by admin | Apr 6, 2018 | Benefit Management, Employee Benefits, ERISA
The Department of Labor’s new claim rules for disability benefits took effect April 2, 2018. The changes were announced over a year ago, but the effective date was delayed to give insurers, employers, and plan administrators adequate time for implementation. Although we’ve reported on the key issues in this blog previously, now seems like a good time for a refresher on how the new rules affect employer plans.
Affected Plans
The new claim rules apply to disability benefits provided under plans covered by the Employee Retirement Income Security Act (ERISA); that is, plans sponsored by private-sector employers. Then the new rules apply if the ERISA plan must make a determination of disability in order for the claimant to obtain the benefit. Group short- and long-term disability plans are the most common examples, but pension, 401(k), and deferred compensation plans also may be affected.
Many plans do not make their own determination of disability, but instead condition the plan’s benefit on another party’s determination. For instance, employer plans that base the benefit on a disability determination made by the Social Security Administration (SSA) are not affected by the new rules.
New Rules
For ERISA plans affected by the new rules, the following additional requirements apply to disability claims filed on or after April 2, 2018:
- Disclosure Requirements: Benefit denial notices must explain why the plan denied a claim and the standards used in making the decision. For example, the notices must explain the basis for disagreeing with a disability determination made by the SSA if presented by the claimant in support of his or her claim.
- Claim Files and Internal Protocols: Benefit denial notices must include a statement that the claimant is entitled to request and receive the entire claim file and other relevant documents. (Previously this statement was required only in notices denying benefits on appeal, not on initial claim denials.) The notice also must include the internal rules, guidelines, protocols, standards or other similar criteria of the plan that were used in denying a claim or a statement that none were used. (Previously it was optional to include a statement that such rules and protocols were used in denying the claim and that the claimant could request a copy.)
- Right to Review and Respond to New Information Before Final Decision: Plans are prohibited from denying benefits on appeal based on new or additional evidence or rationales that were not included when the benefit was denied at the claims stage, unless the claimant is given notice and a fair opportunity to respond.
- Conflicts of Interest: Claims and appeals must be adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision. For example, a claims adjudicator or medical or vocational expert could not be hired, promoted, terminated or compensated based on the likelihood of the person denying benefit claims.
- Deemed Exhaustion of Claims and Appeal Processes: If plans do not adhere to all claims processing rules, the claimant is deemed to have exhausted the administrative remedies available under the plan (unless exceptions for minor errors or other conditions apply). In that case, the claimant may immediately pursue his or her claim in court. Plans also must treat a claim as re-filed on appeal upon the plan’s receipt of a court’s decision rejecting the claimant’s request for review.
- Coverage Rescissions: Rescissions of coverage, including retroactive terminations due to alleged misrepresentations or errors in applying for coverage, must be treated as adverse benefit determinations that trigger the plan’s appeals procedures.
- Notices Written in a Culturally and Linguistically Appropriate Manner: Benefit denial notices must be provided in a culturally and linguistically appropriate manner in certain situations. Specifically, if the claimant’s address is in a county where 10 percent or more of the population is literate only in the same non-English language, the notices must include a prominent statement in the relevant non-English language about the availability of language services. The plan would also be required to provide a verbal customer assistance process in the non-English language and provide written notices in the non-English language upon request.
Action Steps for Employers
Employers are reminded to work with their carriers, third-party administrators, and advisors to make sure their plans comply with the new requirements. Consider these steps:
- Identify all plans that are subject to ERISA. (Plans sponsored by governmental employers, such as cities and public school districts, and certain church plans, are exempt from ERISA.)
- Does the ERISA plan provide any benefit based on disability? If so, is the benefit conditioned on a determination of disability made by the plan or by another party, such as Social Security?
- For insured plans, such as group STD and LTD insurance plans, the carrier generally is responsible for compliance with ERISA’s claim rules. The employer, however, does have a duty to make reasonable efforts to ensure the carrier is complying.
- For self-funded plans, the employer is responsible for compliance. Although the employer may engage the services of a third-party claims administrator, the employer remains responsible for the plan’s compliance with all rules.
