ERISA

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for employee benefit plans maintained by private-sector employers. ERISA includes requirements for both retirement plans (for example, 401(k) plans) and welfare benefit plans (for example, group health plans). ERISA has been amended many times over the years, expanding the protections available to welfare benefit plan participants and beneficiaries.

The Department of Labor (DOL), through its Employee Benefits Security Administration (EBSA), enforces most of ERISA’s provisions. Violating ERISA can have serious and costly consequences for employers that sponsor welfare benefit plans, either through DOL enforcement actions and penalty assessments or through participant lawsuits. At AJM Associates we help employers tackle the cumbersome requirements imposed upon sponsored group health plans including the numerous notices and disclosures.

Some of the main notice and disclosure requirements for group health plans are:

The Summary Plan Description (SPD)
Summary of Material Modification (SMM)
COBRA notices
HIPAA notices, including the HIPAA Privacy Notice
ACA notices, including the Summary of Benefits and Coverage (SBC)
Medicare Part D notices of creditable coverage
Summary Annual Report (SAR)

Compliance Timeline

Plan Document – 30 days from written request
SPD – 90 days from enrollment
SMM – Within 210 days after plan year ends
Form 5500 – Before end of the seventh month after plan year ends
SAR – Within nine months after the end of the plan year

Potential Penalties

Form 5500. The maximum penalty for failing to file Form 5500 (which must be filed by most ERISA plans) is $2,586 per day starting from the date of the administrator’s failure or refusal to file the Form 5500

Group Health Plans.

The maximum penalty for failing to provide the Summary of Benefits and Coverage (SBC) required under health care reform is $1,362 (up from $1,264)
Violations of the Genetic Information Nondiscrimination Act (GINA), such as establishing eligibility rules based on genetic information or requesting genetic information for underwriting purposes, may result in penalties of $127 per participant per day, up from $110.
Maximum penalties relating to disclosures regarding the availability of Medicaid or CHIP assistance, including failure to disclose to a state, on request, relevant information about the employer’s plan may result in penalties of $141 per participant per day. If a failure is not corrected before the plan receives a notice of violation, then the minimum penalty is $3,439. Minimum penalty is increased to $20.641 if violations are “more than de minimis.”
Failure to provide benefit plan information (including SPD) to DOL. $110 per day. Failure to furnish plan-related information requested by the DOL carries a penalty of up to $184 per day, not to exceed $1,846 per request.