans may be eligible for a rebate.
- Each enrollee must receive a rebate that is proportional to the premium amount paid by that enrollee.
*The handling of these MLR rebates has potential ramifications for employers both small and large as it regards annual Form 5500 filing requirements. For example: small plans that hold onto these rebates past ninety (90) days and do not have a policy in place could be subject to Form 5500 filing requirements; large plans could have additional reporting requirements related to their Form 5500 filings
- ERISA and Health Care Reform Notices: The Patient Protection and Affordable Care Act (PPACA) requires annual notices to eligible employees based upon the status of any new or renewed group health plan. These notices must be provided to all eligible employees on or prior to the first day of the group health plan effective date.
- Discrimination Testing: Section 105(h) of the Internal Revenue Code requires all self-insured health plans to perform discrimination testing. Note: This has been suspended for Fully-Insured.
The above is a basic breakdown of the reporting requirements under ERISA and is not meant to be a full list of every requirement governing health and welfare benefits and NOT retirement plan requirements.
How Do I Ensure that I Am Compliant with ERISA?
HR Knowledge understands that ERISA is complicated and many employers are unsure whether they are fully compliant. It with this is mind that we are rolling out our newest product offering: ERISAEdge, an ERISA compliance package for health and welfare benefit plans only. We have partnered with TASC (Total Administrative Services Corporation), providers of innovative, tax-advantaged employee benefits programs, to offer our clients peace of mind and deliver compliance.
What Will Our ERISAEdge Compliance Package Do for You?
- Maintain all required records for the mandated amount of time
- Provide instruction regarding required on-site record-keeping
- Complete all required forms accurately and promptly
- Prepare and design the required plan document and the summary plan description
- Provide guidelines for disclosure of required information to employees
- Prepare all applicable forms and schedules
- Prepare the Summary of Materials Modification (SMM)
- Prepare the Summary Annual Report (SAR) if required
- Provide access to experienced employee benefits professionals
With HR Knowledge and TASC as your partners in ERISA compliance practices, you can more easily focus on the operations that keep your business going while we devote our resources to assessing the compliance of your company’s programs.
If you are interested in learning more about our newest offering, please contact us at HR@HRKnowledge.com.
In general, ERISA does not cover group health plans established or maintained by governmental entities, churches for their employees, or plans that are maintained solely to comply with applicable workers compensation, unemployment, or disability laws. ERISA also does not cover plans maintained outside the United States primarily for the benefit of nonresident aliens or unfunded excess benefit plans.
Please note that these advisories are an informational resource and not a substitute for professional or legal advice.