Health and Fringe Benefit Plans

COBRA

Although employers have been working with COBRA continuation coverage for many years now, there have been numerous changes to the COBRA regulations, related legislation and litigation developments. It is more important than ever to be "COBRA compliant." For example, do you know…

• if COBRA applies to your company?
  
• who is eligible for COBRA?
  
• what triggers COBRA?
  
• which health plans are subject to COBRA?
  
• how to calculate and collect premiums?
  
• the penalties for noncompliance?
  
• how to coordinate COBRA with FMLA, leaves of absence, etc.?

Properly drafted COBRA forms, plan documents and Summary Plan Descriptions are key to compliance. In addition, with all the recent business reorganizations occurring, complex COBRA issues can arise. Also, if your company has a third party administering your COBRA continuation coverage, we recommend reviewing the service agreements to ensure that all responsibilities are outlined clearly with the appropriate indemnification so that the employer is protected.

HIPAA

Many third party administrators and insurers offer "HIPAA compliance services." However, these services address only the issuance of the HIPAA certificate of creditable coverage. HIPAA imposed many more requirements that are ultimately the responsibility of the employer, unless delegated to a third party. Examples include notification of:

• the employee's special enrollment rights
  
• the terms of an imposed pre-existing condition provision
  
• reconsideration of a pre-existing condition
  
• annual request for updated dependent information
  
• requests for additional certifications.

We can assist and counsel your company on proper HIPAA compliance, including preparing HIPAA compliance forms and notices.

Service Contract Reviews

Do you realize that under most benefit laws, legal compliance rests with the employer – but someone else, like a third party administrator, controls compliance?

Make sure your service contracts and agreements provide you with adequate protection with respect to indemnification issues, privacy concerns, fiduciary liability concerns, and other considerations. You need to protect yourself from legal liability in the case of negligence, or errors or omissions of these service providers. In addition, such service providers will "subcontract" certain administrative functions to another third party. In such situations, we can assist in ensuring that such agreements address the responsibility and liability for all parties involved.

Ice Miller can review your service agreements and contracts with third party administrators, stop-loss carriers, and other benefit service providers, and negotiate with these service providers on your behalf when necessary.

Domestic Partner Coverage

Within the past few years, domestic partner benefit coverage has become increasingly more popular. If your company is thinking of offering domestic partner benefit coverage, consider the following:

• What is your company's goal in offering it? Do you want to boost employee morale, incorporate a sense of "fairness" in providing benefits, attract a wider variety of candidates to enter their work force, embrace diversity?
  
• How would your company handle any objections to this policy? What will be the reaction of the employer's employees, customers, vendors, and management community in implementing or not implementing such coverage?
  
• Who would be offered this benefit (same sex partners, opposite sex partners)?
  
• What would be offered (medical only, health benefits, life benefits, etc.)?
  
• Would there be administrative burdens in offering this coverage?
  
• What are the tax implications to the employee, domestic partner, and children?

In addition, there are myriad technical legal issues that must be addressed. We can help!

Form 5500 Annual Reports

Certain employer-sponsored ERISA plans have annual reporting requirements. In these cases, the Department of Labor imposes an annual Form 5500 filing requirement. As an employer, it is your responsibility to:

• determine which of your welfare benefit plans are subject to the filing requirements
  
• obtain information from insurance carriers, benefit providers, accountants
  
• file on time.

If you miss a filing deadline, Ice Miller can help. We can minimize or eliminate potential penalties by preparing the missed filing for you and including an appropriate explanation to the Internal Revenue Service and/or Department of Labor.

Funding

Welfare benefit plans can be funded in a variety of ways. Ice Miller advises clients on issues and considerations regarding all types of funding sources, including trusts (such as VEBA trusts and grantor trusts), by insurance, by self-funding, or a combination of self-funding with insured stop-loss coverage.

How do you decide on the appropriate funding vehicle and then establish it? Ask Ice Miller. We know the filing requirements, auditing requirements, and plan document requirements. Ice Miller can assist you every step of the way in making sure your funding choice is the right one and that it is compliant with all the regulations.

