United States: New Year's Resolution #5: Four Employee Benefits Resolutions For 2018!

Happy New Year! It's that time when we all vow to better ourselves in the months ahead. Resolutions abound, and they need not be limited to individual self-improvement. Employers too have many opportunities for betterment in the New Year. In the area of employee benefits, we offer these four goals for 2018.

ONE. Clean up the house! Whether it's shredding those electric bills from 2003 or organizing your kids' toys into color-coded bins, January is a great time for getting your house in order. Similarly, it's a great time to tidy up your employee benefit plan documents! Some ideas to get you started:

  • Adopt a wrap document for your ERISA-covered health and welfare plans. As described on our earlier post, most health and welfare plans (medical dental, and vision, among others) are subject to the Employees Retirement Income Security Act of 1974 (ERISA) and required to distribute an ERISA-compliant summary plan description (SPDs). Many employers assume that the insurance certificates provided by insurers meet ERISA's requirements, but that's not usually the case, and this noncompliance can lead to a variety of penalties including a penalty of up to $147 per day for failure to furnish the SPD upon request). ERISA "wrap documents" are documents that incorporate all of your insurance contracts into one document and also contain all of the "bells and whistles" needed to bring your company in line with these legal requirements.
  • Straighten up your retirement plans. It's always best for employers to find (and fix) problems before they are discovered on audit by the IRS or DOL. Some common mistakes include the use of definitions of "compensation" that are not in accord with plan terms, the exclusion of otherwise eligible employees, the failure to implement or properly administer automatic enrollment and escalation features, missed amendments, and delayed transfer of payroll deductions to the plan. Luckily, many problems can be corrected easily and inexpensively through the IRS' Employee Plans Compliance Resolution System (EPCRS) program or the DOL's Voluntary Fiduciary Correction Program (FVCP) – but these programs are beneficial only if employers discover and fix the problems before the agencies do. Employers are advised to gather and review all plan documents and consult with their advisers to identify problems and make corrections. .
  • Make sure all 5500 filings have been timely made. 5500 filings are required for all ERISA-covered retirement plans and for any ERISA-covered health and welfare plans with 100 or more participants. The penalties for late filings can run up to $2,063 per day; luckily, late filings can be corrected by filing through the DFVCP program and paying a minimal fee.
  • Adopt a cafeteria plan. Do you allow employees to pay for insurance coverage on a pre-tax basis through payroll deductions? You need a plan document for that too. Go ahead and adopt one before the IRS comes around and makes you undo all of those tax benefits.

And by the way, are you perhaps hoping that someone will buy or invest in your company? If you or the government haven't already identified benefit plan compliance problems, a buyer's or investor's due diligence team might – and may demand immediate and costly corrections or purchase price adjustments before closing the deal.

TWO. Fall in love (all over again). The New Year is a great time to evaluate your relationships, and perhaps spark up your current partnership, end a toxic friendship or relationship, or set your sights on new romance!

Likewise, how are things going with your benefit advisers? Re-evaluation of your benefits advisers (third party administrators, investment advisers, auditors and even us attorneys) is not only good common sense, it's required under ERISA. ERISA requires benefit plan fiduciaries (including employers who sponsor plans) to not only choose advisers wisely, but also to monitor advisers' performance and fees. Even if your advisers seem to be doing a pretty good job and fees seem fair, it's a good idea to put out a request for proposal (RFP) every few years to confirm that you are getting the best value and that your service agreement contains up-to-date protections. Further, activist litigation is on the rise, with plaintiffs arguing that employers' failure to diligently choose and monitor service providers resulted in high costs to plan participants, particularly from fees on investments. Careful selection and diligent monitoring can protect an employer from this sort of ligation.

All that said, changing advisers can itself be a costly undertaking and should not be taken lightly. A switch may involve, among other things, document review and negotiation, data transfer, investment changes, the learning curve presented by new people and new software, and education of employees. If your RFP reveals that your current adviser is offering good services at reasonable prices, there's no reason to subject your company to a switch. As with romance, sometimes you are already right where you need to be.

