An Overview of Health and Welfare Plan Requirements and Plan Governance Issues Suncoast HR Legislative Conference September 12, 2018 Presented By: Kirsten Vignec Shareholder

Introduction The more things change the more they stay the same... With all of the regulatory changes and issued guidance it is still important to remember the basics of health and welfare plan administration

Introduction Today our discussion is going to focus on: An overview of the requirements that apply to health and welfare plans Plan governance and fiduciary issues specific to health and welfare plans

Health and Welfare Benefit Requirements General Requirements With all of the focus in recent years on health care reform it is easy to overlook the basic but equally as important health and welfare plan rules Health care reform did not replace the plan basics

Many “plan documents” are inadequate Health and Welfare Plan Requirements General Requirements/Plan Documentation Many “plan documents” are inadequate Failure to include required provisions Insurance policies are not always complete ERISA wrap plans Failure to properly adopt/update plan

Health and Welfare Plan Requirements General Requirements/Reporting Form 5500 for health and welfare plans Generally required for each plan with more than 100 participants on the first day of the plan year Determination of number of plans/ERISA wrap plans Voluntary plans Audit requirements Form M-1 for MEWAs Form 990 for VEBAs

Summary Plan Description Summary of Material Modifications Health and Welfare Plan Requirements General Requirements/Participant Disclosures Summary Plan Description Summary of Material Modifications Summary of Benefits and Coverage Summary Annual Reports Medicare Part D

Documents that can be delivered electronically Health and Welfare Plan Requirements General Requirements/Electronic Delivery Documents that can be delivered electronically SBCs, SPDs, SMMs and SARs Documents requested by the participant COBRA notifications Privacy notices Qualified medical child support order notices

Active employees with work related computer access Health and Welfare Plan Requirements General Requirements/Electronic Delivery DOL Safe Harbor Active employees with work related computer access  Individuals with no work related computer access

Health and Welfare Plan Requirements General Requirements/ACA PPACA is active and well Applicable large employers Controlled Groups Mergers and acquisitions Penalties

Health and Welfare Plan Requirements General Requirements/ACA Reporting Insured plans Self-insured plans Pay or play Penalty assessments 2015 Affordability

Health and Welfare Plan Requirements General Requirements/ACA Ongoing Considerations Additional medicare tax for higher earners Preventative services MLRs PCORI fees W-2 reporting Section 1557 nondiscrimination requirements

Health and Welfare Plan Requirements General Requirements/ACA ACA Notices Health insurance exchange notices Statement in COBRA notices Summary of benefits and coverage Notice of plan changes

Health and Welfare Plan Requirements General Requirements/ACA Issues to watch: Reimbursements/payment for individual insurance QSEHRAs HRAs – Integration requirements FSAs – Excepted benefits

Health and Welfare Plan Requirements General Requirements/ACA Delayed implementation Nondiscrimination requirements for fully insurance plans – Nonenforcement Cadillac tax

Health and Welfare Plan Requirements General Requirements/Section 125 Plans Plan document is required Participant elections are generally irrevocable/Permitted change events Coverage under the Exchange cannot be paid through Section 125 plan Individual insurance may not be eligible to be purchased through a Section 125 plan

Health and Welfare Plan Requirements General Requirements HIPAA/HITECH Protected Health Information Privacy notices Business Accountants/Business associate agreements Policies and procedures Breach determination and notification Employee training

Health and Welfare Plan Requirements General Requirements/COBRA COBRA Notices Initial notice Election notice Notice of unavailability Notice of termination Failure to provide required notice Late premium payments

Health and Welfare Plan Requirements: Plan Governance/Fiduciary A person (or entity) is a fiduciary with respect to a plan if he or she... exercises any discretionary authority or discretionary control with respect to the management of the plan, renders investment advice for a fee or other compensation, direct or indirect, with respect to any money or other property of such plan, or has any authority or responsibility to do so, has any discretionary authority or discretionary responsibility in the administration of such plan, or is a named fiduciary under the plan (e.g., plan administrator, administrative and investment committees, trustee)

