FSA administration company, Clarity Benefit Solutions, gives advice for avoiding common compliance pitfall moments.
The Employee Retirement Income Security Act of 1974 (ERISA) was established to designate minimum standards for a majority of benefits plans in addition to voluntarily established pension programs. Since ERISA regulations can be challenging to navigate, these common ERISA pitfall moments can be avoided by considering the following words of wisdom.
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Learn the ERISA acronyms. Knowing ERISA terminology can go a long way toward compliance. The Summary Plan Description (SPD) defines the terms and conditions of a plan and includes benefits, obligations, and rights. This document must be shared with plan participants and beneficiaries in a specific time frame. Then, the Summary of Benefits and Coverage (SBC) provides participants and beneficiaries with customary information—in addition to a standard wordlist—allowing participants to compare plans with ease and select the best one to fit their specific needs. Companies who do not provide both of these documents are in violation of ERISA.
Allocate administrator accountability. Companies must clearly designate an ERISA plan administrator in the SPD. This person should take this task seriously, as failure to comply with ERISA regulations results in both financial and legal liability.
Know which plans are subject to ERISA. Mostly all ERISA Group Health Plans (GHPs) need to have an SPD. This encompasses medical benefits in combination with Health Reimbursement Accounts (HRAs) and Flexible Savings Accounts (FSAs), dental, vision, and a mix of wellness initiatives. Some voluntary programs, cafeteria plans, and Health Savings Accounts (HSAs) are not subject to ERISA compliance.
Deliver COBRA notices in a timely manner. Employees who are no longer eligible for employer-funded health insurance may continue their coverage under COBRA. This requires plan administrators to notify employees in the following manner: a General Notice, which is distributed to the eligible employee by the employer within 30 days after the qualifying event or by the health plan administrator 60 days or more after the event; an Election Notice that outlines the employee’s rights and information concerning filing an election within 14 days; a Notice of Unavailability of Continuation Coverage to inform and employee that he or she is not eligible for COBRA coverage; and a Notice of Early Termination of Continuation Coverage that informs an employee that health coverage is being terminated earlier than expected.