What are the liability risks for health plan administrators? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

What are the liability risks for health plan administrators?

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in Employee Benefits Program,Human Resources

Q. I was recently approached by one of our company’s board members and asked to act as the plan administrator for our health benefits plan. While I’m accustomed to taking phone calls and managing the paperwork that comes into the office from our plan participants, I am nervous about assuming formal responsibility for plan administration. Am I subject to personal liability for administering our company’s plan?

A. The plan document (or summary plan description) is used to define the terms and conditions of your benefits plan and should explicitly name the plan administrator. The plan administrator is almost never an individual. Normally, the company itself acts as plan administrator.

In this case, it sounds like you will act as a fiduciary under the plan, which carries certain risks and liabilities under the Employee Retirement Income Security Act (ERISA). Typically, the person appointed to administer the paperwork for the plan administrator has that duty defined in the job description, and the company takes out an insurance policy on that person’s behalf to cover any legal liability associated with actions under the plan.

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