Spring Cleaning – Making Your ERISA Compliance Sparkle

Author: Ann Marie Olszewski, Senior Account Manager, Marsh & McLennan Agency | Michigan

As the weather warms up, you’re probably thinking about starting fresh with a thorough spring cleaning. But look past your closets and windows to your ERISA compliance requirements! For many employers, the plan year renewed on January 1, so this may be the optimal time to address issues that escape your notice during busier times of the year.

The following is not a complete list, but may help you to get started with your compliance check:

  • Have you distributed Summary Plan Descriptions (SPDs) to plan participants? You should have an ERISA-compliant SPD for each of the benefit plans subject to ERISA. In most cases, the insurer (or plan administrator, for a self-funded benefit) will provide you with a booklet for participants. However, it may not satisfy all of the content requirements under ERISA. You can use a “wrap” document to fill in those gaps, and to provide additional pertinent details to participants.

Perhaps you are already distributing the SPDs to employees enrolled in the component benefit plans. But do you also provide SPDs to individuals covered under COBRA, or to children covered because of a court order? They are also plan participants, so they need access to the same written information.

  • Are the correct COBRA notifications being sent when necessary? Most employers outsource COBRA to a third-party administrator (TPA), so check with that organization on their practices. For example, the initial notice of COBRA rights should be sent to new plan participants, such as new hires who enroll for medical, dental and/or vision coverage. However, this notice should also be provided if an employee first elects coverage mid-year or during annual enrollment, or if a spouse is newly enrolled. If your TPA was not contracted to send this particular notice, then it will be your responsibility as the employer to make sure it is mailed out.

There are other COBRA-related notices, such as the election notice when a plan participant experiences a COBRA-qualifying event. Make sure your TPA is informed of such events in a timely fashion, and mails the notice within 14 days of such notification.

  • Are plan participants receiving the various required notices? To make it easier, it’s best to include the following notices with your new hire and annual enrollment materials, such as in a benefits guide received by all eligible employees:
    • Employer CHIPRA Notice. The employer must provide this notice annually to all employees, regardless of their enrollment or eligibility status. You can use the model notice created by the Department of Labor (DOL). (Please note: This notice is usually updated biannually, at the end of January and July.)
    • Women’s Health and Cancer Rights Act (WHCRA) Notice. This must be provided to individuals enrolled in the group health plan. It should be distributed at enrollment, and then annually thereafter.
    • Notice to Employees of Marketplace Coverage Options. This should be provided to all new hires, regardless of whether they are eligible for benefits. You can use the model notice created by the DOL, but will have to add some information applicable to your medical plan.
    • Notice of Special Enrollment Rights. This must be given to employees at or before the time they become eligible to enroll in the group health plan.

  • Do plan participants receive a copy of the Summary of Benefits and Coverage (SBC) for the medical plans available to them? You should provide SBCs for each available medical plan to employees who are enrolling for coverage for the first time, such as new hires. Otherwise, employees must receive an SBC for at least the medical plan in which they are currently enrolled, at the time of annual enrollment. If an employee requests an SBC during the year, a copy should be provided within seven working days.

  • Are you filing an annual Form 5500 for your ERISA health and welfare plan? Plans with 100 or more participants are required to file a Form 5500 by the end of the seventh month following the last day of the plan year. If you have not been filing, take advantage of the DOL’s Delinquent Filer Voluntary Compliance Program to reduce your risk for heavy penalties. Don’t wait for a DOL audit to comply, when the fines will be much higher.

Again, this is not an all-inclusive list of an employer’s requirements under ERISA. However, it is a good starting point, which will help to keep your plan clean and refreshed!

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About Marsh & McLennan Agency – Marsh & McLennan Agency LLC, a subsidiary of Marsh, was established in 2008 to meet the needs of midsize businesses in the United States. MMA operates autonomously from Marsh to offer employee benefits, executive benefits, retirement, commercial property & casualty, and personal lines to clients across the United States.