Issue: Spurred by corporate retirement-fund scandals, the federal government is stepping up its monitoring of benefit plans under the Employee Retirement Income Security Act of 1974 (ERISA).
Risk: In 2003, the feds recovered more than $1.4 billion in ERISA-related lawsuits, an increase of almost 60 percent over 2002.
Action: Conduct an annual audit to make sure your organization is meeting ERISA disclosure, reporting and claims-payment requirements.
Thanks largely to publicity from corporate scandals slamming Enron, WorldCom and others, claims challenging employers' benefits policies are rising rapidly.
At the center of the storm: The Employee Retirement Income Security Act of 1974 (ERISA), which governs the administration of private employers'and the rights of plan beneficiaries.
The Labor Department'sSecurity Administration (EBSA) is in charge of making sure your organization meets its "fiduciary responsibility" to manage in a way that minimizes the risk of losses. Here's what EBSA would look for in an ERISA claim against your organization:
1. Disclosure. In an ERISA investigation, your's Summary Plan Description (SPD) will be closely scrutinized. Thanks to a recent law change, you no longer need to file your SPD with the Labor Department, but you must still prepare it according to ERISA regulations in case of an audit. For advice, visit the "Compliance Assistance" section of EBSA's Web site at www.dol.gov/ebsa/ compliance_assistance.html.
2. Reporting. Your organization must file annual returns and reports about its pension and other benefit plans' financial condition and operations using Form 5500 (or 5500EZ). Reporting requirements differ based on the size of your plan.
Typically, "small plans" serve fewer than 100 participants. An important exception: The 80/120 rule, which applies when an organization files under a small plan in one year but then increases the number of its employees beyond 99 during the following year. In that situation, it can still file as a small plan as long as it doesn't exceed 120 employees.
You can streamline government reporting by filing through "EFAST," the electronic filing system. Go to www.efast.dol. gov for details.
3. Paying claims. When an employee or beneficiary is denied benefits, your plan is required to send a notice of denial with specific reasons. When employees are denied benefits, ERISA lets employees take the issue to court.
To keep ERISA issues out of court in the first place, put all claims procedures in writing. That helps resolve benefits disputes, reduce the chance for frivolous lawsuits and provides a framework for claims review.
Good resource: Download a new U.S. Labor Department guide on ERISA reporting and disclosure rules at www.dol.gov/ ebsa/pdf/rdguide.pdf.
Like what you've read? ...Republish it and share great business tips!
Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...
We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.
The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.
" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/1302/shelter-yourself-from-gathering-storm-of-erisa-claims "