PrimePay Continuing Education Series 2015 CE Approved for One (1) Hour Credit

ERISA 101 Benefits & Employers Subject to ERISA Key ERISA Requirements Case Study Guiding Your Clients Through it All Other Considerations ©PrimePay LLC 2 Course Agenda

ERISA 101 Key Definitions ©PrimePay LLC 3

ERISA 101 Employee Retirement Income Security Act Passed in 1974 Applies to both Pension Benefit and Welfare Benefit Plans Title 1 of ERISA governs Employee Benefits Plan Reporting and Disclosure Fiduciary Responsibility Administration and Enforcement COBRA HIPAA and other disclosures/notices ©PrimePay LLC 4

ERISA 101, cont’d For most employee benefit plans, ERISA requires: Detailed disclosure to covered individuals (employees and beneficiaries) Detailed reporting through form 5500 A strict fiduciary code of conduct on plan sponsors and administrators ERISA also creates a federal mechanism for enforcing rights and duties and preempts a large body of state law. ©PrimePay LLC 5

Three Basic Elements of an ERISA Welfare Benefit Plan ©PrimePay LLC 6 1.There must be a Plan, Fund or Program 2.That is established or maintained by an employer 3.For the purpose of providing one or more benefits to participants and beneficiaries

ERISA Plan Plan Sponsor ERISA Plan Administrator Participants & Beneficiaries Named Fiduciary Other ERISA Fiduciaries Insurance Companies Third-Party Administrators Trustee ©PrimePay LLC 7

Plan Document Requirement Applies to each plan an employer maintains No hard-and-fast rules for # of plans; generally, employers are free to determine the number of plans it has for ERISA compliance purposes Bundling ERISA & non-ERISA benefits together in the same plan – doesn’t make the non-ERISA benefits subject to ERISA ©PrimePay LLC 8

Anyone acting in the capacity of performing ERISA fiduciary functions is a fiduciary under ERISA o Exercise discretionary authority over management of Plan o Exercise discretionary authority over Plan assets o Render investment advice o Exercise discretionary authority over Plan administration ©PrimePay LLC 9 ERISA 101: Fiduciary Duty

General decisions made by a Fiduciary o Sponsoring one type of benefit Plan versus another o Amending a plan; changing Plan options o Requiring employee contributions o Terminating a Plan or a portion of a Plan o If TPA, does it have discretionary authority? ©PrimePay LLC 10 ERISA 101: Fiduciary Duty

Every Fiduciary must be bonded Protects the Plan from losses due to fraud or dishonesty Must be in place at the beginning of the Plan year – At least 10% of the funds handled during the prior reporting year Subject to minimum of $1,000 and maximum of $500,000 ©PrimePay LLC 11 ERISA 101: Bonding Requirement

BENEFITS & EMPLOYERS SUBJECT TO ERISA Which Plans and Employers must comply with ERISA? ©PrimePay LLC 12

Plans That Must Comply © PrimePay, LLC 13 VISION DENTAL MEDICAL HEALTH FSA HOSPITAL ACCIDENT PRESCRIPTION

Medical, surgical or hospital care Dental & Vision Plans Health FSA HRA – Health Reimbursement Arrangement Wellness & EAP Programs Sickness, accident, disability, death or unemployment (many exceptions; most are exempt) Severance Insurance Policy Voluntary benefits under IRC §125 ©PrimePay LLC 14 Plans that must comply with ERISA

Generally, all employers will be subject to ERISA Exemptions: o Government o Church o Programs maintained solely to comply with state law requirements for workers compensation, unemployment compensation, disability insurance or Plans maintained outside the US for non-resident aliens ©PrimePay LLC 15 Employers that must comply with ERISA

KEY ERISA REQUIREMENTS Required Documentation, Disclosure & Notices & Annual 5500 Filing Requirement ©PrimePay LLC 16

“Written” Plan document Document varies with type of benefit Insured benefits require a Wrap or Umbrella Document Contains: o Available benefits o How they will be funded o Standard of review for benefit decisions o Named Fiduciary o Plan amendment and termination procedures o Required provisions for COBRA, HIPAA, Special Enrollments, USERRA, etc. ©PrimePay LLC 17 Required ERISA Documentation

