Overview

Enacted in 1974, the Employee Retirement Income Security Act (ERISA) is a comprehensive federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans. Since 1974, the law has been amended numerous times. ERISA is extremely detailed and complex. Employers (not WPS) are solely responsible for complying with ERISA requirements that apply their pension and health plans. Failure to comply may be result in costly employee lawsuits or enforcement actions/penalties assessed by the Department of Labor. Please consult your legal counsel for advice on your specific situation and how ERISA may affect you.

Please note: This overview summarizes our legal understanding of ERISA. It is not a legal opinion.

Applicability

Many employee benefit arrangements that provide non-pension fringe benefits are "employee welfare benefits plans" covered by ERISA. Most private-sector employers (corporations, partnerships, and sole proprietorships) are subject to ERISA, including non-profit organizations. Certain employee welfare benefit plans are exempt from all ERISA requirements. Generally, an exempt plan has one or more of the following characteristics:

• It is for the benefit of persons other than employees
• It is administered by a government body or agency
• It is a "church" plan as defined by ERISA; or
• It is established solely to comply with a workers' compensation law or other state disability law.

In addition, certain "voluntary employee-pay-all" arrangements are exempt.

Plan Administrator

An employer subject to ERISA is required to have the "Plan Administrator" of an employee welfare benefit plan furnish certain materials to participants under that plan. A "participant" is any employee or former employee who is eligible to receive any benefit under an ERISA plan or whose beneficiaries may be eligible to receive such benefits. An employer must name a Plan Administrator for its welfare plan. WPS is not the Plan Administrator, plan sponsor, or plan trustee of the plan.

Summary Plan Description

The Plan Administrator (not the insurer or third-party administrator) is responsible for furnishing the Summary Plan Description (SPD) to participants. WPS will furnish documents to employers that may be used as part of the SPD, including the Certificate of Insurance. The SPD is important because it outlines all of plan rights and obligations. SPDs, updated SPDs, and summaries of material modifications must be written in a manner that can be read and understood by the average plan participant.

SPDs must be distributed to participants within 120 days of the employee welfare benefit plan effective date. Plan amendments and revised SPDs must be given to participants every five years. Summaries of material modifications must be distributed within 210 days of the year in which they were made. An SPD must be given to new employees within 90 days of becoming a participant.

Procedures for Processing Benefit Claims

Claims procedures have been a part of ERISA since its inception; however, recently these claims procedures have been updated and revised. As before, every plan has an obligation to establish and maintain reasonable claims procedures.

Important Definitions:

• Adverse Benefit Determination - a denial, reduction, or termination of, or a failure to provide or make payment, in whole or in part, for a benefit.
• Concurrent Care - an on-going course of treatment provided over a period of time or number of treatments.
• Pre-Service Claim - any claim for a benefit that is conditioned, in whole or in part, on approval of the benefit in advance of obtaining medical care.
• Post-Service Claim - any claim for a benefit that is not a pre-service claim.
• Urgent Care Claim - a claim for medical care or treatment required for an illness or injury that would not result in further disability or death if not treated immediately, but requires professional attention and has the potential to develop such a threat if treatment is delayed.

Timeframes. Once a claim is filed it must be processed within the following timeframes:

• Urgent Care Claim - 72 hours or less, with no extensions. If the claim is incomplete, the claimant must be notified with 24 hours or less of receipt of claim. The claimant has 48 hours to respond.
• Pre-Service Claim - 15 days or less (a 15-day extension is permitted, with notice). If the claim is incomplete, the claimant must be notified within15 days of receipt of the claim. The claimant has 45 days to respond.
• Post-Service Claim - 30 days or less (a 15-day extension is permitted, with notice). If the claim is incomplete, the claimant must be notified prior to the expiration of the 30-day period. The claimant has 45 days to respond.
• Adverse Benefit Determination of Concurrent Care - in advance of reduction or termination of care to allow time for the claimant to appeal.

Timeframe for appeals is as follows:

• Urgent Care Claim - 72 hours or less, with no extensions.
• Pre-Service Claim - 30 days or less, with no extensions.
• Post-Service Claim - 60 days or less, with no extensions.
• Adverse Benefit Determination of Concurrent Care - in advance of reduction or termination of care to allow time for the claimant to appeal.

Content of Denial Notices

Written or electronic notification of any adverse benefit determinations must be given to the claimant and must include the following:

• Specific reasons for the adverse benefit determination and the specific plan provisions relied upon.
• A description of any addition information necessary and why such information is necessary.
• A description of the appeals process, including time limits. Also, a statement of the claimant's right to bring a civil action under ERISA.
• If appropriate, the rule, guideline, protocol, etc., relied upon in making the adverse benefit determination or a statement indicating that a copy of such rule, guideline, protocol, etc., will be provided free of charge upon request
• If appropriate, an explanation of the scientific or clinical judgement used for the adverse benefit determination or a statement that such explanation will be provided free of charge upon request.

Appeal Process

A plan must provide at least 180 days in which a claimant can decide whether to appeal an adverse benefit determination. Once an appeal is filed, it must receive a full and fair review of the claim and adverse benefit determination by a named fiduciary of the plan. WPS is the fiduciary of insured plans. A plan must also:

• Provide the opportunity for claimants to submit written comments, documents, etc. and such comments, documents, etc. must be taken into account during the review.
• Provide that a claimant will be provided, upon request and free of charge, access to and copies of information relevant to the claim.
• Provide for a review that does not give deference to the original decision.
• Consult with a health care professional if any adverse benefit determination was based on a medical judgment.
• Identify any medical or vocational experts whose advice was obtained.
• If claim involves urgent care, an expedited review process.

A plan may not require a claimant to file more than two appeals of an adverse benefit determination prior to bringing a civil action.