ERISA ENFORCEMENT IS ON THE RISE

Enforcement of an existing federal EMPLOYER law called ERISA (Employee Retirement Income Security Act of 1974).

• As an unintended consequence of healthcare reform, compliance is in the bright lights and compliance investigations by the Department of Labor (DOL) are on the rise. The law has not changed, the enforcement has and with few exceptions, applies to all employers offering health and welfare benefit plans, regardless of employer size. ERISA does not cover government entity plans, churches plan for their employees, or plans maintained solely to comply with workers’ compensation, unemployment, or disability laws.
• The law mandates that Employers provide federally compliant language to their employees and plan participants at specified points in time and in specified ways. These legal instruments dictate the rights and responsibilities of the plan participants and employer surrounding the health and welfare benefits offered. The documents you receive from your insurance carriers are not sufficient for meeting this federal legal requirement.
• If you are already familiar with ERISA, you may think it only applies to retirement and pension plans, and that is not the case. Health and welfare benefits are also subject to ERISA.
• Health benefits are group insurance benefits (fully or self-insured). g. medical, dental, vision, life, accident, disability, LTC, FSAs (Healthcare only) and HRAs.
• Welfare benefits are benefits that are company sponsored and unfunded. g. PTO, vacation time, holiday pay, prepaid legal, scholarship programs, wellness programs (offering medical care), EAPs (offering counseling), and on-site daycares.
  
  

 Employers MUST be in compliance with ERISA to avoid increasing DOL penalties. For example, as of January 15, 2023:

• Certain Model Notice-Failure to Provide is subject to a penalty of up $137 per day, per employee (with no cap). That means an employer with 50 employees that doesn’t distribute appropriately could face fines upwards of $2.5 million, for only one year of non-compliance.
• SPD/SAR/Plan Document-Failure to Distribute carries a penalty of up $110 per day, per employee (with no cap).
• For employers with 100 or more employees enrolled on day one of the plan year, that failed to file a Form 5500 with the DOL for each applicable benefit (due no later than the end of the 7th month after plan year-end), penalty for late filing increased to $ 2,586 per filing, per day late (with no maximum).
• ERISA enforcement isn’t going anywhere. According to the annual enforcement statistics fact sheets, released by the DOL’s ERISA enforcement agency, Employee Benefits Security Administration (EBSA): 
• In the midst of a global pandemic in 2020, the DOL conducted more than 1,100 formal ERISA civil investigations, closed 230 ERISA criminal investigations, and set a new record of more than $3 billion in benefit plan enforcement.
• In 2021-22, almost 70% of investigations resulted in monetary/corrective action. EBSA commented, “to minimize their likelihood of becoming an EBSA statistic, plan sponsors, administrators, and service providers need to stay on top of ERISA compliance requirements.”