iceberg NOAA

Many employers sponsoring welfare benefit plans are understandably now totally focused on what they can see in front of them. Namely, the Affordable Care Act.

But lurking just below the surface is ERISA and a host of other laws through which employers have to navigate.

Let’s start with ERISA. Most welfare benefit plans are subject to Title I of ERISA. And as an ERISA plan, the Department of Labor’s Employee Benefits Security Administration (“EBSA”)  has primary jurisdiction over welfare benefit plans but not exclusively as you’ll see later.

ERISA Requirements

But in pure ERISA terms, this means that:

  • There must be a governing plan document(s) which complies with ERISA.
  • Participants must be provided with a Summary Plan Description (“SPD”). Keep in mind that an insurance contract is by itself neither a plan document nor SPD.  A “Wrap Plan” can be used to meet SPD and Form 5500 reporting requirements.
  • There must be a Named Fiduciary, the individual or entity named in the plan document who has the authority and responsibility to control and manage the operation of the plan. Does EBSA have the same concerns about the timely deposit of employee premiums as they do about 401(k) contributions? Darn right.
  • The plan must provide a reasonable claims and appeals procedure. The purpose of which is to ensure “full and fair review” to participants whose claims for benefits have been denied. It’s a part of ERISA that is seeing increased litigation and regulatory attention, e.g., the Department of Labor’s recently proposed amendments to the claims procedure for plans providing disability benefits.
  • Every fiduciary and every person who handles funds or other property of such a plan must be bonded to protect against fraud and dishonesty unless the plan is funded solely by general assets of the plan sponsor. For example, using a 501(c)(9) trust as the funding vehicle through which contributions are made and benefits paid.

Mandated Benefits

ERISA generally allows the plan sponsor to decide whether to offer a plan and allows flexibility in the plan’s benefit design. But if an employer does decide to sponsor a plan, there are mandated benefits. Here is the  list of those mandated benefits complete with initials and acronyms.

  • Consolidated Omnibus Budget Reconciliation Act (COBRA) which gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year.
  • Health Insurance Portability and Accountability Act (HIPAA) which 1) provides for continuation coverage for workers and their families when they change or lose their jobs; 2) mandates industry-wide standards for health care information on electronic billing and other processes; and 3) requires the protection and confidential handling of protected health information.
  • Mental Health Parity Act (MHPA) which generally prevents group health plans and health insurance issuers that provide mental health or substance use disorder (MH/SUD) benefits from imposing less favorable benefit limitations on those benefits than on medical/surgical benefits.
  • Newborns’ and Mothers’ Health Protection Act (Newborns’ Act) which requires plans that offer maternity coverage to pay for at least a 48-hour hospital stay following childbirth (96-hour stay in the case of a cesarean section).
  • Women’s Health and Cancer Rights Act (WHCRA) which provides protections for individuals who elect breast reconstruction after a mastectomy. Under WHCRA, group health plans offering mastectomy coverage must provide coverage for certain services relating to the mastectomy, in a manner determined in consultation with the attending physician and the patient.
  • Genetic Information Nondiscrimination Act (GINA) which protects individuals from genetic discrimination in health insurance and employment. Genetic discrimination is the misuse of genetic information.
  • Mental Health Parity and Addiction Equity Act (MHPAEA) which generally prevents group health plans and health insurance issuers that provide mental health or substance use disorder (MH/SUD) benefits from imposing less favorable benefit limitations on those benefits than on medical/surgical benefits.
  • Children’s Health Insurance Program Reauthorization Act (CHIPRA) under which group health plans and group health insurance issuers must offer new special enrollment opportunities.
  • Michelle’s Law which requires employer-provided health plans to continue coverage for an employee’s dependent child who is a college student when they take a “certified medically necessary leave of absence.” The extension of eligibility is to protect group health coverage of a sick or injured dependent child up to one year.

All of which can be part of a DOL welfare benefit plan compliance audit.

Additional Jurisdiction

But the DOL is not the only ones with jurisdiction over welfare benefit plans. The others include:

  • Department of Treasury: Internal Revenue Code
  • Department of Health and Human Services: Public Health Service Act
  • State Insurance Commissions: State insurance laws
  • Participants and Beneficiaries: Private litigation

The Takeaway

What’s the takeaway from this lengthy explanation? Simply this. The DOL has an active and extensive enforcement program for welfare benefit plan ERISA compliance. Employers should be ready.

Image: An iceberg captured on camera during a 30-day mission in 2012 to map areas of the Arctic aboard the  National Oceanic and Atmospheric Administration (NOAA) Ship Fairweather. (Original source: National Ocean Service Image Gallery)

This article expands upon one previously published in Employee Benefit Advisor for which the author is on the Editorial Advisory Board.