Originally Published By ThinkHR.com
by admin | Mar 21, 2018 | IRS, Retirement
In its March 15, 2018, decision, the U.S. Court of Appeals for the Fifth Circuit overturned the U.S. Department of Labor’s (DOL) Fiduciary Rule that expanded the definition of an investment advice fiduciary under the federal Employee Retirement Income Security Act (ERISA). Under the Fiduciary Rule, investment brokers were going to be required to put the interest of their clients before their own when advising about individual retirement accounts (IRA) and 401(k) plans. Read our blog post on the rule from April 11, 2016.
According to the Fifth Circuit’s decision, “[t]he Fiduciary Rule … bears hallmarks of ‘unreasonableness’ … and arbitrary and capricious exercises of administrative power.” In other words, the court found that the DOL exceeded its authority with the Fiduciary Rule. Additionally, through its ruling, the court agreed with the plaintiffs’ claims that “the Rule is inconsistent with the governing statutes, the DOL overreached to regulate services and providers beyond its authority, the DOL’s imposed legally unauthorized contract terms to enforce the new regulations, the Rule violates the First Amendment, and it is arbitrary and capricious in the treatment of variable and fixed indexed annuities.”
For the time being, the Fiduciary Rule has been overturned, but the issue may be pursued in the U.S. Supreme Court, which has the authority to overturn the Fifth Circuit’s decision.
Originally Published ThinkHR.com
by admin | Oct 11, 2017 | ACA, ERISA, Group Benefit Plans
Two tri-agency (Internal Revenue Service, Employee Benefits Security Administration, and Centers for Medicare and Medicaid Services) Interim Final Rules were released and became effective on October 6, 2017, and will be published on October 31, 2017, allowing a greater number of employers to opt out of providing contraception to employees at no cost through their employer-sponsored health plan. The expanded exemption encompasses all non-governmental plan sponsors that object based on sincerely held religious beliefs, and institutions of higher education in their arrangement of student health plans. The exemption also now encompasses employers who object to providing contraception coverage on the basis of sincerely held moral objections and institutions of higher education in their arrangement of student health plans. Furthermore, if an issuer of health coverage (an insurance company) had sincere religious beliefs or moral objections, it would be exempt from having to sell coverage that provides contraception. The exemptions apply to both non-profit and for-profit entities.
The currently-in-place accommodation is also maintained as an optional process for exempt employers, and will provide contraceptive availability for persons covered by the plans of entities that use it (a legitimate program purpose). These rules leave in place the government’s discretion to continue to require contraceptive and sterilization coverage where no such objection exists. These interim final rules also maintain the existence of an accommodation process, but consistent with expansion of the exemption, the process is optional for eligible organizations. Effectively this removes a prior requirement that an employer be a “closely held for-profit” employer to utilize the exemption.
Employers that object to providing contraception on the basis of sincerely held religious beliefs or moral objections, who were previously required to offer contraceptive coverage at no cost, and that wish to remove the benefit from their medical plan are still subject (as applicable) to ERISA, its plan document and SPD requirements, notice requirements, and disclosure requirements relating to a reduction in covered services or benefits. These employers would be obligated to update their plan documents, SBCs, and other reference materials accordingly, and provide notice as required.
Employers are also now permitted to offer group or individual health coverage, separate from the current group health plans, that omits contraception coverage for employees who object to coverage or payment for contraceptive services, if that employee has sincerely held religious beliefs relating to contraception. All other requirements regarding coverage offered to employees would remain in place. Practically speaking, employers should be cautious in issuing individual policies until further guidance is issued, due to other regulations and prohibitions that exist.
Background
As background, the Patient Protection and Affordable Care Act (ACA) requires that non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage provide coverage of certain specified preventive services without cost sharing.
In 2011, the Departments issued regulations requiring coverage of women’s preventive services provided for in the Health Resources & Services Administration (HRSA) guidelines. The HRSA guidelines include all FDA-approved contraceptives, sterilization procedures, and patient education and counseling for women with reproductive capacity, as prescribed by the health care provider (collectively, contraceptive services).
