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Strict guidelines govern benefit plans

With all the attention being given to health care reform, there is one area of compliance physicians should not overlook –the Employee Retirement Income Security Act (ERISA). This federal law regulates group-sponsored benefits, and it is important to understand the potential financial impact noncompliance presents to both employers and employees.

In addition to providing employees with specific information about plan features and funding, the law requires employers that provide group-sponsored benefits to submit detailed reports to the Department of Labor (DOL). Employers face strict deadlines for disclosing plan information to all eligible employees; and all employers that administer ERISA plans must follow strict fiduciary codes of conduct.

ERISA compliance is not new; many of the provisions have been around since 1974. However, the DOL’s Employee Benefits Security Administration (EBSA), which is charged with enforcing ERISA compliance, ramped up its efforts in 2012 by adding more than 90 full-time positions. It is foreseeable that every business will be audited within the next five years. According to an EBSA budget justification report, the agency estimates that it will achieve $1.1 billion in monetary results (including participant benefit recoveries) in 2013 alone.

The penalties for noncompliance can be heavy. Under ERISA, the DOL may require the employer to pay employees $110 per day for not providing the necessary plan documentation. The DOL also may assess a civil penalty against an employer of up to $1,100 per day.

ERISA does not require an employer to provide group-sponsored benefits (health, dental, vision, wellness, etc.), and it does not require plans to provide a minimum level of benefits. However, when an employer provides benefits that are subject to ERISA, the benefit plan is regulated and the benefits must be detailed through a written plan document.

If you are an employer that offers group-sponsored benefits, you are subject to ERISA – even if you have as few as two employees.

Some employers mistakenly believe that their health insurance company covers them for ERISA compliance. Unfortunately, the Certificate of Coverage typically provided by an employer’s health insurance company may contain some of the necessary information for ERISA disclosure, but it does not house all other sponsored benefits. Also, health insurance companies are required to adhere to only state laws and regulations, and ERISA is a federal law.

In addition to a written plan document, there are detailed reporting expectations for the federal government and disclosure to plan participants. Certain disclosures that clearly list the benefits being offered, the rules for receiving those benefits, the plan’s limitations and other guidelines for obtaining benefits must be provided to plan participants.

To learn more about ERISA compliance and mitigating your risk, call Dave Serena of the Wisconsin Medical Society at 414.238.6105 or 800.474.7500.

Back to April 25, 2013 Medigram