It’s a busy time of the year for employers sponsoring welfare benefit plans dealing with Affordable Care Act matters such as open enrollment and IRS compliance reporting.
But while they may be out of sight, they shouldn’t be out of mind. The “they” are ERISA and a host of other laws to which welfare benefit plans are subject. Let’s start with ERISA. That same ERISA that govern retirement plans.
Most welfare benefit plans are subject to Title I of ERISA. In broad terms, this means that:
- There must be a plan document which sets forth the terms and conditions of the plan and complies with ERISA.
- Participants must be provided with a Summary Plan Description which summarizes the material provisions of the plan and is understandable to the average participant. Keep in mind that an insurance company's Master or Group contract, Certificate of Coverage, or Summary of Benefits is not a plan document or SPD.
- You know that if this is an ERISA plan, then there has to be a fiduciary involved. As with a retirement plan, 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.
- No different than a retirement plan, 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.
- 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. Because of the nature of health plans, the claims procedure is a much more utilized function than a retirement plans — and the subject of much litigation.
ERISA doesn’t mandate that employer provide welfare benefits — let’s put the Affordable Care Act out of this part of the discussion for now — but there are certain mandated benefits that must be offered. Here is a list of mandated benefits including the obligatory 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.
- 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 healthcare 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.
And as an ERISA plan, the Department of Labor's Employee Benefits Security Administration is the primary government agency responsible for enforcement.
Kalish is president of National Benefit Services, Inc., a Chicago-based consulting and administration firm. He has been publishing The Retirement Plan Blog (retirementplanblog) since 2004, which was recently named by Fiduciary News as one of the Top 10 Insider Blogs that should be read by plan sponsors and other fiduciaries. He is a member of the IRS Great Lakes Area TE/GE Council, a select group of benefit practitioners that maintains lines of communication with the IRS Great Lakes Region and the Department of Labor on Tax Exempt (TE) and Government Entity (GE) plans. Kalish is also an Advisory Board member of Employee Benefit Adviser.
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