Health and Welfare Plan Requirements: Plan Governance/Fiduciary Who is a fiduciary? Plan sponsor Plan administrator Trustees Claims Fiduciary Functional fiduciaries

Health and Welfare Plan Requirements: Plan Governance/Fiduciary Status Fiduciary status flows from plan functions performed, regardless of person’s formal title or designation Anyone can be a fiduciary when performing ERISA fiduciary functions; even individual employees can become fiduciaries based on the functions they perform for the company’s ERISA plans Functional test – individual may be a fiduciary without intending to be

Health and Welfare Plan Requirements: Plan Governance/Fiduciary Standards Fiduciaries are required to carry out their plan duties solely in the interest of plan participants and beneficiaries with the exclusive purpose of providing benefits to them Prudent person standard Follow the plan documents (unless inconsistent with ERISA) Pay only reasonable plan expenses

Health and Welfare Plan Requirements: Plan Governance/Fiduciary Requirements A plan must have at least one fiduciary (a person or entity) The type and structure of the plan will affect who has fiduciary responsibilities Self insured plans versus fully insured plans Settlor decisions/Two hats

Health and Welfare Plan Requirements: Plan Governance General Fiduciary Duties Plan administration Claims administration Discretionary authority to interpret the plan Hiring and monitoring of third parties

Health and Welfare Plan Requirements: Plan Governance Delegation of Fiduciary Duties A fiduciary cannot fully eliminate its fiduciary liability by delegating its fiduciary responsibilities to a third party

Health and Welfare Plan Requirements: Plan Governance Fiduciaries may be held personally liable for their actions or inactions For this reason it is extremely important for every fiduciary to fully understand his or her fiduciary responsibilities

Health and Welfare Plan Requirements: Plan Governance A fiduciary is required to follow the terms of the plan unless it violates ERISA A plan is required to provide for a process to amend or terminate the plan

Health and Welfare Plan Requirements: Plan Governance/Options Plan committees Administration Claims Separate committees Plan charters/documentation

Health and Welfare Plan Requirements: Plan Governance Protections for employer and employees acting as fiduciaries Fiduciary Insurance Indemnification Fidelity bond Document decisions Fiduciary training

Health and Welfare Plan Requirements: Plan Governance/Authority The plan sponsor has the governing authority under ERISA to establish, maintain, amend, and terminate the plan The plan administrator has discretionary authority to make decisions on behalf of the plan and the responsibility to ensure the plan is administered in accordance with its terms and applicable law

Health and Welfare Plan Requirements: Plan Governance/Amendment Plan Amendment Concerns Unilateral HR decisions Failure to follow plan’s amendment process Effect of not following the amendment process

Health and Welfare Plan Requirements: Plan Governance/Delegation A plan sponsor may delegate its responsibilities as well as the plan administrator authority and responsibilities Proper delegation Board resolutions

Health and Welfare Plan Requirements: Plan Governance/Claims and Appeals Disclosures ERISA sets forth certain requirements for claims and appeals Requirements differ based on the type of plan and the claim Exhaustion of administrative remedies Process can effect future litigation Procedures must be disclosed to participants SPD or separate disclosure

Health and Welfare Plan Requirements: Plan Governance General requirements Initial claim Benefit claim on appeal Disability claims Health claims

Health and Welfare Plan Requirements: Plan Governance Plan sponsor can establish reasonable procedures Insured plans Delegation of claims administration Common limitations

Health and Welfare Plan Requirements: Plan Governance Failure to follow procedures/making exceptions Setting a precedent Discrimination concerns Stop loss coverage issues Fiduciary liability Disqualification issues Adverse tax consequences Penalties

Health and Welfare Plan Requirements: Plan Governance Review plan documents and SPDs Evaluate steps to adopt and amend plans Ensure the proper delegations are in place Review service provider agreements Fiduciary training

This presentation is made available by Hill Ward Henderson for educational purposes only to provide you general information and a general understanding of the law, it is not intended to provide nor does it constitute legal advice. The presentation should not be used as a substitute for specific legal advice from a licensed professional attorney.  Further, the subject matter contained in this presentation is complex and subject to change. Any tax statements in this material are not intended to suggest the avoidance of U.S. federal, state or local tax penalties.