Why Do You Need a Lawyer to Help You with Your Company’s Health & Welfare Benefits?

Health and welfare benefits are an important part of attracting and retaining employees, as well as creating a positive and supportive workplace environment. There are many service providers who are eager to help you provide these benefits, such as insurance brokers, insurance companies, third-party administrators and benefit consultants. With so many resources, why is it necessary to get a lawyer involved?

1. Plan Documents and Summary Plan Descriptions. Health and welfare plans are subject to the requirements of the Employee Retirement Income Security Act (“ERISA”), including a requirement that the plan have both a plan document and a summary plan document. Some employers rely upon the insurance-prepared certificates of coverage and policies to communicate and govern their health and welfare benefits. However, these documents rarely contain all of the information that is specifically required by ERISA to be in a plan document or a summary plan description. In addition, these documents are not prepared to protect the company sponsoring the plan, rather to set out the insurance company’s obligations. A lawyer familiar with the requirements of ERISA can review and evaluate the insurance-prepared documents for compliance as well as ensure that there is language in the document designed to offer reasonable protections for the plan sponsor.
2. Wrap Documents. Most employers bundle their health and welfare plans into a single ERISA plan, allowing them to file a single information return (Form 5500) each year, and streamlining some of the administrative requirements. This is generally done through the adoption of a “wrap document” which sets out the general terms of the plan, and incorporates other documents such as insurance certificates that provide specific details of the various benefits.  Many service providers offer wrap documents to their clients. However, these wrap documents are form documents designed to function generically for all of the service provider’s clients. This can result in inaccuracies with respect to your plan, leading to potential issues from employee confusion to obligations for benefits that were not intended. A knowledgeable benefits attorney can review the service provider wrap document and ensure that the language accurately reflects your intentions and administration. In addition, benefit attorney’s can also provide you with a custom wrap document that is drafted specifically for your plan.
3. Identification of Plans. There are many health and welfare benefits that companies, and even service providers, do not realize are plans subject to ERISA. For example, wellness programs and employee assistance programs are not only usually ERISA plans, they are health plans subject to many of the additional requirements that apply to such plans, such as COBRA. In addition, benefits marketed as “voluntary plans” that are not subject to ERISA, frequently do not actually meet the requirements for the exclusion from ERISA. A benefits attorney can review your company’s benefit programs to identify those that are subject to ERISA and other requirements, so that you are able to operate those programs in compliance with the law.
4. Tax Compliance. Critical to employers and employees alike, are the tax benefits that are associated with health and welfare benefits. The employer wants to take the tax deduction for the cost of providing the benefits, and the employee does not want to have to include the cost of the benefit in income and wants to be able to pay the employee share on a pre-tax basis. Pre-tax payment requires a written cafeteria plan document and compliance with several non-discrimination tests and limitations on changes to elections during the plan year. While some benefits providers can provide a form cafeteria plan, a benefit attorney can ensure the accuracy and compliance of the document for your specific situation (or provide a document customized for you), and advise you on plan design issues that can lead to operational problems.
5. Contract Review. Insurance companies, third-party administrators and benefits consultants will provide you with contracts and administrative services agreements to sign. An attorney can review these documents and negotiate to ensure that these contracts provide you with the services you need and protection from unreasonable terms and limitations.
6. Trust Requirement. Did you know that plan assets are generally required to be held in a trust? While health and welfare plans can avoid this requirement through payment of contributions from the general assets of the plan sponsor directly to an insurer, care must be taken in the process so that the trust requirement is not triggered. A benefits attorney can review your procedures and advise you on how to ensure you are not violating this requirement.
7. Health Care Reform. The requirements of the Affordable Care Act are many and complicated. While many service providers are on the front lines helping employers comply with the coverage requirements, few are focusing on the complete integration of these changes with the other requirements that apply to health and welfare plans. What needs to be in your plan document and summary plan description? What do you do if there is a merger or acquisition? A benefits attorney will look at all of the effects of health care reform on your benefit plans and answer the questions that arise in your unique situation.
8. HIPAA Privacy Requirements. Even with fully-insured plans, the privacy requirements for protected health information impact employers. Do you have a health flexible spending account? Are you receiving protected health information from your service providers? Do you have written procedures in place to adequately address the disclosure and uses of protected health information?  Do you have written business associate contracts in place with service providers who are working with your plan participants’ information? A benefits attorney can review the scope and process currently in place to set in place new procedures that will limit the amount of protected health information to what your company needs, and to meet the legal requirements for the use and disclosure of plan participants’ protected health information.
9. Self-Insured Plans. Self-insured health plans have special considerations:
   1. Without insurance companies to prepare insurance certificates, self-insured plans need custom plan documents and summary plan descriptions.
   1. Self-insured plans are subject to special non-discrimination requirements.
   1. Self-insured plans are not subject to state insurance laws, but may be subject to other state laws.
   1. Self-insured plans that cover unrelated employers are multiple employer welfare arrangements (“MEWA”) that are subject to state insurance laws.

A benefits attorney can assist in ensuring compliance with, or avoidance of, all the above special issues.

And obviously, but not least importantly, other service providers cannot give legal advice. Benefits attorneys know benefits law and can advise you and guide you so that your health and welfare plans won’t give you headaches.