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BASIC | www.basiconline.com ERISA Compliance Requirements for All Employers BASIC | www.basiconline.com Coast to Coast Administration BASIC services over 18,000 employers nationwide. BASIC | www.basiconline.com HR Solutions should be simple. Keep it BASIC.Technology Driven HR Solutions to Take Your Company Further Suite of HR Benefits, Payroll and Leave Management, and Compliance solutions offered individually or bundled.

BASIC | www.basiconline.com Presented byCatherine RischeJD, LLM, Compliance OfficerCattheComplianceOfficerhereBASICBenefitsShehasextensiveexperienceworkingwithemployersERISAplansponsorsemployeebenefitsattorneyHerumbrellaexperienceincludes,limitedto,strategicbenefitdesign,technicallegalcomplianceERISA,COBRA,HIPAA,ACA,LMRA,FMLA,MHPAEASheholdsfromtheJohnMarshallSchoolemployeebenefits,fromtheDePaulUniversityCollegeLaw,fromA

quinasCollege BASIC | www.basiconline.com Overview of Topics DiscussedERISA Fundamentals for Health and Welfare PlansWhat plans are subject to ERISA?What are the implications of ERISA? Other Laws Governing Health and Welfare PlansInternal Revenue CodeTaxability of BenefitsCafeteria PlansOther Applicable Federal LawsVarious State Laws BASIC | www.basiconline.com What is ERISA?The Employee Retirement Income Security Act of

1974 is a federal law that sets minimum standards for most employersponsored plans (pension and welfare) BASIC | www.basiconline.com ERISA Policy GoalsPrimary focus at enactment of ERISA was to protect retirement savings from mismanagement and abuseWelfare benefit protection was a secondary purpose; however, the declaration of the policy to protect the interests of participants and beneficiaries appliesRequires transparen

cy and accountabilityEnsures participants have access to information about plans BASIC | www.basiconline.com Application of ERISAERISA applies to most employee benefit plans sponsored by employersERISA does not apply to the following plans: Government plansChurch plansPlans that exist solely to comply with workers’ compensation, unemployment compensation, or state disability insurance plans BASIC | www.basiconline.co

m Benefits Subject to ERISAMedical, Prescription Drug (Rx), Dental and Vision Benefits (selffunded or fully insured)Health Reimbursement Arrangements (HRA) (except some small employer QSEHRAs)Employee Assistance Plans (EAP) providing counseling benefits (referralonly EAPs are not subject to ERISA)Shortterm disability (STD) benefits if provided through a trust or are fully insuredLongterm disability (LTD) benefits BASIC |

www.basiconline.com Benefits Subject to ERISA, ContinuedGroup term life insuranceAccidental death and dismemberment (AD&D)Flexible Spending Arrangements (FSA) The medical spending portion of the account isDependent care and pretax premium collection of a 125 cafeteria plan are not Most severance benefits (if they do not classify as an ongoing administrative scheme) site medical clinics providing treatment more than for m

inor injuries and illnessesTelemedicine BASIC | www.basiconline.com Benefits Not Subject to ERISAPlans sponsored by governments or churches … but be careful with church plansVoluntary Plans Whether or not a plan is voluntary is subject to facts and circumstancesMany shortterm disability plansHealth Savings Accounts (HSA) generally not subject to ERISA BASIC | www.basiconline.com Voluntary Plan Operation for ERISA Exe

mptionNO EMPLOYER CONTRIBUTIONS ALLOWEDEmployer cannot “endorse” the programEmployee participation must be completely voluntaryInvolvement must be limited to permit the insurer to publicize the program, collect premiums by aftertax payroll deduction, and remit premiums to the insurer BASIC | www.basiconline.com Voluntary Plan Operation for ERISA ExemptionFacts that may lead to a determination that the plan is su

bject to ERISA:The employer’s name is used in communications with employeesThe benefit associated with other employer sponsored plans The employer selects and recommends the benefit to employeesBenefit materials include a statement that the program is subject to ERISAThe employer assists employees with claims or disputesThe employer allows pretax deductions for benefits under a cafeteria plan BASIC | www.basiconline.

