Friday, October 25, 2013

Don't Get Fined For Neglecting These Must-Have Health & Welfare Employee Benefit Documents

By Erica N. CordovaHR Esquire – The Cordova Law Firm LLC

ERISA (Employee Retirement Income Security Act) is a federal law that was passed in 1974. ERISA has been amended many times since then, most recently through Healthcare Reform. ERISA sets out certain reporting and disclosure requirements that are enforced primarily by the U.S. Department of Labor (DOL). An employer's failure to comply with these reporting and disclosure requirements can result in government enforcement actions such as a DOL audit, penalties, or legal action from an employee.

The reporting and disclosure requirements of ERISA apply to most private-sector employers regardless of size or number of employees. ERISA, however, generally does not apply to governmental or church plans. To learn more about which health and welfare benefits are subject to these ERISA reporting and disclosure requirements, click here.

While employers are not required to offer employee health and welfare benefits, if an employer chooses to offer benefits to its employees, the plan sponsor is subject to these reporting and disclosure requirements under ERISA. There seems to be a lot of awareness about the reporting and disclosure requirements of ERISA for retirement plans, but not nearly as much awareness about the requirements for health and welfare benefits. Below, I have provided a brief overview of an employer's responsibilities under ERISA for its health and welfare benefits.

Reporting and Disclosure Requirements Under ERISA

  • Form 5500 Annual Reporting
    • Applies to Most Plans That Cover 100 or More Participants
    • Deadline to File is 7 Months After the End of the Plan Year
    • Penalties Up to $1,100 Per Day For Each Late or Incomplete Filing
  • Plan Document & Summary Plan Description (SPD)
    • Plan Document
      • More Formal of the Two Documents - Contains Administrative Provisions
      • Does Not Need to Be Distributed to Participants
      • Must Remain on File for Participants to View If Requested
    • Summary Plan Description
      • More User-Friendly Summary of the Plan Document
      • Must Be Distributed To All Plan Participants (with and without request)
        • Must Be Distributed Within 90 Days of Participant Coverage
        • Must Be Distributed Within 120 Days After a New Plan Is Established
        • Penalties Up to $110 Per Day For Failure to Distribute the SPD
      • To Learn More About SPD Requirements, click here.
  • Summary Annual Report (SAR)
    • Summary of the Form 5500 Information
    • Must Be Distributed to All Plan Participants Within 9 Months of the End of the Plan Year
    • Penalties Up to $110 Per Day For Failure to Distribute the SAR

It is important that employers comply with these ERISA requirements not only to remain in compliance with the law, but also to avoid costly government penalties and possible employee lawsuits. Please remember that ERISA is a very complicated area of law and you should consult with an attorney for more detailed information specific to your plan.

Erica N. Cordova is the Managing Attorney of HR Esquire - The Cordova Law Firm LLC. At HR Esquire, we believe in passing the savings along to our clients through our part-time law firm model. We strive to help small businesses develop a solid foundation and legal strategy so they can be successful. We will work to improve legal compliance and employee relations. Our goal is to improve your business' performance and provide legal advice for a successful human resources strategy via our Offsite General Counsel. Find out how we can help you and your business today! If you have questions about this article, please email 

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