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An Overview of Health and Welfare Plan Requirements
and Plan Governance Issues Suncoast HR Legislative Conference September 12, 2018 Presented By: Kirsten Vignec Shareholder
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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
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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
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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
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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
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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
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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
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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
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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
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Health and Welfare Plan Requirements General Requirements/ACA
PPACA is active and well Applicable large employers Controlled Groups Mergers and acquisitions Penalties
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Health and Welfare Plan Requirements General Requirements/ACA
Reporting Insured plans Self-insured plans Pay or play Penalty assessments 2015 Affordability
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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
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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
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Health and Welfare Plan Requirements General Requirements/ACA
Issues to watch: Reimbursements/payment for individual insurance QSEHRAs HRAs – Integration requirements FSAs – Excepted benefits
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Health and Welfare Plan Requirements General Requirements/ACA
Delayed implementation Nondiscrimination requirements for fully insurance plans – Nonenforcement Cadillac tax
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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
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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
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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
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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)
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Health and Welfare Plan Requirements: Plan Governance/Fiduciary
Who is a fiduciary? Plan sponsor Plan administrator Trustees Claims Fiduciary Functional fiduciaries
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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
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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
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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
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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
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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
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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
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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
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Health and Welfare Plan Requirements: Plan Governance/Options
Plan committees Administration Claims Separate committees Plan charters/documentation
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Health and Welfare Plan Requirements: Plan Governance
Protections for employer and employees acting as fiduciaries Fiduciary Insurance Indemnification Fidelity bond Document decisions Fiduciary training
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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
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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
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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
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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
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Health and Welfare Plan Requirements: Plan Governance
General requirements Initial claim Benefit claim on appeal Disability claims Health claims
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Health and Welfare Plan Requirements: Plan Governance
Plan sponsor can establish reasonable procedures Insured plans Delegation of claims administration Common limitations
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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
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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
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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.
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