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

Last Updated: January 12 2018
Article by Patricia A. Moran

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.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

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