ERISA/ACA Requirements

What is ERISA and Does it Apply ?

ERISA, which stands for the Employee Retirement Income Security Act, is a federal law regulating employer-sponsored group benefits. Nearly every employer, regardless of their size, is subject to ERISA if they offer even one employer-provided group benefit such as health, dental, vision, accidental death & dismemberment, disability, or group term life insurance; medical flexible spending account or health reimbursement account; wellness and employee assistance program; or any other benefit for which the employer contributes to the cost. The only exempt employers are churches and government entities. Besides requiring certain plan features, the law also mandates detailed reporting requirements, both to the Department of Labor and other government agencies and to employees and covered members under your policies.

The employer is solely responsible for ERISA compliance. Penalties may be enforced for failure to comply with ERISA regulations, including DOL enforcement actions and penalties as well as employee lawsuits. Certain infractions can entail up to $100/day penalty for every employee that is affected by a violation until the violation is corrected. The penalty for late delivery of SPD or Wrap can be as much as $110/day per plan. Late filing of form 5500 can result in fines as high as $1,100 per day.

While ERISA was first enacted in 1974, recent changes under the Patient Protection and Affordable Care Act (PPACA) have added additional requirements and changed reporting deadlines. The deadline for each requirement varies, depending on when your plan was enacted, whether it is grandfathered under PPACA, whether material changes have been made, and other exceptions. Copies of certain plan documents must be also available to participants and beneficiaries on written request.

Requirements Under ERISA & PPACA

If you offer any of the above-mentioned health and welfare benefits, you must meet specific requirements, specifications, and deadlines for plan documents under ERISA as well as under PPACA. Here are some key provisions listed below:

  • distribute a written plan document and Summary Plan Description (SPD) for every health and welfare benefit and any voluntary benefit pre-taxed under a 125 plan to all plan participants including spouses and COBRA enrollees
  • distribute ERISA benefit notices to all eligible employees on enrollment and re-enrollment of your health plan
  • notify participants of any change to a plan that materially affects the design or pricing
  • meet all fiduciary standards and plan terms
  • establish a trust fund that holds the plan’s assets, if applicable
  • establish a recordkeeping system to track contributions, benefit payments, maintain participant and beneficiary information, and to prepare reporting documents
  • provide a summary of benefits and a coverage explanation (SBC) and documentation of how and when it was distributed each year
  • verify fiduciary bonding needs for individuals handling funds and other property of employee benefit plans like a 401(k) plan, if applicable.

ERISA Benefit Notices

All eligible employees must receive ERISA Benefit Notices upon enrollment and re-enrollment of your health plan. Depending on company size and other criteria, you may be required to provide employees with the following employee notifications:

    • Medicare Part D Notice
    • CHIP (if applicable in your state)
    • Wellness Program Disclosure
    • Women’s Health & Cancer Rights
    • Hospital Stay Rights for Childbirth
    • Mental Health & Parity Act
    • HIPAA Notice
    • Disclosure of Grandfathered Status
    • COBRA Rights – Initial Notice In the event of certain Qualifying Events, additional required notices may include:
    • COBRA Qualifying Event Letter
    • HIPAA Breach Notice
    • Medical Child Support Order Notice (MCSO)
    • National Medical Support Notice (NMS)

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