Ensuring ERISA Compliance for Employer-Sponsored Health Plans

Employer-sponsored health plans provide substantial tax advantages for employers while helping companies to attract and retain employees. Employer-paid premiums for health insurance are exempt from federal income and payroll taxes. Additionally, the portion of premiums employees pay is typically excluded from taxable income. The exclusion of premiums lowers most workers’ tax bills and thus reduces their after-tax cost of coverage. This tax subsidy partly explains why most American families have health insurance coverage through employers.

These significant tax benefits are estimated to reduce contributions toward coverage and out-of-pocket expenses by 25% to 33% — a significant incentive for both employers and employees. However, to protect and maximize these benefits, strict compliance with ERISA regulations is essential.

Key Elements of ERISA Compliance

To ensure compliance, plan sponsors must be well-versed in the Department of Labor’s (DOL) comprehensive guidance on fiduciary responsibilities. This guidance covers critical elements required for a compliant health plan:

  • Essential Plan Components: Written plan documents, trust requirements, effective record-keeping systems, and mandated disclosures.
  • Service Provider Requirements: Fiduciary decisions involve comparing providers and monitoring their performance to ensure they meet necessary standards.
  • Fiduciary Duties: Plan sponsors must exercise discretionary authority, implement the plan effectively, minimize risks, and act in the best interest of participants.
  • Settlor Duties: Responsibilities include establishing the plan, determining benefits, and making necessary amendments.
  • Fidelity Bond: Insurance to protect the plan against fraud and dishonest acts.
  • Worker Contributions: Ensuring timely remittance of contributions to the plan or trust.
  • Fees: Ensuring third-party compensation is reasonable and transparent.
  • ERISA Claims and Appeals Process: Compliance with minimum standards for care criteria and disclosure requirements.
  • Coverage Recissions: Proper protocols for retroactive cancellation of coverage.
  • External Review Requirement: Engaging third parties post-claims process.
  • Prohibited Transactions: Understanding civil and criminal penalties for non-compliance.
  • Mandated Disclosures/Notices: Required communications, including Summary Plan Descriptions (SPDs), Summaries of Benefits and Coverage (SBCs), and COBRA notifications.
  • Government Reporting: Annual Form 5500 reports.
  • Qualified Medical Child Support Orders (QMCSO): Compliance with private or state agency orders.

The Importance of Compliance

Compliance is not merely a regulatory obligation; it is a crucial aspect of effectively managing employer-sponsored health plans. Non-compliance can result in severe penalties, including civil and criminal charges, jeopardizing the financial stability of the plan and the trust of its participants.

By ensuring compliance, plan sponsors can continue to provide valuable health benefits, enhancing employee satisfaction and retention. Additionally, it reinforces the trust employees have in their employers, knowing their health coverage is secure and well-managed.

aequum’s Commitment to Plan Sponsors

aequum is dedicated to supporting plan sponsors in navigating the complexities of ERISA compliance. Our focus is on protecting plan participants, reducing employee dissatisfaction with their healthcare plans and achieving significant cost savings for both plans and participants.

aequum’s strategic efforts to protect partners, clients and members against unreasonable medical charges, balance billing and overpayment have led to the successful resolution of over 12,000 claims on behalf of 425 self-funded health plans, resulting in 97.2% savings.

aequum’s team of associates coordinates administrative and advocacy services, while the relationships with attorneys around the nation, including the law firm of Koehler Fitzgerald LLC, helps navigate federal and state healthcare regulations and litigate complex medical billing issues.

Enhancing Compliance Through Partnerships

aequum’s tech-driven team partners with self-funded health plans, third-party administrators, insurers, medical cost management companies and stop-loss carriers nationwide.

By providing administrative and technical support to these partners and legal support to their members, aequum advances the adoption of reference-based pricing and price transparency solutions to control costs, reduce spending and achieve potential savings.

This proactive approach involves using a proprietary database to protect plan members against aggressive out-of-network charges, recover excessive provider payments and shield them from unfair debt collection practices.

As advocates for change, aequum employs information technology and data-driven solutions to bring savings to employer-sponsored health plans while improving employee satisfaction by defending against medical balance billing and recovering overpayments.

Employer-sponsored health plans offer significant benefits, but they come with the responsibility of strict adherence to ERISA regulations. Understanding and fulfilling these fiduciary duties is essential for the continued success and legal protection of these plans.

By leveraging resources like the Department of Labor’s publication on fiduciary responsibilities and conducting regular compliance audits, plan sponsors can safeguard their plans and participants. For more information and access to the Department of Labor’s guidance, visit the DOL Fiduciary Responsibilities Guide.