Probably the most important document? – The Summary Plan Description To the following: Participants covered under the Plan(s) COBRA QBs Parent or guardian of a child under a QMCSO Spouse of a deceased retiree who remains entitled to benefits Within 90 days after a participant first becomes covered under the Plan No small plan exception ©PrimePay LLC 18 Required ERISA Documentation

Summary Plan Description Summary of Material Modification Summary Annual Report – generally, ≥100 employees Summary of Benefit Coverage – GHPs subject to ACA Additional Notices for: o COBRA o Claim procedures o HIPAA o WHCRA & QMCSO o ACA ©PrimePay LLC 19 Notices and Disclosures

Form 5500 filed annually with the DOL Applies to each ERISA plan; with some exemptions: o Small Plans with fewer than 100 covered participants at the beginning of the Plan year o Applies to small unfunded, insured or combination of Plans o EE Count is different for WRAP Plans ©PrimePay LLC 20 Annual 5500 Filing Requirement

Deadline? o Last day of the seventh month after the end of the Plan year (i.e. 7/31 for calendar year Plans) o 2 ½ month extension can be granted through Form 5558 o Filed electronically through EFAST2 o Schedules A, C, I (small), H (large) and G (certain prohibited transactions ©PrimePay LLC 21 Annual 5500 Filing Requirement

B COMPLIANT, INC. Case Study Bringing it to life ©PrimePay LLC 22

B COMPLIANT, INC. Employees Group-Sponsored Coverage/Benefits Voluntary Benefits Pre-tax Deductions Health Reimbursement Arrangement (HRA) Flexible Spending Plan (FSA) Health Savings Accounts (HSA) Disability PTO benefits 401(k) ©PrimePay LLC 23

B Compliant, Inc. Let’s dig into the details…  120 W-2’d Employees  June 1, 2015 Plan Years for ALL Benefits  Fully-Insured Medical Plan Offered o HDHP Option (HSA qualified) o Employer pays 60% of premiums (EE to Family coverage) Other Available Options:  One (1) Dental Plan  HRA reimburses deductible expenses after federal minimum deductible has been satisfied  HSA available for HDHP option  Health FSA  Dependent Care Account  Disability Benefits  Voluntary Benefits  PTO Benefits  Cafeteria Plan ©PrimePay LLC 24

B Compliant, Inc.  Under the Cafeteria Plan, employees can elect: o Major Medical – B Compliant, Inc. pays 60% of the premium, employee responsible for 40%; 108 Enrolled (beginning of Plan Year) o Dental Insurance – B Compliant, Inc. pays 25% of the premium, employee responsible for 75%; 45 Enrolled o Health Savings Account – Voluntary; 100% EE contribution; 55 Enrolled o Health FSA – Voluntary; 100% EE contribution; 16 Enrolled o DCAP – Voluntary; 100% EE contribution; 12 Enrolled o Voluntary Insurance (Cancer, Critical Illness) – Voluntary; 100% EE paid; 30 Enrolled  Outside the Cafeteria Plan, employees can receive: o HRA – B Compliant, Inc. reimburses a portion of the deductible; 100% ER paid; 108 Enrolled o 100% ER paid GTL, AD&D and LTD o STD paid from general assets (not insured) o PTO paid from general assets o Educational Assistance Program paid from general assets ©PrimePay LLC 25 Going a bit further…

What Plans Are Subject to ERISA? ©PrimePay LLC 26 ERISA-Qualified Plans Medical Plans Dental Plan Health FSA HRA Group TL, AD&D, LTD Voluntary Benefits Non-ERISA Plans Cafeteria Plan Dependent Care Account HSA STD PTO Educational Assistance Program

Key ERISA Requirements for B Compliant, Inc.  Plan Documents o For each plan o Employee Handbook  Summary Plan Description (SPD) o For each Plan o IRC Section 125 & 105 Plans  Summary of Benefit Coverage o Group Health Plans o HRA  Summary of Material Modifications  Form 5500 Filing o Summary Annual Report (SAR)  Fiduciary Responsibilities  Fidelity Bond  Welfare plans – Trust accounts Other Key Requirements include:  Established claim procedures  COBRA & HIPAA compliance  W-2 reporting: HSA, DCA and potentially ER sponsored health coverage ©PrimePay LLC 27