Under the 2011 regulations, group health plans of “religious employers” (specifically defined in the law) are exempt from the requirement to provide contraceptive coverage.
In 2013, the Departments published regulations that provide an accommodation for eligible organizations that object on religious grounds to providing coverage for contraceptive services, but are not eligible for the exemption for religious employers. Under the accommodation, an eligible organization is not required to contract, arrange, pay for, or provide a referral for contraceptive coverage. The accommodation generally ensures that women enrolled in the health plan established by the eligible organization, like women enrolled in health plans maintained by other employers, receive contraceptive coverage seamlessly–that is, through the same issuers or third party administrators that provide or administer the health coverage furnished by the eligible organization, and without financial, logistical, or administrative obstacles.
In 2014, the U.S. Supreme Court decided Burwell v. Hobby Lobby. The Court held that the contraceptive coverage requirement substantially burdened the religious exercise of closely held for-profit corporations that had religious objections to providing contraceptive coverage and that the accommodation was a less restrictive means of provision coverage to their employees.
Because of Burwell v. Hobby Lobby, the Departments extended the accommodation to closely held for-profit entities. Under the accommodation, an eligible organization that objects to providing contraceptive coverage for religious reasons may either:
- Self-certify its objection to its health insurance issuer (to the extent it has an insured plan) or third party administrator (to the extent it has a self-funded plan) using a form provided by the Department of Labor (EBSA Form 700); or
- Self-certify its objection and provide certain information to the Department of Health and Human Services (HHS) without using any particular form.
In 2016, in Zubik v. Burwell, the U.S. Supreme Court considered claims by several employers that, even with the accommodation provided in the regulations, the contraceptive coverage requirement violates the Religious Freedom Restoration Act of 1993 (RFRA). The Court heard oral arguments and ultimately remanded the case (and parallel RFRA cases) to the lower courts to give the parties “an opportunity to arrive at an approach going forward that accommodates [the objecting employers’] religious exercise while at the same time ensuring that women covered by [the employers’] health plans ‘receive full and equal health coverage, including contraceptive coverage.'”
Previously, Who Could Object and How
As provided in the 2015 final regulations, only certain organizations could object to providing contraception coverage. The final regulations provide two accommodations for eligible organizations to provide notice of a religious objection to the coverage of contraceptive services. Employers that object to providing contraceptive services will need to determine if they meet the criteria of an eligible organization in order to use one of the two accommodations. An eligible organization is an organization that meets all of the following requirements.
- Opposes providing coverage for some or all of any contraceptive items or services required to be covered on account of religious objections.
- Either is organized and operates as a nonprofit entity and holds itself out as a religious organization, or is organized and operates as a closely held for-profit entity, and the organization’s highest governing body (such as its board of directors, board of trustees, or owners, if managed directly by its owners) has adopted a resolution or similar action, under the organization’s applicable rules of governance and consistent with state law, establishing that it objects to covering some or all of the contraceptive services on account of the owner’s sincerely held religious beliefs.
- If both of the first two requirements are met, the organization must self-certify. The organization must make such self-certification or notice available for examination upon request by the first day of the first plan year to which the accommodation applies. The self-certification or notice must be executed by a person authorized to make the certification or notice on behalf of the organization, and must be maintained in a manner consistent with the record retention requirements under Section 107 of ERISA.
A “closely held for-profit entity” is defined in the regulations as an organization that:
- Is not a nonprofit entity;
- Has no publicly traded ownership interests (for this purpose, a publicly traded ownership interest is any class of common equity securities required to be registered under section 12 of the Securities Exchange Act of 1934); and
- Has more than 50 percent of the value of its ownership interest owned directly or indirectly by five or fewer individuals, or has an ownership structure that is substantially similar thereto, as of the date of the entity’s self-certification or notice described in the requirements of an “eligible organization.”
To determine its ownership interest, the following rules apply:
- Ownership interests owned by a corporation, partnership, estate, or trust are considered owned proportionately by such entity’s shareholders, partners, or beneficiaries. Ownership interests owned by a nonprofit entity are considered owned by a single owner.
