Transcript 2012 NAHU Annual Convention

2012 NAHU Annual Convention
SPD Compliance & Requirements:
Mystery Solved
Robert A. Marcino, Esq. from
PLAN DOC Builder®
© 2011, National Association of Health Underwriters • www.nahu.org
© 2011, National Association of Health Underwriters • www.nahu.org
TODAY’s AGENDA
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The 3 Majors: ERISA, HIPAA & PPACA
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SPDs and ERISA compliance
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The Challenges
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Compliance: Who is Responsible?
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Plan Document & SPD Provisions (and SBC’s)
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DOL Audits and Non-Compliance Consequences
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What’s Coming and How Will SPDs Be Affected?
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Summary
© 2011, National Association of Health Underwriters • www.nahu.org
The 3 Majors: What dictates Compliance?
• ERISA (1974)
– Title I governs structure of employee benefit plans, including Reporting &
Disclosure requirements
– DOL and IRS regulations, bulletins and other issuances provide guidance
• Health: Medical | EAP | Dental | Health Care FSA | Vision | HRA
• Disability & Life/AD&D
• HIPAA (1996)
– Portability, non discrimination, privacy & security mandates
– Pre-existing Limits/Creditable Coverage
• PPACA (2010)
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Series of requirements / Grandfathered provisions
No lifetime limits, No rescissions
Pre-existing Conditions eliminated for all 1/1/2014
Dependent children covered until age 26
SBC and IRO for Denied Claims
© 2011, National Association of Health Underwriters • www.nahu.org
SPDs and ERISA Compliance
• ERISA (1974) Title I
– Requirements for all employee benefit plans. MUST:
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Administer the Plan according to the written Plan document
Provide detailed disclosure – SPDs & SMMs
Perform certain reporting (i.e. Form 5500) when over 100 ee’s
Comply with Fiduciary code of conduct
• Advantages of ERISA Compliance
– Better outcomes in DOL audits & Law Suit avoidance
– Federal law limits damages, no jury trials
– Higher standard of review: “arbitrary and capricious” for overturning
decisions of a Plan Administrator
– May Preclude employer from being sued in state court (or several state
courts) and “de novo” review
© 2011, National Association of Health Underwriters • www.nahu.org
SPDs and ERISA Compliance
• The Plan Document
– Legal written document required by ERISA
• The SPD (Summary Plan Description)
– Required “summary” of the PD to be understood by the
average participant
– What the Plan provides and how it operates
– Employee Rights and Obligations
– Must be provided to participants
• SMM (Summary of Material Modification)
– Summary to update the SPD describing amendments made
– Must be provided to participants
• Current Means of Production: Varies
© 2011, National Association of Health Underwriters • www.nahu.org
The Challenges
• Self Funded Plans
– Maintaining Compliance
• Amendments and SMMs required for changes:
– Regulatory Updates and/or Benefit design
– No “Insurance” certificates describing benefits
– Responsibility of Plan Sponsor (Employer)
• Fully Insured Plans
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Most Employers unaware of compliance requirements
Carriers are not responsible for more than the COC
COC’s are not SPDs and lack required SPD provisions
Again, Responsibility of Plan Sponsor (Employer)
© 2011, National Association of Health Underwriters • www.nahu.org
Compliance
• Who Must Comply?
– Common misunderstanding of exceptions to
compliance that leads many employers to be
non-compliant
– Easier to look at who is exempt and from what
© 2011, National Association of Health Underwriters • www.nahu.org
Compliance
• ERISA (1974) Title I
– Which plans are exempt from what?
• Government and church plans exempt from Title I of ERISA
– No requirement to comply with Reporting or Recordkeeping
– But must have a Plan Document/SPD. Some of these plans
voluntarily choose to follow SPD content rules.
• Private Sector Employer Sponsored Plans
– Plans Exempt from Disclosure and Reporting
» Employer-Provided Day Care Centers (except onsite)
» Key employee plans (have to be insured)
» Certain fringe benefits (e.g., tuition reimbursement)
*All defined in CFR2520 (regs of ERISA)
© 2011, National Association of Health Underwriters • www.nahu.org
Compliance
• ERISA (1974) Title I
• Private Sector Employer Sponsored Plans (continued)
– Exempt from 5500 Reporting only
» Small Plans - fully insured welfare plans with fewer than 100
participants at the beginning of the plan year. Few other
exceptions do exist (i.e., foreign based locations)
- Other Exceptions
» If funded through a VEBA (i.e., trust), additional reporting
(Form 990), financial audit and document issues exist
» If MEWA (Multiple Employer Welfare Association), unrelated
employers, then additional reporting (Form M-1) and
document issues exist.
» Virtually all ERISA plans & fiduciaries have recordkeeping
requirements (especially grandfathered plans)
© 2011, National Association of Health Underwriters • www.nahu.org
Compliance
• Bottom Line
• ALL Health and Welfare plans, regardless of size,
must have a Plan Document / SPD
• Those under 100 included in the requirement
except that they likely do not need to file a form
5500
© 2011, National Association of Health Underwriters • www.nahu.org
Plan Document & SPD Provisions
• Key Plan Document Provisions
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Named Fiduciary/Plan Administrator
Procedure for Allocation of Responsibilities
Overview of Benefits Provided (i.e. We offer benefits…)
Employee Eligibility
Source and method of funding
How Payments Are Made
How Benefits may be Lost or Reduced
Amendment Procedure
Distribution of Assets on Plan Termination (if through Trust)
Adoption Page (can be done by board action as well)
© 2011, National Association of Health Underwriters • www.nahu.org
Plan Documents & SPD Provisions
• Key SPD Provisions
1.
