ERISA eSolutions - Web-Based Tools
If you received an ERISA audit today, would you be ready?
You will be with ERISA eSolutions.
125 Premium Only Plan (POP) – Create, store and edit documents in our web-based document center. Clients and their insurance broker can access these documents.
Compliance Assessment & Dashboard – The compliance assessment and dashboard feature helps employers determine an overall risk assessment and supplies a list of missing compliance items. The reminder system and dashboard will help to make sure nothing falls through the cracks.
Employment Law Updates & Reminders – Stay informed of federal and state employment law changes, due to date reminders, and needed employer actions.
Employee Notifications – Generate customized all-in-one annual employee notices such as Medicare Part D, CHIP, WHCRA, HIPAA, Initial COBRA, Health Exchange, etc.
Health Exchange Notice – Our Web-based system automatically creates and emails this notice for distribution.
HIPAA Toolkit – Receive HIPAA policies, compliance checklist, requirements training, forms, and documents to be HIPAA compliant.
Summary of Material Modification (SMM) – Easily communicate benefit changes.
If not, we offer our White Glove Service where we do the work for you. You are assigned a personal coach who will walk you through step by step, ask key questions, complete and file the documentation on your behalf. No stress solution at your fingertips.
What is ERISA?
ERISA, which stands for the Employee Retirement Income Security Act, is a federal law regulating employer-sponsored group benefits. Nearly every employer, regardless of their size, is subject to ERISA if they offer even one employer-provided group benefit. Examples include health, dental, vision, accidental death & dismemberment, disability, or group term life insurance; medical flexible spending account or health reimbursement account. Also, wellness and employee assistance program; or any other benefit for which the employer contributes to the cost. The only exempt employers are churches and government entities.
Besides requiring certain plan features, the law also mandates detailed reporting requirements, both to the Department of Labor and other government agencies and to employees and covered members under your policies. While ERISA first enacted in 1974, recent changes under the Patient Protection and Affordable Care Act (PPACA) have added additional requirements and changed reporting deadlines.
Requirements Under ERISA & PPACA
The key ERISA and PPACA provisions are listed here, and details of each follow:
- distribute a written plan document and Summary Plan Description (SPD) for every health and welfare benefit and any voluntary benefit pre-taxed under a 125 plan to all plan participants including spouses and COBRA enrollees,
- distribute ERISA benefit notices to all eligible employees on enrollment and re-enrollment of your health plan,
- notify participants of any change to a policy that materially affects the design or pricing,
- file Form 5500 and all applicable schedules within seven months after the plan year ends for each project that has more than 100 participants (not just employees) on the first day of the plan year,
- meet all fiduciary standards and plan terms,
- establish a trust fund that holds the plan’s assets, if applicable,
- create a record keeping system to track contributions, benefit payments, maintain participant and beneficiary information, and to prepare reporting documents,
- provide a summary of benefits and a coverage explanation (SBC) and documentation of how and when it’s distributed each year,
- verify fiduciary bonding needs for individuals handling funds and other property of employee benefit plans like a 401(k) plan, if
The deadline for each requirement varies depending on when your policy enacted, whether it’s grandfathered under PPACA, whether material changes made, and other exceptions. Copies of certain plan documents must also be available to participants and beneficiaries on written requests.
SPD and Wrap Requirements
An employer must have a written Summary Plan Description (SPD) for each separate welfare benefit plan, informing participants of eligibility requirements, benefits, claims and appeals procedures, and rights under ERISA. Your insurers may provide some but not all information required for SPD compliance. It is a common mistake by employers to think the summary
insurance information they receive from their insurance provider meets the SPD requirements.
A common approach is to combine all SPDs into one overall SPD Wrap notice, tying in the required ERISA language and simplifying the SPD notice process. A customized SPD Wrap must include the name of the plan, plan sponsor, plan administrator, plan year, employer tax identification number, type of welfare plan, type of administration, summary of the benefits, detailed description of plan benefits for group health plans, provider network availability for group health plans, procedures for Qualified Medical Child Support Orders (QMCCOS), COBRA rights, plan contributions, and claims procedures. A Statement of ERISA Rights is also required.
The SPD and Wrap must be distributed to newly- enrolled participants within 90 days of when coverage started or within 120 days of a new plan established.
ERISA Benefit Notices
All eligible employees must receive ERISA Benefit Notices upon enrollment and re-enrollment of your health plan.
Depending on company size and other criteria, you may be required to provide employees with the following employee notifications:
- Medicare Part D Notice
- CHIP (if applicable in your state)
- Wellness Program Disclosure
- Women’s Health & Cancer Rights
- Hospital Stay Rights for Childbirth
- Mental Health & Parity Act
- HIPAA Notice
- Disclosure of Grandfather Status
- COBRA Rights – Initial Notice
In the event of certain Qualifying Events, additional required notices may include:
- COBRA Qualifying Event Letter
- HIPAA Breach Notice
- Medical Child Support Order Notice (MCSO)
- National Medical Support Notice (NMS)
Form 5500 and Summary Annual Report
ERISA further requires employers with 100 or more participants to annually report certain information to the DOL on Form 5500.
