What Are the Essential Elements of ERISA Compliance for Florida Businesses?

ERISA law, overseen by the Employee Benefit Security Administration (EBSA), regulates the health, disability, and pension plans that employers can offer in the US. But how do you know if your employer or your plan’s manager is compliant with ERISA?

ERISA violations can lead to significant civil penalties for employers, administrators, or other fiduciaries. Minor infractions may lead to small fines, but these can quickly mount. Negligent or deliberate interference with a plan can cost much more and even result in criminal charges.

Qualifying Plans

ERISA applies when employers offer their employees specific types of benefit plans, including:

• Pension plans, such as 401(k)
• Group health insurance plans
• Health reimbursement plans
• Disability insurance

Employers and plan administrators have to follow laws and regulations intended to prevent plan members from losing their benefits or failing to understand their status. Not every employer plan falls under ERISA law, however. It does not cover:

• Government employee plans
• Plans established for employees of churches or other tax-exempt religious organizations
• Plans only instituted to comply with workers’ compensation, unemployment insurance, or disability insurance regulations
• Unfunded excess benefit plans

Key Documentation and Recordkeeping

Plan sponsors—that is, the companies offering plans—and plan administrators need to supply informative documents to plan members. These include:

• Summary plan descriptions (SPDs), informing members what benefits the plan provides and how it operates. 
• Summaries of benefits and coverage (SBCs), describing the plan’s features in plain language.
• Information on changes to their plans, either through revised SPDs or summaries of material modifications (SMMs).
• Notices of benefit determinations or “explanation of benefits.”
• Summary annual reports (SARs), describing the plan’s financial status and operation and summarizing the business’s Form 5500 filing.

The documents must be available on schedule. For example, a new participant must receive their SPD within 90 days of joining, and a SAR is due within 2 months of the Form 5500 filing (or 9 months from the end of the plan year). For more information about documents and disclosure, see the Department of Labor’s Reporting and Disclosure Guide.

ERISA also requires extensive recordkeeping, particularly since businesses may face audits by EBSA to check on their legal compliance. Documents should be retained for at least six years after filing. 29 USC § 1027.

Fiduciary Duties

Administrators, service providers, and many employers have a fiduciary duty to ERISA plan members. This means that they must act in the best interest of the plan members, using “care, skill, prudence, and diligence” to maintain the benefits that the members are entitled to. Anyone who has discretionary authority and control over a plan may be a fiduciary under ERISA, and some employers may not even be aware they are fiduciaries.

Their obligations include:

• Avoiding conflicts of interest and prohibited transactions. (See more.)
• Diversifying investments to reduce exposure to losses.
• Monitoring administrators and service providers.

COBRA and Mini-COBRA Compliance

Under COBRA law, employers over a specific size must continue to offer health coverage to health plan participants, including spouses and dependent children, after several qualifying events:

• When a covered employee is terminated for any reason other than gross misconduct 
• When the employee’s hours are reduced 
• When the employee becomes entitled to Medicare
• When the employee dies or divorces their spouse
• When the employee’s child loses dependent child status

Source. The coverage can extend for 18 to 36 months, depending on the circumstances of the qualifying event.

COBRA applies only to private employers with over 20 employees and to state and local governments. Florida has a separate state law requiring smaller employers to offer continued coverage under similar conditions.

How Disputes Are Handled

If an ERISA plan member suspects their rights have been violated under ERISA—for example, a violation of fiduciary duty or a failure to disclose—they may file a complaint with the regional EBSA office. However, this is not the same process as a claim denial. It’s best to talk to an ERISA attorney before making a complaint to be certain that you’re making the right assertion for the help you need.

When an ERISA plan member objects to the denial of a claim under their plan, they must file an appeal to the plan administrator within a specific time period. For a disability claim, this is usually 180 days after the denial. They have a right to “a full and fair review” of their claim. See 29 USC § 1133.

A claimant should ideally work with an ERISA attorney for this appeal since it may be the last chance to present all the relevant medical information and vocational evidence for review. If the plan denies the claim again, the claimant can file a lawsuit in federal court.

However, it will rest on exactly the same information that the plan reviewed before its appeal denial. For the best chance of success, an ERISA attorney should prepare a strong, carefully documented file for a judge to review.

Defending Your Benefits

ERISA standards do not always help workers in the way they should, and employers or administrators may be careless about their duties.

Attorney Nancy L. Cavey has been fighting for Florida plan beneficiaries for years. Don’t let an ERISA violation or claim denial ruin your plans for the future. Contact us at 727-477-3263 to schedule your free initial consultation.