Medicare Coordination

Coordinating health plan and the Medicare rules is not easy. The Department of Health and Human Services has detailed rules and requirements relating to secondary payor regulations and Medicare+Choice regulations.

We can guide our clients through the labyrinth of coordinating the provisions of their health plan(s) with the complex rules of Medicare. We can unravel the issues associated with Medicare coordination, as well as draft your plan description so it has the greatest flexibility.

Subrogation and Reimbursement

A welfare benefit plan’s subrogation and reimbursement right is enforceable under the federal common law of subrogation. It is well established that ERISA preempts state law claims for subrogation relating to self-funded employee health benefit plans. There are numerous ways we can suggest to "strengthen" a welfare benefit plan's subrogation rights and increase the enforceability of such plan's language.

Ice Miller can provide numerous suggestions to strengthen a plan's subrogation rights and increase the enforceability of its language. In addition, we can review your company's subrogation administrative procedures, stay on top of any third-party lawsuits your company may be involved in, assist you in coordinating with your stop-loss (reinsurance) carrier, participate in mediation, and file suit if necessary.

Retiree Medical

Providing post-retirement health benefits is a major financial investment for most employers. Employers continue to look for ways to contain the cost of providing retiree medical benefits beyond shifting costs to retirees and restricting the access to future retirees. Ice Miller has helped clients contain costs in unique ways.

In addition to the cost implications, those who provide retiree medical coverage need to be aware of the current case law environment and other legislative efforts that may affect your company's decision to continue to provide coverage. Ice Miller can guide clients through the process of adding or eliminating a retiree medical benefit program.

Claims

Due to the issuance of final claims regulations by the Department of Labor ("DOL"), employers have been forced to overhaul the claims procedures for their ERISA health and disability plans and modify the claims procedures for all their other welfare plans (such as life insurance plans). This has created three different groups of complex rules with which employers must comply:

• rules for health claims,
  
• rules for disability claims, and
  
• rules for other welfare claims.

Some of the major changes imposed by the claims regulations include:

• faster deadlines for making decisions on health and disability claims;
  
• more detailed information that must be included in claim denial notices;
  
• more stringent denial procedures; and
  
• the requirement that appeal reviews for a health or disability claim be made independently by a fiduciary who did not handle the initial claim review.

These new claims rules are much more burdensome – both administratively and financially - on employers and their third party administrators/insurers, and legal liability lies with the employer. Employers have to be on top of what their third party administrators and insurers are doing. If employers use several administrators, they need to work through compliance with all of them and ensure contractual indemnification for their errors. We can help your company create legally compliant claims procedures, update plan documents and summary plan descriptions, and work with your third party administrators.

"WRAP" Plans

In the employee benefits arena, plan documentation is essential. Employers who have fully-insured benefits often rely on their insurer's insurance policy or contract as the ERISA-required plan document. Insurers do not draft policies with the ERISA compliance in mind. The same is true for various self-insured benefits. One way to better ensure ERISA compliance in plan documentation, as well as streamline administrative duties and reduce costs, is to create a "wrap plan." This is an ERISA plan document that essentially "wraps" each separate welfare benefit plan into a single plan document. Furthermore, employers need to file only one Form 5500, reducing the number of annual filings and ultimately reducing administrative costs.

Ice Miller can help your company develop a wrap plan that will satisfy ERISA requirements, as well as comply with other mandated coverage requirements such as COBRA, the HIPAA privacy regulations, and the Family and Medical Leave Act.

SPD Requirements

One of the many challenges plan sponsors face is drafting and updating summary plan descriptions ("SPD") to comply with ERISA. This task has become more difficult with the Department of Labor’s new regulations governing SPD content. Under the final rules, a health plan SPD must contain several new items including:

• a description of procedures for handling qualified medical child support orders;
  
• a description of plan cost-sharing provisions, including premiums, deductibles, coinsurance, and copayment amounts;
  
• any annual or lifetime limits on benefits;
  
• the extent to which preventive services, drugs, and tests are covered;
  
• provisions governing the use of network providers and the composition of provider networks; and
  
• pre-authorization and utilization review requirements.