Form 5500 returns ask for information about the plan, including plan name, plan year, plan sponsor, plan number, participants, insurance costs, and financial data. Employers who set up an SPD Wrap can file one 5500 reports for the SPD Wrap covering all health and welfare plans.
Once a Form 5500 is completed and filed, you must prepare a Summary Annual Report (SAR) for each of your welfare benefit plans subject to ERISA reporting, or just one if done under an SPD Wrap. The SAR summarizes Form 5500 information and notifies participants Form 5500 has filed, and a copy is available to those who request a copy. SARs must be distributed to covered participants within nine months after the end of the plan year. No SAR required for plans that are not required to file Form 5500.
Audits and Enforcement’s
The Department of Labor’s Employee Benefits Services Administration (EBSA) routinely conducts inspections of group health benefit plans to investigate or audit the plan’s compliance. Also, the Health Benefits Security Project (HBSP) was recently established under PPACA to add to EBSA’s compliance and enforcement initiatives. Reportedly, smaller groups of fewer than 100 mainly targeted since the DOL cannot monitor them through a Form 5500 filing. Audits anticipated increasing significantly, given increased audit budgets and concerns over ERISA and PPACA violations.
If your company selected for a DOL audit, a letter will be sent to the Plan Sponsor containing the list of documents the DOL would like to review. The request for information typically goes back three to six years.
Audit Triggers and Penalty’s
Every audit is unique. However, reported trends show the following are common areas of concern, in recent audits:
- Summary Plan Descriptions
- HIPAA compliance particularly notices to employees about exclusive enrollment rights
- PPACA Grandfathered Plan notices and documentation of coverage for adult children
- PPACA lifetime and annual limit requirements
- inadvertently excluding people who may be eligible to participate in the plan, including dependents up to age 26
The DOL reports typical audit triggers to include:
- the Department’s internal audit initiatives
- employee complaints
- press tips and public visibility of a company or its third-party vendors
- the Department’s Memorandum of Understanding with the IRS
- form 5500 filings inconsistencies or suspect information
- an audit of a plan’s auditor (if 100+ group)
- randomly selected
In the future, DOL audits will also likely focus on:
- employer communications and documentation
- employer reporting requirements
- coverage of essential health benefits, cost-sharing and out-of-pocket limits for applicable plans
- annual limits, on non-essential health benefits only
- structure of group health benefit plans and offers of coverage
- waiting period limitation of 90 days
- exchange notice documents
- adherence to PPACA requirements
The employer is solely responsible for ERISA compliance. Penalties enforced for failure to comply with ERISA regulations, including DOL enforcement actions and penalties, as well as employee lawsuits.
Certain infractions can entail up to $100/day penalty for every employee that is affected by a violation until the violation is corrected. The death for the late delivery of SPD or Wrap can be as much as $110/day per plan. Late filing of form 5500 can result in fines as high as $1,100 per day.
The DOL estimate three out of four plans they audit have an ERISA violation, and about 70 percent of reviews with the offense have resulted in monetary fines to the employer.
Knowledge and familiarity of compliance requirements, complete documentation, and policies that show reasonable faith efforts to comply are the best way to be prepared for an audit (as well as to avoid one in the first place).
Below is a summary of the items you should have in place to ensure ERISA compliance.
- ERISA & PPACA requirements mentioned above
- The written ERISA plan document
- SPDs or the combined SPD Wrap prepared and distributed to all plan participants within 90 days of the first day of coverage
- Summary of Material Modification (SMM) for any amendments such as carrier change, eligibility change, benefit structure change to your plans
- Form 5500 and SAR filed annually (only if you have over 100 enrolled participants in any benefit)
An organized employer with meticulous records who has a health insurance broker who helps review all of the company’s compliance materials annually will be in much better shape if faced with a DOL audit than an employer who isn’t prepared.
by Rhonda Hollier, HR Coach
Click the "Free HR Benefit Compliance Risk Assessment" to Determine your Audit Risk Level
The level and extent of HIPAA compliance requirements vary based on whether your company is considered a “covered entity.” However, even businesses not considered covered entities and those excluded from HIPAA requirements should still take necessary steps to ensure the protection of employee’s information.
– Contact Prospects by offering a FREE “Quick & Comprehensive Risk Assessment.”
– Ask them for an initial meeting to conduct the assessment.
– Give your client an instant “Risk Assessment Score.”
– Present a professionally designed, easy to read PDF of action items to reduce their risk.
– Offer your expertise to assist your client.
– Close the deal by providing this as an ongoing service.
Complimentary 2020 Compliance Calendar Download - Never Miss a Deadline Again!
2020 Compliance Calendar
Free Calendar Download Get your calendar filled with important dates and reminders to ensure you are compliant with Federal and State Laws.