The Employee Retirement Income Security Act (ERISA) of 1974 requires all organizations that provide benefits to their employees to follow certain compliance guidelines. Most notably, this includes organizations that offer benefits such as retirement and health insurance.
As you strive for federal compliance with concern to your employee benefits, make sure to focus on these five key areas.
- EBP Information Disclosure to the DOL and Current Plan Participants
Benefit plan administrators must, upon request, provide detailed information about benefit plans to both plan participants and the U.S. Department of Labor (DOL).
According to ERISA, where health insurance is concerned, plan participants must be able to obtain complete information about their coverage, options, and other financial aspects of their plans. Where retirement plans are concerned, there may be additional disclosure requirements as well.
- Retirement Plan Requirements
Organizations that offer retirement plans must also disclose plan information, abide by reporting guidelines, and meet specific fiduciary responsibilities.
First, all retirement plan participants must be informed automatically and regularly about their plan information. Next, funding rules apply; plan sponsors are required by law to provide adequate funding to all retirement benefit plans.
ERISA has additional complex requirements when it comes to retirement benefits as well. For instance, ERISA will dictate:
- Where spouse retirement benefits start and stop if an employee dies
- The duration of time an employee must be employed before they can attain non-forfeitable benefit plan interest
- How retirement benefits are affected by a participant being away from work (time restraints)
- When and how employees can become participants in retirement plans
- Welfare Plan Information Disclosure for Current and New Employee Participants
Many organizations offer welfare plans to their employees. Welfare plans include all funds, programs, and plans that may offer benefits such as:
- Group medical plans
- Group vision benefits
- Group dental benefits
- FSA (flexible spending account) plans
- Medical reimbursement plans
- Group short-term disability benefits
- Group life insurance benefits
- Unemployment benefits
- Training and apprenticeship plans
- Scholarships
- Vacation benefits
Whenever requested by current plan-holders or as new employees undergo orientation, your organization must provide information on these welfare plans, per ERISA compliance guidelines. If your welfare plans are administered through third party insurance companies or other third parties, make sure that they are ERISA compliant as well.
- Reporting
ERISA requires that organizations report and file specific returns with both the Internal Revenue Service and the Department of Labor. Additionally, whenever a participant wants information on their plan, ERISA requires that the plan administrators provide that information in a timely manner. All of these reported documents should follow specific guidelines dictated by ERISA, though there are some documentation exceptions.
Plan information must be reported and filed whenever plans are modified as well. The information returns that must be reported and filed include:
- Employee enrollment forms
- Employee communication materials
- Summary plan descriptions
- Claim Payouts and Processing
Lastly, any welfare plan must have an established protocol for processing and paying out employee claims. All participants must be able to obtain information on this protocol as needed. Additionally, if a claim is denied, participants must be able to obtain information on why their claim was denied, and they must be able to follow an established process for appeals to appeal the denial ruling.
Annual Audit Requirements
Lastly, remember that if your organization has more than 100 benefit participants, you need to undergo an annual EBP (employee benefit plan) audit to ensure compliance. Right now, if you have 80-90 benefit participants, you should consider moving toward scheduling this audit as you will soon be required to do so by law. Not undergoing your annual EBP audit can result in heavy penalties and legal action. Make sure to hire a third-party CPA to carry out the audit.