Fiduciary Responsibilities

What is an ERISA fiduciary?

Any person who:

• has control over plan assets
• discretionary authority or control over plan administration
• gives investment advice

ERISA has a “functional” definition – not dependent on job title or documents.

Fiduciary Tip #1

Fiduciary Tip #1 – Carefully select and monitor service providers for the plan.

Tips for selecting service providers:

• Get information from more than one provider.
• Compare based on same information — services offered, experience, costs, etc.
• Low bidder not always best, both cost and quality are important.
• Make sure any required licenses are up to date (insurers, brokers, TPAs, etc.).
• Read, understand and keep copy of all contracts
• Obtain commitment from provider from regular updates on services.
• Document process followed in selecting service providers.
• When renewing, repeat the selection process / confirm that facts on which initial selection was made have not changed.
• Confirm that any provider handling plan funds is bonded.

Fees and expenses:

• Fiduciary must ensure fees and expenses paid by the plan are reasonable.
  • Must be necessary for the operation of the plan and not excessive for services received
  • Consider quality and quantity of services
  • Total compensation must be reasonable
    • Ask if provider will be getting any compensation from third parties, e.g., finder’s fees, commissions, revenue sharing, etc.

Monitor plan service providers:
Plan fiduciaries must periodically monitor service providers to make sure the services are being delivered as agreed.

Remember – Fiduciary can be held liable if the service provider fails to perform services.

Fiduciary Tip #2

Fiduciary Tip #2 – Make required disclosures to plan participants (and beneficiaries).

What is an SPD?

• SPD is the basic ERISA disclosure document
• Must be a complete and accurate summary of plan, including benefits, rights and obligations under the plan
• Must be written to be understood by the “average plan participant”

Who gets and SPD and when?

• Must furnish automatically to participants within 90 days of being covered by a group health plan
• Must furnish current SPD within 30 days of a request by a participant of group health plan
• Generally, must redistribute every 5 years

What if the plan changes?

• Must distribute a summary of material modifications (SMM) or an updated SPD if there are material plan changes or changes in the information required to be in SPD
• No later than 210 days after end of plan year
• If it is “material reduction in covered services” – no later than 60 days from date change adopted

Qualified Medical Child Support Orders (QMCSOs)

• Order from court or state agency requiring health plan to provide benefits to non-custodial child of a plan participant
• Plan must provide notice or receipt of medical child support order (MCSO) and notice of determination whether MCSO is qualified.
• Most important thing is to be generally aware of what a QMCSO is and be prepared to deal with it in a timely way if you receive one.

More automatic disclosures:

• Summary Annual Report (SAR)
• COBRA Notices
• HIPAA Notices (Part 7 of Title I of ERISA)
• Notices and disclosures in connection with claims for benefits

Disclosures on request:

• Upon receipt of written request, must provide:
  • Plan document
  • Current SPD
  • Insurance contracts
  • Other instruments under which the plan is established or operated (e.g., plan trust agreement)

How to furnish documents?

• In-hand delivery at workplace
• By mail
• Electronic delivery (e.g., e-mail) subject to certain regulatory standards
• Posting in common area is good to do, but not enough

Failure to provide documents:

• Civil penalties may be imposed by court for failure to provide timely:
  • Current SPD
  • Instruments under which plan is operated
  • COBRA Notices
  • HIPAA Notices (Part 7, Title I of ERISA)

Fiduciary Tip #3

Fiduciary Tip #3 – Follow terms of plan and understand your responsibilities.

“Follow the terms of the plan” means:

• Check plan documents & SPD before acting.
• If SPD and other plan documents conflict, ordinarily SPD will control.
• No personal override when terms of plan documents and SPD are clear.

Claims procedures for group health plans:

DOL Regulation 29 CFR 2560.503-1

• Timeframes for deciding claims
• Contents of notices of denial
• Standards for appeals

What is a claim for benefits?

• A request for plan benefit
• Made in accordance with plan’s reasonable filing procedures
• By claimant (participant or beneficiary) or authorized representative

Time limits for deciding group health claims:

• Type of Claim Initial Appeal
• Urgent Care 72 hrs. 72 hrs.
• Pre-service 15 days* 30 days
• Post-service 30 days* 60 days

* 15-day extension available
Special rules for “concurrent care”

Initial denial notice contents:

• Reason(s)
• Plan provisions
• Disclosure of protocols
• Explanation of scientific judgment
• 502(a) rights
• Material needed to perfect claim
• Review procedures

Appeals procedures for group health plans:

• 180 days to file appeal
• De Novo Review
• Consultation
• Identification of medical experts
• No more than 2 appeals
• Limits on arbitration

Review denial notice contents:

• Reason(s)
• Plan provisions
• Disclosure of protocols
• Explanation of scientific judgment
• 502(a) rights
• Voluntary appeal procedures
• Right to relevant documents