Employers must balance the obligations to meet these legal requirements with the legal obligation to have the SPD written in a manner that can be understood by the "average plan participant."

Ice Miller can help your company by preparing a new, comprehensive and easy-to-read SPD or updating your existing SPD and coordinating our efforts with your insurance company, HMO or third party administrator.

USERRA/Military Leave

In response to the tragic attacks of September 11 and other recent world events, the United States military has called up thousands of reservists and National Guard units into military duty, requiring employers to review their military leave policies. Accordingly, employers should be reminded of the Uniformed Services Employment and Reemployment Rights Act ("USERRA") and their obligations to employees serving in the country's uniformed services. USERRA is a federal law that provides job security to employees called into military duty. It prohibits discrimination in hiring, retention, promotions, and other employee benefits.

An employee’s rights under USERRA include entitlement to continue medical coverage when the employee leaves for military service, and prompt reemployment to the same position upon returning from military leave. Employers should brush up on USERRA and its requirements in case their employees are called to active duty.

Section 125 Cafeteria/Flexible Benefit Plans

Section 125 of the Internal Revenue Code permits employers to establish "cafeteria plans" or "flexible benefit plans." Employees can choose between receiving taxable income (i.e., cash) or certain nontaxable qualified benefits, such as health coverage, group term life insurance, and medical and dependent care reimbursement assistance. Employers must take into consideration when drafting and administering a cafeteria plan that, in addition to satisfying the provisions of the Code, certain benefits offered under a cafeteria plan are subject to ERISA.

There also has been much legislation and guidance issued by the Internal Revenue Service as of late with respect to cafeteria plans. Besides finalizing the permitted election changes allowed under a cafeteria plan, the IRS has ruled on a cafeteria plan's use of automatic enrollment procedures and the effect of the FMLA on the operation of a cafeteria plan.

Ice Miller can help your company design a cafeteria plan that complies with the law and meets your objectives.

Self-Insured Plans

As health care costs continue to rise, many employers are self-insuring their health benefit plans to maintain flexibility in customizing their health plans and to save costs while satisfying employees' needs. Self-insured health plans (those in which the employer assumes all or a portion of the risk for providing health care benefits to its employees) avoid many of the fees insurance companies charge for administering fully-insured plans. In addition, self-insured plans are governed by federal legislation, thus avoiding most state mandated benefit requirements. Another advantage is that the employer's cost for a self-insured health plan is dictated by its claims experience rather than the experience of an insurance company's book of business, thus again, reducing costs.

Employers who are currently self-insured, or are considering self-insuring their health plans, should also be aware of the responsibilities of being self-insured. Self-insured plans require highly specialized administrative functions such as claims administration, HIPAA and COBRA compliance, and plan document preparation. The employer must either administer the plan itself or pay a third party administrator (TPA) or insurer to administer the plan. A self-insured plan is also subject to a much greater risk (particularly to small employers – those with less than 100 employees) of potentially catastrophic individual claims or unexpectedly high aggregate claims. (Stop-loss or excess-risk coverage may be purchased to reduce this risk).

Depending on an employer's size, type of business and claims history, self-insurance may be an option worthy of investigating. We can help employers evaluate the pros and cons of self-insuring and assist them with:

• plan design,
  
• administration issues,
  
• plan document preparation,
  
• employee communication materials,
  
• contracting with stop-loss carriers, TPAs or ASO arrangements, and reviewing TPA. and
  
• other provider agreements.

Employee Communications

When it comes to administering employee benefits, employee communication is critical. In fact, some communication pieces are mandated (for example, ERISA requires that participants receive copies of SPDs). Well-written communications can also help employees be more savvy about benefit options, why costs continue to rise, and how to be a smart healthcare consumer. Human Resources departments with good employee communications spend less time answering routine questions, leaving more time for other responsibilities.

We can enhance your company’s employee communication materials with customized enrollment guides, employee benefit handbooks, SPDs, policies, notices, forms, and employee benefit newsletters.