ERISA service provider, Clarity Benefit Solutions, lists four common ERISA pitfalls to avoid.
The Employee Retirement Income Security Act of 1974 (ERISA) establishes minimum standards for a majority of benefits plans as well as voluntarily established pension programs. This law, designed to protect plan participants, requires plans to disclose important information in a timely manner. ERISA regulations can be complex to navigate. The following are common ERISA pitfalls companies should avoid.
Know the acronyms. A summary plan description (SPD) defines terms and conditions of a plan and includes benefits, obligations, and rights. SPDs need to be shared with plan participants and beneficiaries in a specific time frame. A summary of benefits and coverage (SBC) gives participants and beneficiaries customary information along with a standard wordlist so participants are easily able to compare plans and choose the best one to fit their needs. Companies who fail to provide both these documents will find themselves in violation of ERISA.
Assign administrator responsibility. Employers must designate an ERISA plan administrator that is clearly defined in the SPD. Since maintaining compliance can be a slippery slope, this person should not delegate important compliance responsibilities to another colleague. Again, failure to comply with ERISA regulations results in financial and legal liabilities.
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Recognize which plans are subject to ERISA. Nearly all ERISA group health plans (GHPs) must have an SPD—including medical benefits in conjunction with Health Reimbursement Accounts (HRAs) and Flexible Savings Accounts (FSAs), vision, dental, and a variety of wellness initiatives. Certain voluntary programs, cafeteria plans, and Health Savings Accounts (HSAs) are not subject to ERISA compliance.
Properly deliver COBRA notices. Employees who are no longer eligible for employer-funded health insurance have the option to continue their coverage under COBRA. Plan administrators must provide employees with the proper notifications, including: a General Notice, which is distributed to the eligible employee by the employer within 30 days after the qualifying event or by the health plan administrator 60 days or more after the event; an Election Notice that describes the employee’s rights and information regarding filing an election within 14 days; a Notice of Unavailability of Continuation Coverage to inform and employee that he or she is not eligible for COBRA coverage; and a Notice of Early Termination of Continuation Coverage that notifies an employee that health coverage is being terminated earlier than expected.
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About Clarity Benefit Solutions: Clarity Benefit Solutions provides technology that makes the health insurance plan selection process fast, easy, and straightforward. For over two decades, we have provided clients with industry-leading technology, compliance, and exceptional customer service. Our offering is designed to save time and lower the costs of managing benefits while also promoting employee self-service and automated ACA compliance.
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SOURCE Clarity Benefit Solutions