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And The Rest Of Us Who Represent Nonsubscribers
ERISA For Dummies And The Rest Of Us Who Represent Nonsubscribers James McCoy The McCoy Law Firm 12400 Coit Rd., Ste. 560 Dallas, Texas 75251 (214) © The McCoy Law Firm 2012
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Nonsubscription in One Minute
Unique to Texas Employers reject worker’s compensation No obligation to pay benefits to employees 40% of all employers are nonsubscribers Not just for marginal companies any more Responsible nonsubscribers provide for injured employees © The McCoy Law Firm 2012
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Nonsubscription Pros and Cons
Advantages Cost Savings Employer manages medical costs and can encourage a quicker return to work Employer has greater flexibility and control Disadvantages Subject to negligence liability Time spent on claims © The McCoy Law Firm 2012
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ERISA – What is it? Employee Retirement Security Act of 1974
Enacted to protect the interests of participants by requiring disclosure and establishing standards of conduct, responsibility and obligations for fiduciaries and granting access to courts © The McCoy Law Firm 2012
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ERISA – What it really is:
ERISA is detailed and complex with many exceptions and special rules; sometimes the rules are vague, even contradictory Lawyers, accountants, consultants and insurance specialists can make a career out of it ERISA for the nonsubscriber is very manageable © The McCoy Law Firm 2012
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The Hassle Factor Why do I need an ERISA Plan? Saves money
Gets workers back to work; keeps employer competitive Take care of injured employees Minimizes lawsuit potential © The McCoy Law Firm 2012
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The Plan Reduces Lawsuit Risk
Nonsubscriber carriers require ERISA Plans The Plan pays benefits while an employee is off work Paying wages and benefits takes the fear and anxiety out of being hurt and keeps employee away from lawyers © The McCoy Law Firm 2012
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Inviting a Lawsuit Keep employees guessing
Don’t pay medical bills or lost wages; deny benefits Fire the employee The ERISA Plan helps avoid these Nonsubscriber pitfalls. © The McCoy Law Firm 2012
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What is an ERISA Plan? It’s a contract It’s an assurance
Between the company and the employee It spells out what the employee will get, when he will get it and how long he will get it It’s an assurance If employee is injured on the job, he will be provided for It gives peace of mind to the employee and to his family © The McCoy Law Firm 2012
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ERISA and the Insurance Product
The Plan is the contract between the employee and company The insurance product funds the benefits promised in the Plan This allows the company discretion and freedom in handling its claims Allows the company to receive a credit or offset against any award should a lawsuit be brought © The McCoy Law Firm 2012
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The Plan Binder Benefit Schedule Official Plan Document
Summary Plan Description (SPD) Arbitration Agreement Meeting Sign-In Sheet New Hire Receipt Payroll Stuffer © The McCoy Law Firm 2012
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Benefit Schedule “Dec” Page for the Plan
One page summary of the benefits available and their duration © The McCoy Law Firm 2012
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Official Plan Document
Main Plan document; contains specific information for covered claims and exclusions Think of it as a contract between company and employee © The McCoy Law Firm 2012
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Summary Plan Description
SPD Distributed to all employees Summarizes Plan in understandable language Should be distributed with Benefits Schedule © The McCoy Law Firm 2012
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Agreement to Arbitrate
Reduces likelihood of lawsuits Disputes will not be heard by jury Allows company to participate in selection of arbitrator Critical cost savings measure Covers nonsubscriber negligence claims as well other employer liability claims © The McCoy Law Firm 2012
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Meeting Sign-in Sheet Proof that employees received SPD and arbitration agreement Will be used to compel any lawsuit to arbitration Copy should be returned to TPA to show proof that materials were distributed to employees © The McCoy Law Firm 2012
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New Hire Receipt For use with new hires and employees not present at roll-out meeting Install this document in company’s new hire packet Maintain record for proof that employee received SPD and Arbitration Agreement © The McCoy Law Firm 2012
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Payroll Stuffer Used to remind employees of Arbitration Agreement
Should be distributed in paychecks quarterly Keep record of when distributed © The McCoy Law Firm 2012
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The Rollout Can be as simple or as complex as you would like
Purpose is to ensure employees get the materials and employer gets employees’ signatures acknowledging receipt of same Signatures, Signatures, Signatures © The McCoy Law Firm 2012
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The Roll of the Agent Talk to insured about importance of getting SPD and Arbitration Agreement into employees’ hands Stress getting signatures from all existing and future hires Participate in rollout Handle getting copies of sign-in sheets back to TPA Explain the basics of the Plan © The McCoy Law Firm 2012
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Common Questions Does everybody really need to get a copy of the SPD?
Can’t we just pass out the Benefits Schedule? Do we have to pass out the Benefits Schedule? Multiple Locations? Who gets the sign-in sheet? © The McCoy Law Firm 2012
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Common Questions Why are the ERISA limits lower than the policy limits? Don’t want to make it an goal Need to save insurance for litigated claims Allows extra insurance to settle large loss Limits are adequate for 99.5% of claims © The McCoy Law Firm 2012
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Claims Procedures Utilize TPA’s expertise
TPA will assist in setting up a claims administrator and review committee Claims administrator makes initial determination Review committee handles appeals © The McCoy Law Firm 2012
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ERISA Lawsuits Very rare
Recovery limited to benefits and possibly attorney’s fees Exhaustion of administrative remedies (i.e., appeal under Plan’s terms) required Net result – lawyers try to roll wrongful denial claims into negligence lawsuit Emphasizes importance of distributing arbitration agreement and getting employee signatures.
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Regulatory Requirements
DWC (State) Forms DWC-5 Annual requirement DWC Notice 5 DWC-7 DOL Form 5500 Annual Report 100 or more employees at beginning of plan year © The McCoy Law Firm 2012
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ERISA. Simple. It’s a contract It has to be distributed Get signatures
If you have a claim, avoid re-inventing the wheel -- rely on TPA’s expertise © The McCoy Law Firm 2012
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