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