com ERISA Compliance RequirementsA written plan document (no prescribed form)Disclosure RequirementsSummary Plan Document (SPD)Summary of Material Modifications (SMM)104(b) RequestsSummary annual report (SAR) in some circumstancesReporting RequirementsForm 5500 must be filed unless exception applies BASIC | www.basiconline.com ERISA Compliance Requirements, ContinuedFiduciary Obligations Must follow the terms of the plan

document in a consistent and uniform mannerMust exercise prudence in selecting vendorsEmployer may not mislead plan participants (lie or omit)Bonding requirements (if funded through trust or special account)Prohibited transactions with party in interest (disqualified persons)Prohibition on selfdealingClaims and AppealsERISA requirements responsibility of plan administrator, not TPA or insurer BASIC | www.basiconline.com P

lan Document Requirements Must be writtenMay include one benefit or multiple benefitsMust contain the following information:Named fiduciariesSource of fundingAmendment & termination proceduresProcedure for allocation of responsibilities for administration of the planSpecification of basis on which payments are made to/from the planHIPAA privacy (if subject to HIPAA); COBRA rights Optional/advisable provisionsDiscretionary

language for review purposes, statute of limitations, and venue identificationIdentification of benefits for Form 5500 purposesSubrogation and reimbursement language Coordination of benefits BASIC | www.basiconline.com Summary Plan Description (SPD)Primary function of SPD is COMMUNICATIONExplains benefits to participants in an easily understood manner; it is meant to summarize the terms of the written plan document Very

different feel depending on whether it is meant to be a “wrapped document” of fully insured benefits or includes selffunded benefits BASIC | www.basiconline.com SPD Requirements Who is entitled to a copy of the SPD? Enrolled employees, COBRA beneficiaries, custodial parent under QMSCO, spouses, and enrolled dependents of deceased employees that remain covered under the plan BASIC | www.basiconline.com SPD Requir

ements Required Content What must be included in SPD?Plan Name & NumberName, address, telephone number, and EIN of employer sponsoring plan/plan administratorNames of participating employersType of plan (benefits provided)Type of administration (selffunded or insured)Plan fiscal year and plan ID number for Form 5500 purposesAgent for the service of process (cannot be employer) and a statement that process may be made upon

plan administrator or trustee BASIC | www.basiconline.com SPD Required Content, ContinuedStatement of collective bargaining rights, if applicableEligibility and participation rulesQMSCO procedures court order providing coverage by noncustodial parent (can be in SPD or separate policy, but SPD should refer to policy and make available free of chargeSubrogation/overpayments/reimbursements/coordination of benefitsCostshari

ng provisions, including deductiblesDescription of plan benefitsDescription of annual, lifetime, or other limitsRules regarding provider networksListing of providers must be offered without charge BASIC | www.basiconline.com SPD Required Content, ContinuedAny preauthorization requirements/utilization reviewSummary of plan exclusionsDescription of the plan’s claim and appeals proceduresAuthority of plan sponsor to ame

nd or terminate the planCOBRA & HIPAA rules (if required by GHP)Source of contributions (employer, employees, trust fund, etc.)Identification of insurerERISA rightsNMHPA rights (mother and newborn inpatient stays in hospital after delivery) BASIC | www.basiconline.com SPD Requirements When & HowWhen: How: Method must be reasonably calculated to ensure actual receiptCan be distributed via firstclass mail or handdelivery (b

est), second or thirdclass mail, or electronically (if requirements are met)Plan sponsor should be prepared to document and produce method(s) of distribution & delivery Within 90 days for new participants; within 120 days of plan establishment/new planOnce every five years if material changes; and once every 10 years otherwise (even if no material changes)Failure to provide SPD to participants could result in a penalty of

$110 per day per participant or beneficiary for each violation BASIC | www.basiconline.com Other SPD NotesOptional ProvisionsUSERRA provisionsHIPAA privacy notice Medicare Part D notice of creditable/noncreditable coverageCan do combo plan/SPDEliminates inconsistencyThorough explanationsNot really a summary because it is lengthyEvidence of plan amendments procedures neededBooklet from insurer probably not enoughWrap docu

ment should fill all the gaps intended to supplement the booklet/certificate with all required information BASIC | www.basiconline.com Summary of Material Modifications (SMM)SMM is a summary of plan change (amends the SPD)Generally,mustprovidedeachparticipantwithindaysafterthetheplanyearwhichmaterialchangemadethechangematerialreduction,thenwithindaysafterthedatetheplanamendmentadoptedMaterialreductioneliminationreductionb

enefit,increasedeductiblescopays,additionpreauthorizationAnd,thechangeaffectstheinformationsummarybenefitsandcoverage(SBC),thendayspriortheeffectivedatethechange BASIC | www.basiconline.com Summary Annual Report (SAR)SAR is a summary of information that appears in Form 5500If exempted from Form 5500, no SAR requiredDOL has model formMust be provided to participants annuallyMust be provided within 9 months after the end of

