Welfare Benefit Plan ERISA News & Views
August 2011

 
Enrollment Error Costs Employer $159,000

Harper Excavating mistakenly told a new employee, Jeffrey Hansen, that he would be eligible after a 90-day waiting period. Hansen enrolled, and Harper began withholding payroll deductions for the coverage. Later hospitalized, Hansen learned that he was never covered because the policy had a 60-day waiting period, and his application was late. The court ordered Harper Excavating to pay $57,000 in medical expenses and $102,000 in in attorney's fees. Lessons: carry Fiduciary Liability coverage, distribute accurate SPDs on a timely basis, and be careful with deadlines! Enrollment administration will take on heightened importance with PPACA's automatic enrollment, adequate notice, and opt-out provisions soon to be required of large employers. Hansen v. Harper Excavating, Inc.

Special Limited COBRA Obligation for Health FSAs
Employers may provide more limited COBRA coverage for health FSAs than for other group health plans. They 1) may terminate coverage at the end of the year in which the qualifying event occurs; and 2) are not required to offer coverage to employees whose maximum benefit available is less than the amount the plan would require as payment for the rest of the plan year. The amount required as payment includes both the employee's contribution and the employer's contribution, if any, plus the 2% administrative fee. For details: CFR § 54.4980B-2, Q&A-8 (b) - (f)
Complex, Detailed, Lengthy, and Complicated
US Supreme Court Chief Justice John Roberts has acknowledged the complexities confronting ERISA plan administrators: "People make mistakes, even administrators of ERISA plans. That should come as no surprise, given that the Employee Retirement Income Security Act of 1974 is 'an enormously complex and detailed statute,' and the plans that administrators must construe can be lengthy and complicated." Proskauer Newsletter, July 2011

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© 2017 ERISAPros, LLC, All rights reserved. Information on ERISAPros' website, its newsletter, “News & Views,” and its blog, “ERISA Wonk,” is published as a general informational source. Information and articles are general in nature and are not intended to constitute legal or tax advice in any particular matter. Blog posts and comments reflect the personal views of their respective authors - not those of ERISAPros. Transmission of this information does not create an attorney-client relationship. ERISAPros, LLC is not a law firm and is not giving legal or tax advice. It does not warrant and is not responsible for errors or omissions in the content on its website or in its newsletters. ERISA is a complicated and confusing law. Summary Plan Descriptions (SPDs), Wrap Plan Documents, and Form 5500s require review and updating by qualified ERISA compliance professionals.

 

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