Employers that offer an employee health benefit plan, such as health insurance, Health Reimbursement Arrangements (HRAs), 125 Cafeteria Plans, to name a few, are subject to the provisions of ERISA.
The Employee Retirement Income Security Act (ERISA) is a federal law that sets the minimum standards for health and welfare benefit plans to provide the protection for the participants in the employer-sponsored plans. ERISA regulates plan administrators and sponsors of the health benefits to ensure they provide plan information to their participants and their dependents, and the offered benefits are outlined.
The BASE® ERISA Wrap is a risk management tool that is designed to help employers provide the required provisions and information necessary to comply with the ERISA requirements and wrap around the existing certificates of insurance and benefit plan booklets with the Summary Plan Description (SPD) and Plan Document. The ERISA Wrap applies to virtually all employers who sponsor a health benefits plan, regardless of size, structure, or number of participants.
Violations of ERISA happen when a party has certain obligations imposed under the law and fail to live up to those obligations. Three of the most common ERISA violations are:
- Improper denying benefits to current/former employees
- Breach of fiduciary duty toward those employees covered by the plan
- Interference with the rights of the employees covered by the plan
For those that commit ERISA violations, there are two ways to bring forward an investigation. The first of these is if someone who is covered by the plan, files a complaint against the violator. The second is through an action that was initiated by the Employee Benefits Security Administration, EBSA, which is a part of the DOL that enforces the laws related to ERISA.
Under ERISA, there are two types of penalties for these violations. The first is civil penalties such as fines, being required to change procedures or practices, or to make a payment to the plan participant. Civil penalties are assessed on a case-by-case basis with the penalty amounts depending on the degree of willfulness in which the violations were committed.
The second is criminal punishments, which the party may need to pay a fine and be found convicted of violating an ERISA requirement and may be imprisoned. Criminal punishments can depend on the nature of the violation and the corresponding provision with the federal law. For example, backdating paperwork relating to the plan, altering to make it appear that a transaction happened before it did, can result in severe penalties.
The ERISA Wrap helps to protect the interests of the employee benefit plan participants, including their beneficiaries, and ensures they receive their appropriate benefits with access to the information about their health benefit plan.
Employers may have questions about their obligations under ERISA and BASE® is here to help! For more information contact BASE® at 888.386.9680 or visit www.BASEonline.com.