THREE. Get tech savvy. Are you tired of being the last one in your social circle to get the new phone or download the latest app? This could be the year you take that great leap forward into the digital age and get the smartest smartphone! Then you can download all the apps to help you monitor your fitness efforts, organize your finances, order groceries, track your home thermostat from miles away, or figure out why the bus hasn't shown up yet! Similarly, now may be a good time to consider modernizing your benefit plans. Two suggestions here:

  • Cybersecurity review. By now, most employers are aware of (and hopefully compliant with) the Health Insurance Portability and Accountability Act of 1996 (HIPAA) requirements affecting health plans. But there's a wide variety of sensitive information involved with benefit plans that is not covered by HIPAA. For example, 401(k) plan administrators may collect and retain participant information such as social security numbers, compensation, account balances, addresses and beneficiary designations. In addition, third-party administrators may have access to sensitive employer information such as yet-unexecuted plan design changes or particularly challenging claims. Yet, while many companies have taken great efforts to enhance cybersecurity protections with respect their general business, protection of benefit plan information from cyber-threats is often an afterthought (if it is considered at all). To be sure, cybersecurity is a moving target, and besides HIPAA there are no rules specifically geared towards benefit plans. That said, ERISA imposes general fiduciary obligations on plan sponsors and advisers to act in the best interest of participants, and as noted above, to wisely choose and monitor service providers. In addition, general cybersecurity laws and industry standards may apply to benefit plans, or at least provide inspiration for internal standards. One thing employers should do is carefully review cybersecurity protections offered (or perhaps not offered) by service providers. Questions to ask include (among others): Which service providers have access to sensitive data? What sorts of data are potentially exposed? Where and how the data is transferred, stored, retained and destroyed? Does the employer have audit rights? Who handles the data and how are they trained? How is access to the data controlled? And what happens if there's a breach? If a service provider is not willing to offer cybersecurity protection, or seems to have very loose standards, it may be time to move on.
  • Review electronic distribution of benefit plans. ERISA requires that benefit plan administrators use measures reasonably calculated to ensure actual receipt of ERISA-covered notices and documents by participants. In addition, notices must be sent by a method or methods of delivery likely to result in full distribution. ERISA offers an electronic distribution safe harbor for this requirement, which allows employers to distribute ERISA documents electronically but requires affirmative consent from employees who do not regularly work at a company computer. As discussed in our prior post, electronic distribution of documents is a great way to meet ERISA's requirements while fostering environmental stewardship. However, employers who use electronic distribution should do so in a thoughtful way, including by adopting and following an electronic distribution policy, and, wherever reasonable, tracking ERISA's electronic distribution safe harbor.

FOUR. Try something new. Whether it's that new rock climbing gym up the street, exotic travels, a new language, or a different haircut, the new year is a time of re-invention and adventure. So why not try out some new benefits?

These days, there is an endless variety of fun perks and benefits that can help excite and retain your current employees and attract new talent. Many employers are adding health advocacy or health concierge programs, for example, to help employees choose doctors and navigate health insurance costs and claims (and hopefully make cost-saving choices that may save money for both the employer and employee). Other novel benefit offerings include pet insurance, healthy vending machines, student loan payoff assistance, mindfulness seminars, and even assistance with wedding costs.

Employers who offer these perks, however, do need to ask some questions. Are the benefits subject to ERISA? If so, a summary plan description is required and a 5500 filing may be required. Is the plan a group health plan? If so, additional notices, and COBRA continuation coverage, may be required. And employers must consider how these benefits are taxed (depending on the benefit, there may be tax consequences for both the employer and employee). When setting up any new benefit, employers are advised to proceed with caution and consult counsel.

In closing, may your 2018 be decluttered, romantic, tech forward, adventurous, and (most of all) legally compliant! Now get out there and climb that rock wall!

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions