ERISA also requires that participants and beneficiaries received proper notice and disclosure of the benefits that their employer provides. While most enforcement activities have targeted pension and retirement benefits, the Affordable Care Act ACA has placed an enormously renewed focus on health and welfare benefits. Many employers, while aware of the disclosure and reporting rules for pension benefits, are not aware of similar requirements for their group-sponsored welfare benefits.
If an employer is offering a benefit plan that is for the purpose of providing one or more benefits listed in ERISA to employees and beneficiaries e. A common rule of thumb is any employer that offers a group-sponsored health plan must comply with the ERISA notice and disclosure, and possibly, reporting requirements unless an exemption applies. ERISA does not apply to those exempt organizations and to employers that do not offer a benefit identified under ERISA that is for the benefit of their employees and beneficiaries.
An example might be a municipality that offers a medical plan to their employees. For example, an employer group with two employees or employees will both be required to fulfill the disclosure and fiduciary requirements of ERISA. The Form filing and reporting requirements are generally reserved for employers with or more employees covered participants at the start of a plan year but can also apply to smaller employers with funded plans, regardless of whether they are insured or self-funded.
The biggest mistake small employers make is not providing this SPD to their employees. Many businesses confuse the insurance certificate or benefit summary from their carrier or broker as this disclosure, but it is not. This federal preemption spares multi-state employers the burden of complying with 50 different sets of state laws and regulations.
It is estimated that approximately 60 percent of these individuals were covered by a self-funded ERISA health plan and the remaining 40 percent were covered under a fully-insured ERISA health plan. Plans that have an extension of time to file the Form must provide the SAR within two months after the extension ends. A A plan document is the official governing document for the plan. In most situations, a group insurance policy will not include all of the required information and so will not qualify as a plan document.
A An SPD is the document provided to participants to explain their rights and obligations under the plan. If the plan document and SPD are separate and the participant requests a copy of the plan document, the plan sponsor must provide the plan document within 30 days after it is requested, even though an SPD has already been provided.
If benefits are being reduced in any way, the plan amendment and summary of material modifications SMM must be provided within 60 days after the effective date of the change. If, however, the change affects the Summary of Benefits and Coverage SBC and it is made other than at renewal, a revised SBC must be provided within 60 days before the effective date of the change.
However, if the change is part of open enrollment and the employer communicates the change during open enrollment, then the open enrollment communication is considered acceptable notice, regardless of whether the SBC or the SPD, or both, are changing. A Usually a certificate of coverage will not meet the SPD requirements. Many employers use a wrap document that includes all or most of their group benefits, like medical, dental, and life benefits.
A The plan year is the month period designated as the plan year in the plan document and SPD. These types of plans are perfect for high-earning workers.
Examples of excess benefit plans include stock-based incentive plans, deferred compensation plans and recognition and retention plans. Part of the reason for these plans not being subject to ERISA is that they have the ability to increase or decrease in value.
Deferred compensation plans also typically allow pre-retirement distributions for certain life events e. Plans maintained outside the U. Certain types of voluntary group insurance plans where employees pay insurance companies all premiums through payroll deductions may also not be subject to ERISA if the employer does not contribute to the plan.
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