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Importance of BASE® ERISA Wrap to Mitigate Risk

Continuously adapting and changing, we must take compliance rules and regulations as they come.  It is important to understand just how important an ERISA Wrap document is in avoiding risk during this volatile time of unremitting ACA, IRS, and ERISA updates.  Recent Department of Labor regulatory changes serve as a good reminder of how important it is for employers to arm themselves with wraparound compliance protection.  All it takes is one random audit or employee complaint to cost an employer thousands in penalties for not having the proper plan documentation up-to-date.  There is no question it pays to have an ERISA Wrap in place, and serves as a great reminder that the quicker employers get into compliance with an ERISA Wrap, the better.

Effective April 1, 2018, a new rule from the US Department of Labor (DOL) requires ERISA-covered employee benefit plans to re-issue plan documentation (ERISA Wrap documents) to all participants.  While the rule is in effect, employers have 210 days to comply with this new ruling.  Please note this change revolves around changes to claim processing requirements, which can be found in the Summary Plan Description and Plan Document that BASE® provides as part of important ERISA Wrap documentation that was updated on March 5, 2018.

 The most notable changes to claim processing requirements include: 

  • Improvement to Basic Disclosure Requirements. Benefit denial notices must include a more complete discussion of why the plan denied a claim and the standards used in making the decision.
  • Right to Internal Protocols. Benefit denial notices must include specific criteria of the plan that were used in denying a claim, or a statement that none were used.
  • Access to Claims File. The Plan Administrator must inform participants, in benefit denial notices, that they are entitled to access all documents relevant to an adverse claim determination.
  • Avoiding Conflicts of Interest. Plans must ensure that disability benefit claims and appeals are adjudicated in a way that ensures the independence and impartiality of individuals making the decision.

Without this updated documentation employers are at risk of not providing the amended claims procedures to their employee participants, which puts them at risk for $110 per-day per-employee penalty. BASE® reissues ERISA Wrap Documentation to all clients affected by regulatory changes, such as this, to keep steep penalties at bay. 

 But don’t just take our word for it; look at the case of Lee. ING Groep, N.V., 2016 WL 3974176 (9th Cir. July 25, 2016) which serves as a reminder of how a court can impose such penalties.  In this case, a district court moved in favor of a former employee for an ERISA violation, which could have been avoided had the proper documentation been provided. While the case stemmed from a former employees challenge of the denial of benefits and the failure to follow claims procedures imposed on benefits plans, another ERISA violation was uncovered.  In the end, the court granted summary judgement to the plaintiff and imposed a penalty of $27,475 for failure to produce a Plan Document in a timely manner.  So while this case started because an employee was unhappy regarding the handling of claims, it proves that one complaint can lead to a DOL audit and put employers at risk for thousands of dollars in penalties.

This is just one example of how the BASE® ERISA Wrap keeps employers up-to-date and in compliance with the latest IRS and DOL rules and regulations as they become available.  Not to mention the other ways that having an ERISA Wrap in place provides wraparound coverage, this includes important distribution guidelines along with our extensive ERISA Wrap compliance package.

 BASE® provides the service and protection they deserve with the BASE® ERISA Wrap in place.  Should you have any questions regarding these changes or want to learn more about the BASE® ERISA Wrap, please contact our office at 1-888-386-9680.

It’s Spring Time! Let BASE® Help Grow Your Company’s Benefit Package

Grow Your Business with a BASE® 125 Cafeteria Plan

Spring has sprung, and like anything in spring, all kinds of things have begun to grow.  Why not take this time and help grow your company’s benefits package with a BASE® 125 Cafeteria Plan?

Another thing “growing” this year is the rising cost of health care.  In 2018, there will be a rise in the increase of health care costs, from 4.6% to 5.5%, but with a creatively designed health insurance and benefits package, the rise in employers’ costs may be less than the overall health care inflation.  (Health Premiums Expected to Rise 5.5% in 2018, Driving Cost Management Steps).  By incorporating a BASE® 125 Cafeteria Plan into the business, employers can customize a benefits plan to help their employees with the rising cost of health care and both save money.

The BASE® 125 Cafeteria Plan (a form of Consumer-Driven Health Plan – CDHP) consists of the Flexible Spending Account (FSA), Limited Purpose FSA, Dependent Care Assistance Plan (DCAP), and Premium Only Plan (POP).  These plans allow employees who are paying for medical expenses, insurance premiums, and/or dependent care expenses to do so on a pre-tax basis.

Flexible Spending Account (FSA) – an employee sets aside a specified amount of pre-tax dollars from each paycheck to pay for out-of-pocket medical expenses.  The money is used in paying for qualifying medical expenses, such as co-pays, vision care, dental care, and deductibles.  A full list of legitimate expenses that can be reimbursed can be found under Code 213(d).

Limited Purpose FSA – an employee sets aside a specified amount of pre-tax dollars from each paycheck to pay for dental and vision expenses only.  This plan is for the employers who offer a Health Savings Account (HSA) and want to add additional cost saving measures for their employees.  By limiting reimbursements to only the dental and vision expenses, individuals remain eligible to participate in both the Limited Purpose FSA and HSA.

Dependent Care Assistance Program (DCAP) – an employee sets aside a specified amount of pre-tax dollars from each paycheck to pay for qualifying dependent care expenses.  Qualifying dependent care expenses are considered daycare, preschool, before and after-school care, and elder care.

Premium Only Plan (POP) – this plan allows for employees to pay for a variety of employer-sponsored benefits, such as health, dental, vision, and supplemental insurance premiums with pre-tax dollars, ultimately reducing taxable compensation.

There are numerous benefits to both the employer and employee when implementing a BASE® 125 Cafeteria Plan into the business.  The employer will see financial benefits with the employee’s pre-tax contributions that will reduce the employer’s share of FICA and FUTA taxes, an enhanced benefits package that helps to give the business a competitive edge when hiring, and an option for increased plan participation and savings with more employees participating.  The employees will see increased take-home pay since the funds are transferred from their wages on a pre-tax basis; they will save on federal, state, Social Security, and Medicare taxes.  Employees will see increased benefit savings with the money they have set aside for qualified out-of-pocket expenses.

In a recent study, 90% of larger employers will offer at least one Consumer-Driven Health Plan (CDHP) in 2018 with one focus in mind – enhancing their employees’ experience.  (Health Premiums Expected to Rise 5.5% in 2018, Driving Cost Management Steps).  With a Cafeteria Plan from BASE®, employers can nurture benefit packages that will provide personalization and savings.   

For more information on how a BASE® 125 Cafeteria Plan can help grow an employer’s benefit package, please call BASE® at 1-888-386-9680 or visit the website