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• Thrive. Grow. Achieve.
ERISA & Actions
Theodore P. Stein
Thursday, October 24, 2013
Whiteford, Taylor & Preston, LLP
Simone Putnam, Raffa Managed HR
• 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
ERISA BACKGROUND
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)
POST-ERISA BENEFITS LEGISLATION
• Plan, fund or program• Established by an employer, employee
organization, or both• To provide welfare or pension benefits• For employee participants or their
beneficiariesERISA, §3(1), (2)(A), 29 U.S.C. §1002(1), (2)(A)
WHAT IS AN ERISA PLAN?
• Pension Plans– Exceptions:• Bonus programs• Group IRAs• Salary reduction plans under §403(B)• Top Hat Plans• Excess Benefit Plans• Code Section 457 and 409A Plans• Governmental Plans
TYPES OF PLANS
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
TYPES OF PLANS (CONT’D)
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
ERISA STARTING LINEUP
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
WHEN IS A PLAN ESTABLISHED?
• 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
Plan Requirements
• 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
• Summary Plan Description (SPD)• Summary Annual Report (SAR)• Summary of Material Modification (SMM)• Summary of Benefits and Coverage (SBC)
Reporting and Disclosure Requirements
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)
SUMMARY PLAN DESCRIPTION
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
SUMMARY ANNUAL REPORT
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
SUMMARY OF MATERIAL MODIFICATION
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
SUMMARY OF BENEFITS AND COVERAGE (SBC)
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
AFFORDABLE CARE ACT (ACA)
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
WHO IS A LARGE EMPLOYER?
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
WHAT DOES ACA REQUIRE?
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
“PLAY OR PAY” PENALTIES
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
SMALL EMPLOYERS: “WHAT ME WORRY?”
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
OTHER ACA PROVISIONS
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
OTHER ACA PROVISIONS (cont’d)
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
OTHER ACA PROVISIONS (cont’d)
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
DOL INVESTIGATIONS
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
ERISA AFTER WINDSOR
Page 21
Thank you!
QUESTIONS?
Theodore P. Stein, EsquireWhiteford, Taylor & Preston, LLP
(301) [email protected]