By Raymond Burett, CLU, CPCU, FSA(ret)
Executive Vice President, Chief Compliance Officer

2020 was a busy year for Employee Retirement Income Security Act (“ERISA”) lawsuits—across industries— implicating employers’ retirement and healthcare plans. Not only were there significant decisions on key issues impacting these lawsuits, but COVID-19 also triggered new and different legal exposure for plan sponsors and administrators.

here were notable opinions from the United States Supreme Court (SCOTUS) addressing ERISA’s statute-oflimitations, Article III standing, and ERISA preemption. SCOTUS decided four ERISA cases in 2020, which is more than the Court has decided in any other year since the statute was enacted 45-years ago. We expect 2021 to continue the trend as there are several Appellate cases heading to the Supreme Court.

What do you need to do to be compliant?

The first step in Compliance is to review your ERISA documents to be sure they are in order. Having an ERISA Wrap document greatly reduces your risk and coverage of your Compliance obligations. But there is more.

The following shares the 12 key questions asked most often from you, our clients. If you have further questions or concerns about your organization’s potential compliance exposures, let’s talk. Call me, Ray Burett, at 646.790.7976 or reach out to your Brio Benefit Consulting Strategy Manager or your Strategy Adviser directly

12 FAQS TO MANAGE
CORPORATE COMPLIANCE RISK

W1. Does the Affordable Care Act (ACA) require the Plan Document and SPDs? No, it doesn’t. The Wrap document and the Summary Plan Description (SPD) requirements are a longstanding Department of Labor (DOL) requirement for employers subject to ERISA who offer benefits subject to ERISA.

2. Are Benefit booklets SPDs? No. The SPD requirement is often overlooked by employers who believe the benefit booklet provided by the insurance carrier is sufficient. Failure to provide an SPD to plan participants timely can result in financial penalties for the employer.

3. Is the SPD requirement only for large employers? No. All employers that sponsor benefits subject to ERISA, regardless of the number of employees or plan participants, must have a plan document and provide plan participants with an SPD.

4. What is an ERISA Wrap SPD? An SPD contains information about the group health plan that the employer is required to give to eligible employees and their beneficiaries. That information includes the plan name and number, sponsors and trustees, employee eligibility requirements, benefits provided with co-pay and deductible amounts, claim filing and review processes, employee rights and responsibilities, and more. A Wrap document “wraps around” all ERISA health and welfare benefits and includes required disclosures that are not typically found in other documents. These include details like the allocation of duties and responsibilities between the employer and the insurer, or the rights participants are entitled to under ERISA.

5. When is a Wrap SPD document required to be provided to participants? A Wrap SPD must be provided to a new participant within 90 days after they enroll in a plan. The Wrap SPD must be provided no later than 120 days after the plan is first subject to the SPD requirements for a new plan.

6. Is there a minimum number of employees before a Wrap SPD is required? Yes. One. There is no small employer exception for this requirement.

7. Which employers are subject to ERISA? ERISA typically applies to employers regardless of their size or business type (corporations, S-corporations, LLCs, sole proprietors, and nonprofits).

8. Which employers are exempt from ERISA overall? The only employers exempt from ERISA overall are governmental employers (i.e., village, town, city, county, public school district, state government, etc.) and church plans that are exempt from taxes under IRS § 501 and have not elected to be subject to ERISA.

9. What compliance is required for employers subject to ERISA? All employers subject to ERISA have compliance obligations including written plan documents, summary plan descriptions that contain specific content, and in some instances, record retention, annual Form 5500 filing, and Summary Annual Reports (SAR) (if applicable) to name a few.

10. Which health and welfare benefit plans are subject to ERISA? Examples of employer-sponsored plans subject to ERISA include group health, dental, vision, group term life, group short-term and long-term disability, some voluntary plans, employee assistance plans (EAP), health care flexible spending accounts, and health reimbursement arrangements (HRA) to name a few. Examples of plans/accounts not subject to ERISA include adoption assistance plans, dependent care flexible spending accounts, health savings accounts (HSA), and transportation plans.

11. Are there penalties for failure to meet the SPD requirement? Yes. Penalties can result from an employer who does not have an SPD. These include:

• $110 per day per participant for failure to provide an SPD or plan document within 30 days of request; and
• $159 per day (not to exceed $1,594 per request) for failure to provide the DOL any requested information relating to the employee benefit plan.

In addition, employers should be aware that this failure could trigger a plan audit by the DOL, which could result in additional penalties for noncompliance.

12. How does a Wrap document help satisfy the DOL plan document and SPD requirement? The Wrap document can bundle one or more lines of coverage together under one ERISA plan number and provide supplemental wording not found in insurance certificates or booklets. The Wrap document acts as a companion piece to the insurance certificates and/or booklets, and the two together satisfy ERISA’s plan document and SPD requirement.

There are, of course, other potential issues and exposures. If you have further questions, let’s talk. BRIO Benefit Consulting Strategy Managers and Advisors stand ready to assist your organization in meeting its compliance obligations and to serve as your guide through the many complex nuances that make compliance so challenging. So, let’s talk. Call me, Ray Burett at 646.790.7976 or reach out to your Brio Strategy Manager or Strategy Advisor to discuss how we can work together to help reduce your organization’s ERISA risk.