2.
3.
4.
5.
Plan-Identifying Information
Description of Plan Eligibility Provisions
Actual Description of Plan Benefits
Description of Circumstances Causing Loss or Denial of Plan Benefits
Description of Plan Amendment and Termination Provisions, Plan Subrogation or
Reimbursement Provisions
6. Information Regarding Plan Contributions and Funding
7. Information Regarding Claims Procedures
a. Disclosures Required in the SPD
b. Disclosures Regarding Discretionary Authority
8. Statement of ERISA Rights
a. Model Language Should Be Tailored to Plan
9. Offer of Assistance in Non-English Language
10. Plan's Policy Regarding Recovery of Overpaid Benefits
11. Plan's Allocation Policy for Insurer Refunds / Rebates
© 2011, National Association of Health Underwriters • www.nahu.org
Plan Document & SPD Provisions
• Carrier Documents for Fully Insured
– Certificates of Coverage, Benefit Booklets
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ERISA content not required
Governed by State Insurance Laws, not ERISA
Some are more inclusive than others
Typically lack:
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Required eligibility provisions
Contribution method
ERISA Appeal Rights
Updated compliance language
Claim Procedures and Levels of appeals
© 2011, National Association of Health Underwriters • www.nahu.org
Plan Document & SPD Provisions
• SBCs (Summary of Benefits and Coverage)
– Provides high level comparison of each medical option
– Format must follow specified layout and verbiage
– Must be distributed during open enrollment or to new
employees
– Allows easy comparison of plans to determine costs for 2
medical conditions – birth of child and diabetes
– Insurers generally create for insured benefits
– For self-funded, employer is responsible
– New notice (in April of this year) indicates little changes
for 2013
© 2011, National Association of Health Underwriters • www.nahu.org
Where do you go from here?
• What is the Required Format?
ERISA does not dictate a required format of Plan Documents or SPDs
– Considerations are always Client Specific
• Identify benefit types and existing plan documents, if any.
– Wrap-Around Plan creates a single or combined plan for all insured
benefits, incorporating the COC as part of the SPD. Can also create a
wrap-around plan for insured benefits only and a separate bundled plan
for self-funded benefits with separate or combined SPDs
– Individual Plan with separate PD and separate SPD for each benefit
– Umbrella Plan combines all welfare benefits into a single plan with
separate bundled or individual SPDs
– Combined Plan/SPD document creates a combined Plan and SPD
for a specific benefit or for all welfare benefits
• Advantages of combining plans
– Creates a single Plan Year for all benefits and for Form 5500 filing
purposes
» Ties benefit Plan Year to employer tax year
» One 5500
© 2011, National Association of Health Underwriters • www.nahu.org
How PLAN DOC Builder® Can Help
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ERISA-Compliant and User-Friendly
Combined Plan/SPD for single or multiple benefits
Fully Insured and Self Funded
Wrap Doc for fully insured benefits
Includes Regulatory updates
Ability to create SBCs & Benefit Amendments
Included Technical & Consultative Support
Unlimited Users & Discounts for NAHU Members
© 2011, National Association of Health Underwriters • www.nahu.org
© 2011, National Association of Health Underwriters • www.nahu.org
DOL Audits & non-Compliance
Consequences
U.S. Department of Labor
Employee Benefits Security Administration
33 Whitehall Street, Suite 1200
New York, NY 10004
Phone: (212) 607-8600
Telefax: (212) 607-8681
December 11, 2012
Plan Administrator
COMPANY
Employee Benefit Plan
Street Address
RE:
Company Name. Employee Benefit Plan
Case No.: 00-000000(00)
Dear Sir or Madam
ATTACHMENT A
COPIES OF ITEMS IDENTIFIED BELOW
SHOULD BE SUBMITTED AS INDICATED IN THE COVER LETTER
1.
Plan document.
2.
Summary Plan Description (SPD), including any changes in Plan benefits and entitlement to
benefits.
3.
All contracts with insurance companies for the provision of health benefits.
© 2011, National Association of Health Underwriters • www.nahu.org
DOL Audits & Non-Compliance
Consequences
– Law suits under ERISA enforcing ERISA's document
requirement, including requiring one where none exists
– $110 / day if failure to provide SPD within 30 days
– DOL Audits & Fines (especially re: Grandfathered Status)
– Plan Disqualification leads to loss of Tax Deduction
– Participants and beneficiaries who sue to enforce informal,
unwritten plans can base their legal claims on past practice
– Less favorable “de novo” standard when No SPD
© 2011, National Association of Health Underwriters • www.nahu.org
What is Coming?
– NO coverage denials due to pre-existing conditions and
NO higher charges based on gender or health condition.
– No annual dollar limit on Essential Health Benefits and
must be part of all health insurance plans.
– Group health plans cannot impose a waiting period for
coverage greater than 90 days.
– DOL has delayed the release of model language for the
Notice of Exchanges.
© 2011, National Association of Health Underwriters • www.nahu.org
Conclusion
• PPACA is here to stay.
• DOL has significantly increased staff and budget to
conduct compliance audits.
• Plans should make every attempt to comply with ERISA
• MUST: Have Plan Document / SPD
• MUST: Disclose, Distribute and Keep Records
• MUST: File annual report (form 5500) if over 100 employees
© 2011, National Association of Health Underwriters • www.nahu.org