the plan year, or 2 months after the extended due date of Form 5500, if laterUnclear what 5500 changes will do to SAR requirementNo penalty for failure to send but if a participant requests one, it must be sent within 30 days of the request (104(b)), or penalty of $110 per day could apply BASIC | www.basiconline.com 2020 Disclosure ExtensionsEBSA Disaster Relief Notice 2020Deadlines for furnishing other required notices

or disclosures to plan participants, beneficiaries, and other persons so that plan fiduciaries and plan sponsors are extended No ERISA violation for a failure to timely furnish a notice, disclosure, or document that must be furnished between March 1, 2020, and 60 days after the announced end of the COVID19 National Emergency (one year maximum), if the plan and responsible fiduciary act in good faith and furnish the notice

, disclosure, or document as soon as administratively practicable under the circumstancesGood faith acts include use of electronic alternative means of communicating with plan participants and beneficiaries who the plan fiduciary reasonably believes have effective access to electronic means of communication, including email, text messages, and continuous access websites BASIC | www.basiconline.com Form 5500What: Annual re

port filed with the federal government for ERISA plansWho:Allplans(insuredselfinsuredthroughemployer’sgeneralassets)withemployeesand/orretireesenrolledthebeginningtheplanyearSelfinsuredfundedthroughtrustminimumemployeerequirementCafeteriaplanthatincludesmedicalFSAswithemployeesenrolledmedicalFSAportionthebeginningtheplanyear BASIC | www.basiconline.com Form 5500, ContinuedHow:befiledforeachplancanoneforallplansplando

cumentindicatesoneintendedinsuredbenefitsneedScheduleforeachinsurerSelfinsuredbenefitsneedScheduleforeachserviceproviderpaidmorethen000however,theserviceproviderforanunfundedbenefitwhereemployeecontributionsarepaidpretaxunder125plan,noScheduleneeded BASIC | www.basiconline.com Form 5500, ContinuedWhen:Last day of the 7th month after the plan year endsPlan may file for automatic extension of 2½ monthsPenalties:$2,233 per

day for late filings, per plan, per plan year no capReducedfiledunderDelinquentFilerVoluntaryComplianceProgram(DFVCP)forplanswithparticipants,maximumplanyearwithmaximumplan BASIC | www.basiconline.com Form 5500 Filing Deadlines 2020 • IRS Notice 2020 On April 9, 2020, the IRS announced filing deadline extensions for certain Form 5500s to provide relief from the impact of COVIDThis relief only applies to plans with fi

ling deadlines on or after April 1, 2020 and before July 15, 2020 There is no need to file extension request to be included in this reliefThe most common Form 5500 filing deadline for calendar year benefit plans is July 31This have not been granted extensions and should plan to file their Form 5500 or extension requests by their filing due date BASIC | www.basiconline.com Wrapping ERISA BenefitsInsurance documents or thir

dparty contracts (like an EAP provider) may not contain all ERISA required provisionsWrapping the underlying policies or documents will fill the ERISA gaps BASIC | www.basiconline.com MegaWraps of ERISA BenefitsThe ERISA requirements apply to each plan sponsored by an employerIf an employer sponsors more than one welfare plan, it may be useful to wrap the benefits togetherCan limit the number of Form 5500s plan sponsors a

re required to fileCan incorporate all the various insurance policies into one master document employers can distribute all documents as one packetFills in the gaps in the insurance and other plan documents BASIC | www.basiconline.com Claims ProceduresPlan sponsor must adopt claims procedures that comply with DOL regulationsGroup health plans and disability plans have expanded requirementsImportant to follow the claims pr

ocedures for litigation purposes for any selfinsured benefitsClients should familiarize themselves with claims and appeals language in insurer booklets/certificates or ask insurer to verify in writing that their claims and appeals procedures are compliant BASIC | www.basiconline.com 2020 Deadline Extension for Claims Final Regulations On April 29, 2020, EBSA, DOL and the IRS issued a joint final regulation extending certa

in time frames under ERISA and the IRC for group health plans, disability and other welfare plans, and pension plansHHS “concurs” with the rule and will adopt a similar nonenforcement policy to nonfederal governmental group health plans As of March 1, 2020 and through the end of the Outbreak Period, there are no deadlines tofile claims or appeals including the 4month external review process). Importantly, this i

