Benefits' 5 biggest tripwires
Most private-sector employers that sponsor health plans are ERISA Fiduciaries and ERISA Plan Administrators. This means they have bottom-line responsibility for complying with the federal laws that regulate their plans. While third-party administrators and insurers may help with these responsibilities, employers retain the liability for ensuring such compliance tasks are done and done correctly.
All too often, employers real-world perception of liability and responsibility does not match their actual legal obligations. Therefore, employers must have documented processes in place to fulfill their own obligations and monitor the compliance activities performed by other parties on their behalf.
Eligibility gaps are common and can be costly to employers. The most frequent mistakes include failing to:
- Clearly identify eligible employees
- Clearly define eligible dependents
- Address inconsistencies between leave policies and plan provisions
- Monitor and enforce eligibility rules stated in plan documents
In addition, eligibility rules among employers many different benefit plans may not be consistent, especially because of the expanded coverage mandates under the Patient Protection and Affordable Care Act. Being aware of these pitfalls is the first step toward a solution.
Health care reform has added new coverage mandates, notice requirements, disclosure requirements and plan-status requirements to an employers already overwhelming list of compliance responsibilities. In addition, the complexities of this legislation may actually increase as insurance exchanges, pay or play rules and assistance programs come into effect.
Employers should keep in mind that they probably pay people, either directly or indirectly, to assist them in managing their health plan. Savvy advisors are using health care reform changes as an opportunity to illustrate their value. So, so let them help you its their job.
As the ERISA plan administrator, an employer is legally responsible for preparing and distributing much of the documentation that defines their health plan. Compliance gaps develop because employers and advisers rely on insurance policy certificates to serve as the written plan document and summary plan description. Remember, documentation is one of the most important areas of compliance, because if there is ever a benefit dispute, the documentation rules. Although it can seem tedious and boring (and it is), dont make the mistake of letting this slip through the cracks.
Reporting and disclosure is all about transparency for the plan and the participant. Fines for reporting and disclosure failures can be costly. For example, the fine for not filing a Form 5500 is $1,100 per day. To prevent this, all you need is a well-organized compliance process. If you dont have the time to create it, there are tools available that can do most of the work.
With all of the rules and regulations governing benefits delivery and administration, industry pros can be left feeling like they are traversing a minefield. However, knowledge is power. So, the first step to avoiding benefits biggest pitfalls is knowing what they are. Weve outlined five of them for you here.