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2013-10-24 ERISA & Actions
1. ERISA & Actions
Theodore P. Stein
Whiteford, Taylor & Preston, LLP
Simone Putnam, Raffa Managed HR
Thursday, October 24, 2013
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Thrive. Grow. Achieve.
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Employee Retirement Income Security Act of
1974, 29 U.S.C. §1001, et seq.
Protecting Interests of Plan Participants and
Beneficiaries
Broad preemption of any state law that
“relates” to employee benefit plan
Federal court jurisdiction to enforce ERISA
violations, plus attorney’s fees to prevailing
parties
3.
Consolidated Omnibus Budget Reconciliation
Act of 1985 (COBRA)
Health Insurance Portability and
Accountability Act (HIPAA) of 1996
Genetic Information Nondiscrimination Act of
2008 (GINA)
Patient Protection and Affordable Care Act of
2010 (PPACA or ACA or Obamacare)
4. Plan, fund or program
• Established by an employer, employee
organization, or both
• To provide welfare or pension benefits
• For employee participants or their
beneficiaries
ERISA, §3(1), (2)(A), 29 U.S.C. §1002(1), (2)(A)
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6.
Welfare Plans
◦ Exceptions:
Wage payments for medical and other reasons
Maintenance of recreation, dining, or first aid facilities
Holiday gifts
Remembrance funds
Voluntary group insurance program
Scholarship programs
7.
Plan Administrator
◦ Person specifically designated in plan document
◦ If no so designated, plan sponsor is administrator
◦ Must provide plan documents upon request
Plan Sponsor
Plan Fiduciary
Plan Participant and Beneficiary
8.
No formal writing, notice or reporting
required
Employer’s intent is not relevant
Employer cannot opt out by non-compliance
Employer does not need to be involved in
administration
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Plan must be established and maintained in
writing [29 U.S. C. §1102(a)(1)]
Writing may consist of multiple documents
Must authorize person and establish
procedure to amend plan
Must provide procedure for establishing
funding policy
Must specify how payments are made to and
by plan
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Form 5500
– Annual report filed by plan administrator
– Exceptions:
• Insured or unfunded welfare plan with fewer than 100 participants
• Certain group insurance arrangements
• Top Hat Plans
– Penalties:
• $25 for each day report is unfiled (up to $15,000)
• Secretary of Labor can assess civil penalty of up to $1,100 per day
• Delinquent Filer Voluntary Compliance Program
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Summary
Summary
Summary
Summary
Plan Description (SPD)
Annual Report (SAR)
of Material Modification (SMM)
of Benefits and Coverage (SBC)
11.
Written summary for each employee benefit
plan covered by ERISA
Must be written in manner understood by
average plan participant
Must be furnished to participants within 90
days of becoming a participant (or to
beneficiary within 90 days of first receipt of
benefits)
Updated SPD must be provided every 5 years
if amendments (or 10 years if no changes)
12.
Summary Annual Report (SAR) must be
provided to participants and beneficiaries
Exemption for small insured or unfunded
welfare and top hat plans
Deadline is 9 months after plan year close
Participant, beneficiary, fiduciary or DOL can
bring suit to enforce
Criminal and civil penalties for violations
13.
SMM must be distributed when material
modification of plan terms occurs
Recipients: Participants and beneficiaries
receiving benefits
Must be calculated to be understood by
average plan participant
Must be provided no later than 210 days after
plan year ends
14.
Group health plans and health insurers must
provide 4-page summary of
benefits/coverage
Must be provided at application/enrollment
Notice of material modifications must be
given 60 days prior to effective date
Must use standard definitions and terms as
developed by Department of Labor
15.
Under prior law, no requirement to provide
health care benefits
ACA requires large employers (inc.
nonprofits) to provide affordable and
minimum health care to full-time employees
or pay penalties
Imposes requirements on small employers
Allows whistleblower claims under ACA
procedures
16.
50 or more full-time employees (including
equivalents)
Full-time = 30 or more hours per week or
130 hours per month
Affiliated companies are combined
Special rules for seasonal and salaried
employees who don’t keep track of their time
17.
Employer Mandate – Postponed to 1-1-15
Plan must be “affordable”
◦ May not cost more than 9.5% of household income
Must provide “minimum value”
◦ Must pay out 60% or more of benefit costs incurred
by plan
Employer Shared Responsibility Payments
18.
If no coverage is provided by employer
◦ $2,000 penalty multiplied by all full-time
employees (excluding first 30) if one employee
receives a federal subsidy via health marketplace
◦ Ex: Employer has 130 employees; annual penalty is
$200,000
If coverage is “unaffordable”
◦ $3,000 multiplied by number of full-time
employees receiving federal subsidies
19.
Employers, including small employers,
required to send notice of health insurance
marketplace by October 1, 2013
For new employees, notice must be sent
within 14 days of hire
Must advise employees of marketplace and
employer’s health benefits plan if any
Model notices posted on DOL website
20.
Whistleblower Protections and Claim
Procedure
◦ No employer may discharge or discriminate against
employee:
Who receives an ACA credit or subsidy or
Who reports an ACA violation to the employer or
government agency or testifies in proceeding
◦ Employee has 180 days after adverse action to file
complaint with OSHA
21.
OSHA will investigate and can order interim
reinstatement for “reasonable cause”
OSHA must provide findings and either party
may object and request hearing
OSHA must issue final order within 120 days
If no decision issued in 210 days of complaint
filing, complainant may sue in U.S. District
Court and ask for jury trial
22.
Complainants need to show adverse action
was “contributing factor”
Burden shifts to employer to show by clear
and convincing evidence that same action
would have resulted absent protected activity
ERISA §510 also bars interference with
employee benefits
Rehire, back pay & attorneys’ fees available
23.
Investigation starts with letter or phone call
EBSA is assigned to enforce ERISA
DOL/EBSA can issue subpoenas, compel
witnesses to testify under oath
“Voluntary compliance”
Remedies: Fines, civil lawsuits, criminal
penalities
24.
Windsor: Section 3 of DOMA defining
“spouse” and “marriage” to exclude same sex
is unconstitutional
DOL TR 2013-04 (09-18-2013)
◦ Under ERISA, “state of celebration” rule governs
Effects
◦ Health plan premium for same sex spouse is not
taxable
◦ Marriage “penalty” now applies
