Welfare Benefit Plan ERISA News
July 2014

 
Health Benefits Security Project
The Employee Benefits Security Agency (EBSA) established a comprehensive national health enforcement project, the Health Benefits Security Project (HBSP), in 2012. This project combines established health plan enforcement initiatives with the new protections afforded by the ACA. It involves a broad range of health care investigations, including compliance with WHCRA, MNHPA, MHPAEA,GINA, and Michelle's Law, as well as market reforms, patient protections, extension of dependent coverage, internal claims and appeals, external reviews, and grandfathered health plans. The HBSP also focuses on plan sponsors' and claims administrators' failures to provide promised health benefits through a lack of disclosure or through the misapplication of the plan's terms. See an actual DOL Audit Letter.
IRS Updates Its FAQs on
Individual Shared Responsibility Requirements
According to the IRS, under the ACA, the federal government, state governments, insurers, employers, and individuals share the responsibility for health insurance coverage beginning in 2014. The IRS has just updated its FAQs on the health insurance requirements imposed on individuals. The revised FAQs are here. Also see Publication 5156 - Facts about the Individual Shared Responsibility Provision.
ASO Fee Agreements Under Scrutiny
Qualified plan fiduciaries have long been mindful of the importance of the duty to monitor and disclose fees charged to 401(k) plans and participant accounts. However, fees are not just an issue for retirement plans. Fee disclosure and transparency rules also apply to welfare plans, as one insurance carrier recently became painfully aware.
In 1993, Blue Cross Blue Shield of Michigan (BCBSM) began a program called "Retention Reallocation" under which it marked up hospital claims and passed the additional cost on to its ASO clients. The mark-up was in addition to--not in lieu of--its administrative fee.
In a recent case, the court awarded $6M to one employer, finding that BCBSM had not properly disclosed its fees, which it referred to as "administrative compensation." It also found that BCBSM had made misleading statements, such as saying that its administrative fee was all-inclusive. BCBSM breached its fiduciary duty by engaging in self-dealing and prohibited transactions under ERISA. This recent case serves as a reminder that insurance carriers, agents, TPAs and other welfare plan vendors need to be transparent and provide adequate disclosure of fees.
PCORI Fee Is Due July 31
The ACA imposes a fee on health insurers and plan sponsors of self-insured group health plans to help fund the Patient Centered Outcomes Research Institute (PCORI).
For calendar year plans, and plan years that started on November 1 or December 1, the PCORI fee payable by July 31, 2014 is $2 per covered life. This is the second year that the fee has been payable for those plans. For all other plan years starting on the first of a month, the fee payable by July 31, 2014 is $1 per covered life. This is the first year that the fee has been payable for those plans.
See the fact sheet from Buck Consultants for more information.
ERISA Trivia
My company provides a non-contributory $200,000 group term life policy for me, $10,000 for my spouse, and $5,000 for each of my three children. I know that the cost of $50,000 of my coverage will be tax free, but how much of the dependent life insurance will be tax free? Submit your guess here. See next month's newsletter for the correct answer.
movie link

- Now Offering -
Wrap-TightSM
Online Document Preparation System


  • Plan Document
  • SPD
  • Resolutions
  • QMCSO
  • Instructional Memo
  • Electronic Distribution


Partner with
ERISAPros
&
We'll Make You
Look Like a Pro!

Try our Complimentary ERISA Compliance Evaluation

Read
The ERISA Wonk Blog

Call Us:
678-443-4003 or
1-866-488-6582 toll free

Email Us
info@erisapros.com

Visit Us:
www.ERISAPros.com

© 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.

 

Signup for Newsletter
Newsletters