EUCLID MANAGERS®
has served the independent agent
since 1976, offering a portfolio
of group health, professional
liability, individual life, health,
annuity and long-term
care products.
We proudly represent many
fine carriers including
Group Products:
UnitedHealthcare of Illinois
Delta Dental of Illinois
MetLife
Concierge Services:
LifeLock
HealthiestYou
Individual Products:
American General Life Companies
AXA/Equitable
Banner Life
Delta Dental of Illinois
Genworth Financial Insurance Co.
Guarantee Trust Life
HumanaOne
John Hancock Life
Lincoln National Life
Prudential Financial
Transamerica
West Coast Life
…and many more!
ERISA Review
The implementation of the Patient Protection and Affordable Care Act
(PPACA) these past few years has been the subject of intense and ongoing
study, analysis and compliance effort by employers and brokers – and
rightly so. One of the unintended consequences of PPACA was that it also
cast a spotlight on ERISA, the Employer Retirement Income and Security Act
of 1974. ERISA compliance will be ever more important – and notable – as
PPACA is fully implemented in the next year or so.
This issue of Reflections provides an overview of ERISA as it relates to
employee benefit plans.
continued on page 2
A letter from Karen Knippen
It’s always nice to start out the New Year with resolutions. I have some
that I make each year – someday I’ll actually get through February while
keeping them all!
This issue of Reflections is a lot like a resolution. Employers that have been
a bit careless regarding ERISA compliance should use the start of 2014 as
an opportunity to come into compliance. With the ongoing implementation
of PPACA, government will be much more involved in health insurance and
employee benefits. As such, it’s wise to make sure that any required paper
work is in order.
Contact Information
234 Spring Lake Drive
Itasca, Illinois 60143
Phone: (630) 238-1900
Outside Chicagoland:
(800) 345-7868
Fax: (630) 773-8790
Visit us at:
www.euclidmanagers.com
Sincerely yours,
Karen Knippen, RHU, REBC, CLTC
EUCLID MANAGERS® has been serving the independent agent since 1976 with a portfolio of group health, professional
liability and individual life and health, annuity and long-term care products. We proudly represent UnitedHealthcare,
Delta Dental of Illinois, MetLife and HumanaOne. We encourage your feedback and suggestions. Please call your
EUCLID MANAGERS® Marketing Representative or Marcy Graefen at (630) 238-2915 for more information. Outside
Chicagoland, call (800) 345-7868. Website: www.euclidmanagers.com
ERISA Overview
ERISA governs most private sector employee benefit
plans – irrespective of the size of the employer. It sets
minimum uniform standards that benefit plans must
meet. Chief among these is the requirement that plans
are established and operated in a fair and financially
sound manner.
ERISA requires that plans develop and distribute a
number of notices and documents to plan participants.
These documents establish the scope of the plan as
well as the rights and responsibilities of both the plan
sponsor and the plan participants.
Basic Disclosure Requirements
for Welfare Plans
Summary Plan Descriptions (SPDs) are the primary
vehicle for informing participants about the plan and
how it operates. These documents must be provided
automatically within 90 days of a person becoming
covered under the plan. Updated SPDs must be
furnished every five (5) years if changes are made
to the SPD or if the plan has been amended. If no
changes have been made, SPDs are to be distributed
every 10 years.
Many small employers have mistakenly believed that
the insurance booklet or insurance certificate meets
the requirements for a SPD. This is not correct as some
of the information required in an SPD would not
generally be in the insurance booklet.
Some of the requirements that are required that are
typically not included in an insurance booklet include:
• Name of the plan
• Name of the employer sponsoring the plan
and the employer’s identification number
(EIN) assigned by the Internal Revenue
Service
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Reflections
• The name of the person designated as agent
for service of legal process and the address at
which process may be served
• The sources of contributions to the plan, for
example the employer and employees
• The plan year for the plan.
Employers with insured plans have often used “wrap
documents” to achieve SPD compliance. A “wrap
document” uses the insurance certificate or booklet
and wraps that information with the information
needed to comply with the SPD disclosure, in full.
It’s important to note that a plan participant may
submit a written request for an SPD. The plan sponsor
has 30 days to respond to this request. Employers may
have been reminded of this obligation if they used the
model exchange notice which included a sentence
about the availability of the plan document.
Form 5500
ERISA requires most plans to file an annual Form
5500 as a measure to assure that employee benefit
plans are operated and managed in accordance with
required standards. Most group health and pension
plans with 100 or more participants and that are
subject to ERISA must file this form.
There is a penalty for failure to file Form 5500. There
is a special “delinquent filer voluntary compliance
program” that reduces the penalty for employers who
have not been in compliance.
Welfare plans that have fewer than 100 participants
and which are insured or unfunded, or a combination
of these, do not have to file this form.
Other ERISA Reporting Requirements
There are a number of other reporting requirements
included in ERISA. The Summary of Material
Modification is used to describe changes to a plan
that are not included in the SPD. There is also a
Summary of Material Reduction in Covered Services
or Benefits. Generally, a reduction in benefits must be
announced in a summary of material reduction within
60 days of adoption of the reduction.
Other notices may include:
• Certificate of credible coverage
• Notice of special enrollment rights
• Wellness Program Disclosure
• Women’s Health and Cancer Rights Act
(WHCRA)
• Medical Child Support Order (MCSO).
COBRA Notices
COBRA is another provision that is entwined with
ERISA. Employers are subject to COBRA if they have
20 or more employees on more than 50 percent of its
typical business days in the previous calendar year.
Both full-time and part-time employees are counted
to determine whether a plan is subject to COBRA.
Part-time employees count as a fraction equal to the
number of hours worked.
COBRA rights must be included in the SPD. It’s important to note that a revised model COBRA notice that
reflects the availability of coverage through the health
insurance exchanges has been developed by the
Department of Labor.
• COBRA election notice
• Notice of unavailability of continuation
coverage
• Notice of early termination of coverage.
Electronic Disclosure of ERISA documents
Employers can distribute ERISA-required documents
and communications electronically. The “safe harbor”
rule for electronic distribution provides the following:
• Employers may distribute documents and
notices electronically without obtaining
employee consent for employees with work
related computer access when access to
electronic information is an integral part of
the employee’s duties
• Employers must provide paper copies or
documents and notices to employees without
work-related computer access unless the
employee affirmatively consents to electronic
distribution beforehand and provides an
electronic address
• The plan administrator must use appropriate
means to ensure actual receipt of the
information
• The documents must meet all requirements
• The administrator must notify each recipient
of the significance of the document when it
is being electronically furnished and the
recipient’s right to request a paper version.
There are a variety of notice requirements for COBRA.
These may include:
• An initial notice that is provided to covered
employees and spouses at the time coverage
under a plan commences that informs them
of their rights under COBRA
Reflections
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A service publication for brokers from
Euclid Managers®, proudly representing
UnitedHealthcare of Illinois, Delta Dental of Illinois,
MetLife and HumanaOne.
HealthiestYou and Lifelock available through Euclid Managers Concierge Services.
Visit us online www.euclidmanagers.com.
Legislative Review is published by Euclid Managers®, 234 Spring Lake Drive., Itasca, IL 60143. For more information, contact your Marketing Representative or Marcy Graefen
at (630) 238-2915 or fax your request to (630) 773-8790. Outside Chicagoland: (800) 345-7868, Fax (877) 444-2250. © Permission to quote with credit to source.
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