- An individual is considered to own the ownership interests held, directly or indirectly, by or for his or her family. Family includes only brothers and sisters (including half-brothers and half-sisters), a spouse, ancestors, and lineal descendants.
- If a person holds an option to purchase ownership interests, he or she is considered to be the owner of those ownership interests.
Originally Published By United Benefit Advisors
by admin | Sep 15, 2017 | COBRA, ERISA, Group Benefit Plans
The DOL issued guidance for employee benefit plans, plan sponsors, and employers located in a county identified for individual assistance by the Federal Emergency Management Agency (FEMA) due to Hurricane Harvey.
Because plan participants and beneficiaries may have difficulty meeting deadlines for filing ERISA benefit claims and making COBRA elections, the DOL advised plan sponsors to “act reasonably, prudently, and in the interest of the workers and their families who rely on their health plans for their physical and economic well-being. Plan fiduciaries should make reasonable accommodations to prevent the loss of benefits in such cases and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established timeframes.”
The DOL acknowledged that group health plans may not be able to timely and fully comply with deadlines due to a physical disruption to a plan’s principal place of business. The DOL’s enforcement approach will emphasize compliance assistance, including grace periods and other relief as appropriate.
By Danielle Capilla
Originally Published By United Benefit Advisors
by admin | Jan 18, 2017 | ACA, Compliance, ERISA
Proposed regulations for revising and greatly expanding the Department of Labor (DOL) Form 5500 reporting are set to take effect in 2019. Currently, the non-retirement plan reporting is limited to those employers that have more than 100 employees enrolled on their benefit plans, or those in a self-funded trust. The filings must be completed on the DOL EFAST2 system within 210 days following the end of the plan year.
What does this expanded number of businesses required to report look like? According to the 2016 United Benefit Advisors (UBA) Health Plan Survey, less than 18 percent of employers offering medical plans are required to report right now. With the expanded requirements of 5500 reporting, this would require the just over 82 percent of employers not reporting now to comply with the new mandate.
While the information reported is not typically difficult to gather, it is a time-intensive task. In addition to the usual information about the carrier’s name, address, total premium, and payments to an agent or broker, employers will now be required to provide detailed benefit plan information such as deductibles, out-of-pocket maximums, coinsurance and copay amounts, among other items. Currently, insurance carriers and third party administrators must produce information needed on scheduled forms. However, an employer’s plan year as filed in their ERISA Summary Plan Description, might not match up to the renewal year with the insurance carrier. There are times when these schedule forms must be requested repeatedly in order to receive the correct dates of the plan year for filing.
In the early 1990s small employers offering a Section 125 plan were required to fill out a 5500 form with a very simple 5500 schedule form. Most small employers did not know about the filing, so noncompliance ran very high. The small employer filings were stopped mainly because the DOL did not have adequate resources to review or tabulate the information.
While electronic filing makes the process easier to tabulate the information received from companies, is it really needed? Likely not, given the expense it will require in additional compliance costs for small employers. With the current information gathered on the forms, the least expensive service is typically $500 annually for one filing. Employers without an ERISA required summary plan description (SPD) in a wrap-style document, would be required to do a separate filing based on each line of coverage. If an employer offers medical, dental, vision and life insurance, it would need to complete four separate filings. Of course, with the expanded information required if the proposed regulations hold, it is anticipated that those offering Form 5500 filing services would need to increase with the additional amount of information to be entered. In order to compensate for the additional information, those fees could more than double. Of course, that also doesn’t account for the time required to gather all the data and make sure it is correct. It is at the very least, an expensive endeavor for a small business to undertake.
Even though small employers will likely have fewer items required for their filings, it is an especially undue hardship on many already struggling small businesses that have been hit with rising health insurance premiums and other increasing costs. For those employers in the 50-99 category, they have likely paid out high fees to complete the ACA required 1094 and 1095 forms and now will be saddled with yet another reporting cost and time intensive gathering of data.
Given the noncompliance of the 1990s in the small group arena, this is just one area that a new administration could very simply and easily remove this unwelcome burden from small employers.
By Carol Taylor, Originally published by United Benefit Advisors – Read More