B Compliant, Inc. ERISA Action Items B Compliant, Inc. Benefits Plan ERISA WRAP Document Fully-Insured Medical Plan Dental Plan Group Term Life, AD&D, LTD Health FSA, HRA, Voluntary Notices & Disclosures WHCRA QMCSO Mental Health Parity & Newborns’ Act Exchange Notice Summary of Material Modification Summary Annual Report Other Key Requirements Section 125 Cafeteria Plan Document Premium Only Plan Health FSA Dependent Care Account Health Savings Account Section 105 Plan Document Health Reimbursement Arrangement Summary of Benefit Coverage Notice Medical Plan: Carrier Health Reimbursement Arrangement: TPA 5500 Filing Requirement: Plan Sponsor Medical Plan Dental & Health FSA Health Reimbursement Arrangement Group Term Life, AD&D, LTD, Voluntary ©PrimePay LLC 28

GUIDING YOUR CLIENTS THROUGH IT ALL Failure of non-compliance reduced using an ERISA checklist with your clients ©PrimePay LLC 29

©PrimePay LLC 30 Perform Due Diligence NOW with your Employer- Sponsored Benefits

©PrimePay LLC 31 Initial DOL Review Document Request On-site Review Interviews with Plan Officials Identification of Violations Compliance and/or Settlement

Failure of Non-Compliance  ERISA’s general enforcement provisions allow suit to be brought where no document exists, criminal penalties per conviction could be $100K or imprisonment, fines can be upwards of $500K if against an entity  Failing to provide a copy of the SPD within 30 days of request - $110 per day/employee o B Compliant, Inc. Example ($110 x 5 EEs) x 365 Days = $200,750 o “Willful Failure” to produce documents could equal $100K (Max of $500K) or up to a 10 year sentence  ERISA Fiduciary Breach o Personally liable for any damages caused to the plan because of breach o Other penalties may apply (equal to 20% of the amount recovered by the DOL in a settlement) and/or criminal penalties  Form 5500 o DOL offers a Delinquent Filer Voluntary Compliance Program o $10/Plan/day to a maximum of $2,000 per year or $4,000 per submission (for multiple years) for each failure; no statute of limitations ©PrimePay LLC 32

Common ERISA Penalties to Avoid 29 U.S.C. § 1132(c)(1) states the following: Any administrator... who fails or refuses to comply with a request for any information which such administrator is required by this subchapter to furnish to a participant or beneficiary (unless such failure or refusal results from matters reasonably beyond the control of the administrator) by mailing the material requested to the last known address of the requesting participant or beneficiary within 30 days after such request may in the court's discretion be personally liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure or refusal, and the court may in its discretion order such other relief as it deems proper. $10,560 Penalty Failure to send a summary plan description on a timely basis after the plan participant made three written requests. Kasireddy v. Bank of America Employer failed to produce an SPD to participant thinking that a Certificate of Insurance was enough. Sunderlin v. First Reliance $17,475 Penalty Employer failed to provide a summary plan description to the participant in an appropriate manner required by the DOL. Leyda v. Allied Signal $62,250 Penalty ©PrimePay LLC 33 Case Summary:  Employer posts SPDs on the company’s intranet site.  Judgment: SPD distribution at time of hire is inadequate  Verdict: Plaintiff

What is your next move for your clients?  Do you offer any health and welfare benefits?  Do you have a Plan Document?  Do you have an SPD and have distributed them to your employees?  Have you ever amended your Plan(s)?  Have you ever filed Form 5500 and are you considered a large employer  Have you ever been subject to a DOL audit? ©PrimePay LLC 34 Communicate

THAT’S EASY. ©PrimePay LLC 35 Q UESTIONS ? W E ARE HERE TO HELP Questions? Victoria Hirsch-Boada Area Channel Manager Thank you for your attendance!! Attendance Sheets must be completely filled, signed