URGENT ERISA COMPLIANCE BULLETIN
Inflation is not only fueling price increases; it’s also requiring employers to pay more in penalties for not complying with benefits laws under the Employee Retirement and Income Security Act of 1974 (ERISA).
The U.S. Department of Health & Human Services (HHS) recently announced increases in penalties for noncompliance with ERISA benefits laws involving:
Privacy
Security
Notification rules
Eligible/ineligible participants and beneficiaries
EMPLOYERS AREN’T REQUIRED BY LAW TO PROVIDE BENEFITS, BUT ONCE THEY DO, THEY MUST COMPLY WITH ERISA AND OTHER RESTRICTIONS.
ERISA is one of the federal laws that outlines rules for private-sector employers’ health or welfare benefits plans. The law sets minimum standards for plan sponsors and administrators. Lawmakers designed its provisions to:
Protect employees and ensure that those who qualify for benefits receive them.
Set specific standards of conduct for administrators and fiduciaries who manage benefits plans.
Establish rules for reporting accurate benefits information - including the verification of eligible plan participants - to the government and disclosing plan information to participants.
High profile ERISA compliance attorneys have unambiguously stated what all employers should know relative to maintaining accurate census records involving their covered employee population and dependents:
“Plan sponsors have a fiduciary duty to ensure plan benefits are only provided to eligible employees” – Jennifer Berman (Senior Vice President, Compliance and ERISA Counsel, Kelly Benefit Strategies)
“If you allow exceptions, even unintentionally through failure to monitor, you essentially amend eligibility for other participants, making it difficult or impossible to protect your plan later.” – Dennis Fiszer (Chief Compliance Officer at HUB International)
“An employer’s responsibility in this realm is simple and straightforward: If a plan covers
someone who does not meet that definition (under ERISA) of an eligible participant, that’s a breach of fiduciary duty.” – Benjamin J. Conley (Partner at Seyfarth & Shaw)
A DOL/ERISA investigation starts with the initial notice of investigation which includes a request for documents. The standard list of requested documents and records is extensive. There may also be a non-standard list of requests that include things that are specific to the plan at issue, e.g., information disclosed on the plan’s Form 5500 and a certified record of all eligible plan participants and their dependents. Reports garnered from a systematized dependent eligibility verification program - managed and supported by a qualified vendor - can be supplied to the DOL demonstrating that evidentiary documentation was obtained in certifying ALL dependents participating in company sponsor benefits coverage are legitimate.
| Note: The Department of Labor is planning to collect over $3 billion from employers through the levying of ERISA fines over the next three years. |
Utilizing Verifi1’s dependent eligibility verification program (DEV) to review your health
benefits plan to ensure that only enrolled dependents are eligible to receive – and legally
participate in – employer sponsored coverage will assist your enterprise in FULLY complying with ERISA laws and regulations related to operating a benefit plan as designed and thereby avoiding costly fines and penalties described herein.
Email us today at info@verifi1.com for more information on our services, or phone 248-562-6301
Verifi1 "TRUST...but verify"