ncludes health FSA and HRA expense reimbursement requests, which are generally a few months after the end of the plan year.For example, if a calendar year FSA plan had a runout period that ended on April 30, 2020, the plan could not require that participants forfeit any remaining balance during the Outbreak Period. Notably, these extensions do not apply to dependent care FSAs. It is important to note that the deadlines un

der ERISA for plans toadjudicate claims and appealshave not been suspended.Therefore, plans will need to adhere to their current procedures for reviewing claims and appeals in a timely manner. BASIC | www.basiconline.com 2020 Deadline Extensions Beyond ERISASuspends the 14day deadline to provide a COBRA election notice until the end of the Outbreak PeriodHIPAA SpecialEnrollmentPeriodThe 30day (in some instances, 60day) de

adline to request enrollment in a group health plan following a special enrollment event (i.e., birth, adoption or placement for adoption of a child, marriage, loss of other health coverage, or eligibility for a state premium assistance subsidy)COBRA Qualifying Event and Disability Extension NoticesThe 60day deadline by which qualified beneficiaries must notify the plan of certain qualifying events (e.g., divorce or legal

separation, a dependent child ceasing to be a dependent under the terms of the plan) or disability determinationCOBRA ElectionThe 60day deadline to elect COBRA continuation coverageCOBRA Premium PaymentsThe 45day (for the initial payment) and 30day (for subsequent payments) deadlines to timely pay COBRA premiums BASIC | www.basiconline.com Internal Revenue CodeIRC contains the rules about the tax treatment of employee be

nefits General rule under the IRC is that all income is taxable unless it is specifically permitted as a deductionTwo sides to taxfavored status: (1) the employer deduction; and (2) the employee deductionBesides the inherent positives to offering employees benefits (recruitment, retention, market competitiveness), employers receive tax deduction for most benefits provided to employees BASIC | www.basiconline.com Internal

Revenue Code, ContinuedMainIRCsectionsthatapplywelfarebenefitsareGrouptermlifeinsuranceCompensationforinjuriessicknessfundedemployeeaftertaxcontributionsAmountsreceivedunderaccidentandhealthplansfromemployeremployeepretaxcontributions(FSAs,HRAs,medicalplan)CafeteriaplansTransportationbenefitsQualifiedmedicalexpensesHSAs BASIC | www.basiconline.com Nondiscrimination Rules Health Plans 105(h)Prohibit group health plans from

discrimination in favor of HCEs in terms of eligibility and benefitsFullyinsured group health plans are not subject to any IRC nondiscrimination requirementsACA added rules for nongrandfathered fullyinsured plans, but are under the Trump freezeSelffunded group health plans are subject to the rules BASIC | www.basiconline.com Nondiscrimination Rules Health Plans 105(h)selffundedgrouphealthplanhasdifferenteligibilityrules,

contributionratesbenefitstructuresforvariousgroupsemployees,theremayconcernCan“disaggregate”theplansintosubplansfortestingpurposesthateachsubplancoversnondiscriminatorygroup,thetestingmaystillsatisfiedHourlysalarymayworkhighlycompensatedsalariedemployeesSeniormanagementallotheremployees,probablywon’tworkplanfails,thevaluediscriminatorycoverageconsidered“imputedincome”theHCEs BASIC | www.basiconlin

e.com Nondiscrimination Rules NonHealth PlansDisability plans are not subject to nondiscrimination rulesGroup term life is subject to nondiscrimination rules for coverage under $50,000 125 plans are subject to nondiscrimination rules for the plan overall + component partsHealth FSA also subject to rules Dependent FSA also subject to rules BASIC | www.basiconline.com Cafeteria Planscafeteriaplansimplyprogramthatemployersca

nusehelpemployeespayforcertainexpenses,likehealthinsurancecare,withpretaxdollarsemployeesmustpayforbenefitswithpretaxcontributions,thentheemployermustcafeteriaplanSolelygovernedtheInternalRevenueCodewhichalwaysfocusedthetaxabilitybenefitsChoicebetweenpretaxbenefitsunreducedsalaryNotsubjectERISA’srequirementsunlesstherehealthFSAcomponentTherearecompletelyseparaterequirementsfromERISA,canincluderequirementswrap,megawra

pdocuments,standalonedocument BASIC | www.basiconline.com MidYear Election Changes • IRS Notice 202029 & IRS Notice 202033 On May 12, 2020, the IRS released notices that impact cafeteria plan administration BASIC | www.basiconline.com MidYear Election Changes, 2020Health CoverageEmployers may allow employees to make prospective midyear elections with regard to employer sponsored health coverage. These permissive el

ection changes include: (1) electing previously declined coverage, (2) electing different employer sponsored health coverage, and (3) revoking elections in certain circumstances.Health FSA and Dependent Care FSA Employers may allow employees to make prospective midyear elections to revoke a previous election, make a new election, or change an election (increase or decrease amount). BASIC | www.basiconline.com Applicable

