Are Your Benefits Compliant Under ERISA?

By now you probably know that offering benefits to your employees comes with a few rules, thanks to an act known as ERISA. And, if you’re on top of it, you’ve probably already got a checklist ready to go to keep your organization out of hot water — non-compliance penalty fees could cost you! But, if you haven’t brushed up on the requirements in a while, don’t worry, we’ve got you covered.

Watch our Benefits Compliance webinar to learn about compliance requirements for benefits and solutions to common employer challenges.

What is ERISA?

ERISA or the Employee Retirement Income Security Act (ERISA) of 1974, was created to protect employees from retirement fund mismanagement and abuse. ERISA has since been amended to cover non-retirement accounts, which include group health plans for employee benefits such as medical, dental, vision, life/AD&D, short-term and long-term disability, flexible spending accounts, and health reimbursement arrangements. ERISA is mainly managed by the U.S. Department of Labor.

Amendments to ERISA:

• The Consolidated Omnibus Budget Reconciliation Act (COBRA): provides some workers and their families with the right to continue their health coverage after the loss of a job.
  • The Health Insurance Portability and Accountability Act (HIPAA): provides important protections to workers and their families who have preexisting medical conditions or might otherwise suffer discrimination in health coverage based on factors that relate to their health.
  • Newborns’ and Mothers’ Health Protection Act: provides certain protections relating to the length of hospital stays after childbirth for mothers and their newborns.
  • Mental Health Parity and Addiction Equity Act: requires that mental illness is treated as equally as other medical issues as it relates to the price of care.
  • Women’s Health and Cancer Rights Act: protects patients who decide to have breast reconstructive surgery after a mastectomy.

Who is required to comply with ERISA?

Any employer that offers a retirement plan and/or a group-sponsored healthcare plan must follow ERISA notice, disclosure, and reporting requirements unless an exemption applies. Church organizations are often exempt from ERISA. There is no minimum number of employees that a business must have for ERISA to apply to the company.

ERISA Requirements for Employers

• Summary Plan Description & Access
  Any employers offering an ERISA plan must provide information about the management and features of each retirement or healthcare plan in a summary plan description or SPD within 90 days after the employee becomes a participant. ERISA also requires plans to establish grievance and appeals processes for participants to get benefits from their plans.

• Fiduciary Responsibilities
  A fiduciary is anyone who exercises control over an employer-sponsored retirement or healthcare plan. ERISA requires a strict fiduciary code of conduct for plan sponsors.

• Detailed Reporting
  ERISA requires administers of group health plans to file a Form 5500 by July 31. Additionally, each plan participant is entitled to an annual summary report.

What is the difference between an ERISA plan and a non-ERISA plan?

Most private sector, employer-sponsored plans fall under ERISA, including 401 (k) plans. In an ERISA plan, an employer chooses the investment options, controls the deposit and timing of employee contributions, and may offer a matching contribution.

In a non-ERISA plan, an employer does not contribute, is not involved in investments, and only manages compliance activities. ERISA does not typically cover retirement plans for religious organizations, some public education systems, and government.

ERISA does not cover group health plans that are maintained solely to comply with workers’ compensation, unemployment, or disability laws.

What are the employer penalties for non-compliance with ERISA?

Penalties for not complying with ERISA requirements are as follows:

• Employers who fail to provide a summary of benefits and coverage are required to pay up to $1,264 in penalties.
  • Employers who fail to file Form 5500 are required to pay $2,400 per day.
  • Employers who fail to inform employees of Children’s Health Insurance Program (CHIP) coverage could be fined $127 for each day late.

How Paycor Helps

Don’t risk high penalty fees related to ERISA. With notifications, alerts, and reminders, Paycor empowers HR leaders by eliminating and automating tasks, especially for the benefits administration process. Paycor Benefits Advisor drives efficiencies by offering customized reporting for your benefits compliance needs.