Go ERISA, it’s your birthday! Born in 1974, and still going strong in 2024. While a lot has changed over the past 50 years, a lot has stayed the same.
For example, ERISA compliance remains one of the biggest administrative costs for organizations that choose to offer health benefits to their employees, as plan administration duties intertwine with many compliance efforts. If plan sponsors don’t have good third-party administrators, that makes ERISA compliance that much harder, especially as new compliance requirements come online, adding to existing compliance items.
Existing ERISA Compliance Items
Plan Document and SPD
As you know, the sponsor of an ERISA-covered plan – often with the help of their third-party administrator – must furnish employees with a Plan Document and Summary Plan Description (SPD) that, among other things, explains to employees what benefits and services are available to them as covered participants and what eligibility requirements they (and their dependents) must meet to become covered participants. The Plan Document/SPD – which can be combined into one, single “wrap” document – must also include an explanation of ERISA protections such as COBRA continuation coverage, HIPAA special enrollment rights and what rights participants have when filing a health claim or appealing a denied claim.
Plan sponsors must work with their plan administration partners to distribute this “wrap document” to new enrollees or upon a participant’s request. If and when there are any changes in covered benefits – or changes in the law – the sponsor’s lawyers must draft “amendments” to the Plan. Then, the plan sponsor must work with their third-party administrator to distribute any new, updated “wrap document” to plan participants.
SBCs
Speaking of distributing documents, the plan sponsor – typically with the help of their lawyers and third-party administrator – must put together a Summary of Benefits and Coverage (SBC), which must be furnished to employees as part of initial enrollment, to employees during Open Enrollment, to employees when they trigger a special enrollment right, and if and when the plan sponsor makes changes to the benefits and services covered under the Plan.
Electronic Delivery of ERISA-Related Documents
Adding to the compliance and administrative burden of distributing documents, it’s not necessarily easy to send this information electronically. There are detailed ERISA “electronic disclosure” rules that must be satisfied before the plan sponsor and their third-party administrator can furnish the above discussed documents – as well as other documents such claims denials – to participants through electronic means.
Enrollment, Terminations, Special Enrollment Rights
There is considerable work that goes into initially enrolling employees and their dependents in the health plan. For example, eligibility requirements set forth in the Plan Document/SPD must be confirmed to have been met as employees and their dependents are enrolled.
The plan sponsor and their plan administration partner must also keep track of when an employee terminates their participation in the Plan and why. In this case, the plan sponsor – often with the help of their COBRA administrator – must send the proper COBRA notice within the proper time frames, and the third-party administrator must terminate the coverage under the plan in accordance with the time period set forth in the Plan Document/SPD.
In addition, confirming when an employee has a “change in status” (sometimes triggering a special enrollment right), and keeping track of the applicable rules, is also a full-time task.
New Compliance Requirements That Have Recently Come Online
Above, I only scratched the surface by discussing some – but not all – of the existing ERISA compliance and accompanying plan administration work. In addition, there are numerous recently enacted and promulgated compliance requirements that plans and third-party administrators are currently struggling with, including:
Transparency in Coverage (TiC) Machine-Readable Files
I don’t have to remind you that self-insured health plans and insurance carriers underwriting fully-insured plans must disclose In-Network Rates and Out-of-Network Allowed Amounts on a public website through Machine-Readable Files (MRFs). And I don’t need to tell you that it hasn’t been easy to pull all of this pricing information together, upload the information onto a MRF in the required format developed by the government, and then publicly post links to those files on the plan sponsor’s website that can link back to the third-party administrator’s website (because at the end of the day, the third-party administrator is most likely the one maintaining the files). Adding to the compliance burden, the plan sponsor must make sure that the third-party administrator updates the MRFs monthly.
Gag Clause Prohibition “Attestation”
As I explained in my December blog post, this new compliance requirement has plan sponsors and their third-party administrators fit-to-be-tied. Plan sponsors and their third-party administrators continue to believe that prohibited “gag clauses” still remain in plan-related agreements, and as a result, some plan sponsors opted against submitting an “attestation” by December 31 of last year. Other plan sponsors worked with their third-party administrator to submit an “attestation,” only to turn around and tell the Department of Labor that the plan is not compliant with the law because prohibited “gag clauses” have yet to be eliminated. The Gag Clause Prohibition “attestation” must be submitted every December 31, and unless Congress steps in, plan sponsors and their third-party administrators will continue to struggle.
Prescription Drug Reports
This is another reporting requirement that plan sponsors and their third-party administrators grumble about. Now due every June 1, plan sponsors and their third-party administrators must work together to compile the necessary information to complete the Prescription Drug Reports, which oftentimes includes coordination with multiple service providers to the plan, not just the third-party administrator.
Mental Health Parity NQTL Analysis
You heard me talk about Mental Health Parity in a blog posted last October. In short, plan sponsors must put together an analysis that compares the Non-Quantitative Treatment Limitations (NQTLs) imposed on mental health and substance use disorder (MH/SUD) benefits with the NQTLs imposed on medical surgical (M/S) benefits covered under the plan. Adding to the administrative burden is future compliance with recently proposed regulations (that will likely be finalized in the Fall of this year) that require self-insured plans and insurance carriers to collect specified data and undertake a detailed evaluation to assess the impact of NQTLs applicable to covered MH/SUD benefits as compared to covered M/S benefits.
AEOBs
And not be out-done, plan sponsors and their third-party administrators are bracing for when they are ultimately going to be required to furnish an Advanced Explanation of Benefits (AEOB) to a participant that schedules a medical procedure or service in advance. As I explained in a blog post way back in February 2023, an AEOB must include information like a “good faith estimate” (GFE) of what the provider will charge for the medical item or service, along with the GFE of how much the participant is responsible to pay out of their own pocket for the medical item or service. Technically, the AEOB requirement is NOT effective because we are still waiting for implementing guidance. Right now, we don’t know when we will see any implementing guidance. Stay tuned…
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