Laws ACA AppliesgrouphealthplansNewnoticerequirementsGrandfatheredplanstatusSummaryBenefitscoverage(SBC)NoticeexchangeeligibilitytimenoticeforhiresreportinghealthbenefitcostsPlaypenaltiesDependentchildrencoveredthemonthwhichtheyturnPCORIFeesFeeforplanyearsendingafterSeptember2018beforeOctoberinflationJulyFeeswereextendedDecemberforadditionalyears BASIC | www.basiconline.com Applicable Laws, ContinuedHealthInsurancePortabi

lityAccountabilityAct(HIPAA)FocusportabilityprivacyOfficechargedwithoversightConsolidatedOmnibusBudgetReconciliationAct(COBRA)FocusrightcontinuebenefitsaftercertaineventsOfficechargedwithoversight BASIC | www.basiconline.com Applicable Laws, ContinuedFamilyMedicalLeaveAct(FMLA)FocusprovidingjobrightsbenefitsforemployeeswhotakeapprovedleaveOfficechargedwithoversightWageHourDivision(WHD)DOLUniformedServicesEmploymentReemplo

ymentRightsAct(USERRA)FocusprovidingjobrightsbenefitsforemployeesactivemilitarydutyOfficechargedwithoversighttheVeterans’EmploymentTrainingService(VETS)theDOL BASIC | www.basiconline.com Applicable Laws, ContinuedAge Discrimination in Employment Act (ADEA) Focus is on ensuring nondiscriminatory practices for older employees (at least 40)Office charged with oversight is the Equal Employment Opportunity Commission (EEO

C)Americans with Disability Act (ADA)Focus is on ensuring nondiscriminatory practices for disabled employeesOffice charged with oversight is the Civil Rights Division of the DOJ BASIC | www.basiconline.com Applicable Laws, ContinuedPregnancyDiscriminationAct(PDA)FocusensuringnondiscriminatorypracticesforpregnantindividualsOfficechargedwithoversighttheEEOCGeneticInformationNondiscriminationAct(GINA)Focusensuringnondiscrimi

natorypracticesbasedgeneticinformationOfficechargedwithoversighttheEqualEmploymentOpportunityCommission(EEOC)MentalHealthParityandAddictionEquityAct(MHPAEA)FocusensuringnondiscriminatorypracticesformentalhealthtreatmentOfficechargedwithoversighttheCentersforMedicareMedicaid(CMS) BASIC | www.basiconline.com Applicable Laws, ContinuedWomen’sHealthandCancerRightsAct(WHCRA)Focusensuringreconstructivebenefitsforwomenafter

breastcancerOfficechargedwithoversighttheNewborns’andMothers’HealthProtectionAct(NMHPA)FocusprovidingminimumstaysformothersnewbornsafterchildbirthOfficechargedwithoversightMedicareFocusprovidingmedicalcoverageforseniorsdisabledAmericansOfficechargedwithoversightCMSVariousStateLaws BASIC | www.basiconline.com Various State LawsMany states have miniCOBRA laws that impose COBRArequirements on small employersMany st

ates have FMLAtype laws that impose requirements on small employersState insurance laws may apply to insurers that provide policiesfault insurance laws can affect coordination of benefits provisions QUESTIONS BASIC | www.basiconline.com HR Solutions should be simple. Keep it BASIC.Request a ProposalFor you or your client at this link: https://www.basiconline.com/requestproposal/ BASIC Sales THANK YOUView our current webin

ar schedule at www.basiconline.com/webinar . DisclaimerThispresentationdesignedprovideaccurateinformationregardthesubjectmattercoveredprovidedwiththeunderstandingthatBASICBenefitsengagedrenderinglegalotherprofessionalserviceslegaladviceotherexpertassistancerequired,theservicescompetentattorneyotherprofessionalpersonshouldsoughtDuethenumerousfactualissueswhicharisehumanresourceemploymentquestion,eachspecificmattershouldd