ERISA FAQ

Is my client's Employee Benefit Plan an ERISA plan?

An ERISA plan is an employer provided benefit plan subject to exceptions for government or religious employers. The more important determination is whether it is fully insured or self-funded. Fully insured plans are subject to state law. Self-funded plans are subject to federal law making their contract provide the right of recovery.

Do we have to pay a lien?

In order to determine whether a lien has to be paid, a careful assessment must be made of the applicable Plan Documents with an understanding of the applicable governing law.

Do we have a legal obligation to notify the Plan of the accident and/or settlement?

The terms of an ERISA Plan will articulate the responsibilities of the parties. Typically, the Plan requires cooperation and notification in circumstances where another party may become responsible for the medical benefits the Plan has already paid.

Regardless of whether you, as the attorney, are obligated by the law in your state; your client most likely has a duty to notify the Plan of the accident and/or settlement pursuant to the terms of their health insurance contract or policy. As an extension, you as the client’s representative, could be seen as having an obligation to do so. Synergy’s recommendation is to tackle any possible lien interest head on and bring closure to your representation.

How do I obtain a copy of the Summary Plan Description and Master Plan Document?

ERISA requires plan administrators – the employer group, not the insurance company or the subrogation vendor – to provide the beneficiary with a copy of the SPD and MPD upon written request. This is called a 1024(b)(4) request.  There is the laundry list of items that the plan participant is entitled to receive under the ERISA statute 29 USC § 1024(b)(4): 

The administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary, plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated.

An administrator is required to provide the requested documents. The ERISA statute has created a civil penalty under 29 U.S.C. § 1132(c)(1) which has been increased to $110/day under 29 CFR § 2575.502(c)–(3).

ERISA GLOSSARY

Audit

The review of the ERISA Payment Summary to ensure there are no errors, duplicates or unrelated treatment is included.

Insured

An employee benefit plan where the employer has purchased a plan from an insurance company to provide benefits for their employees. The Summary Plan Description (SPD) or Form 5500 will typically identify if a plan is insured.

Master Plan Document (MPD)

The governing document outlining the coverage as well as the rights and responsibilities agreed to by the plan holder and the beneficiary. The Summary Plan Description (SPD) is a descriptive summary of the control MPD. The language may identify whether the plan is self-funded or insured under ERISA.

Plan Administrator

The Plan Administrator pursuant to a document request under the ERISA statute is the employer group. It is not the insurance company or the subrogation vendor. In order for an ERISA document request to be valid, it must be sent to the proper party.

Self-Funded

An employee benefit plan where the employer is providing health care benefits out of pocket. Larger companies are often self-funded and some may hire an insurance company in an administrative only capacity to handle claim processing and related functions. The Summary Plan Description (SPD) or Form 5500 will typically identify if a plan is self-funded.

Summary Plan Description (SPD)

Document outlining the coverage as well as the rights and responsibilities agreed to by the plan holder and the beneficiary. The language may identify whether the plan is self-funded or insured under ERISA. This is a summary of the Plan/Contract and not the Plan itself.

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