Within the context of employee health plans, the partnership between a plan sponsor and its administrator holds paramount importance in ensuring seamless operations and prudent management of plan assets.
To fulfill their fiduciary duties, plan sponsors often enlist the expertise of third-party administrators, while still retaining their role as administrators under the guidelines of the Employee Retirement Income Security Act (ERISA). Navigating the complexities of day-to-day operations and meeting fiduciary obligations necessitates a comprehensive understanding of applicable laws and regulations, compelling the need for a well-crafted Plan Administration Manual. The absence of such a manual places plan administrators at risk of regulatory non-compliance, potentially resulting in costly consequences.
Regulation Landscape for Self-Insured Plans
While fully-insured health insurance plans primarily fall under state-level regulations, non-governmental, self-insured health plans operate within a different jurisdiction. These plans are subject to federal regulation and adhere to ERISA, bypassing state insurance laws and oversight. ERISA’s reach extends beyond its own framework, encompassing various federal regulations and mandates that plan administrators must grasp to effectively manage a health plan. Notable examples include:
- Consolidated Omnibus Budget Reconciliation Act (COBRA)
- Consolidated Appropriations Act (CAA)
- Health Insurance Portability and Accountability Act (HIPAA)
- Tax Equity and Fiscal Responsibility Act (TEFRA)
- Mental Health Parity and Addiction Equity Act (MHPAEA)
- Pregnancy Discrimination Act
- Americans with Disabilities Act (ADA)
- Age Discrimination in Employment Act
- Economic Recovery Tax Act (ERTA)
- Deficit Reduction Act (DEFRA)
- Families First Coronavirus Response Act (FFCRA)
Given the dynamic nature of regulations, plan administrators must stay abreast of changes, implementing necessary controls to ensure ongoing compliance. Pertinent examples affecting 2024 include the No Surprises Act, Price Transparency Act, and MHPAEA Non-Quantitative Treatment Limits, ERISA fiduciary issues, preventive medical services and ongoing ACA concerns.
Within the context of employee health plans, the partnership between a plan sponsor and its administrator holds paramount importance in ensuring seamless operations and prudent management of plan assets. To fulfill their fiduciary duties, plan sponsors often enlist the expertise of third-party administrators, while still retaining their role as administrators under the guidelines of the Employee Retirement Income Security Act (ERISA). Navigating the complexities of day-to-day operations and meeting fiduciary obligations necessitates a comprehensive understanding of applicable laws and regulations, compelling the need for a well-crafted Plan Administration Manual. The absence of such a manual places plan administrators at risk of regulatory non-compliance, potentially resulting in costly consequences.
A Robust Framework for Administration
The cornerstone of effective plan administration lies in a well-structured manual that delineates the sponsor’s fiduciary responsibilities. This includes:
- Acting solely in the interest of plan participants and beneficiaries, with the exclusive purpose of providing benefits.
- Prudently carrying out duties.
- Adhering to the plan document.
- Holding plan assets, if any, in trust.
- Paying only reasonable plan expenses.
As plan sponsors typically engage internal administrative committees, human resources departments, and third-party vendors for day-to-day operations, the manual should incorporate a matrix defining primary compliance responsibilities for each entity. Policies and procedures, including the delegation of compliance areas to external parties, may be documented within the Administrative Manual or a separate Administrative Policies and Procedures Manual.
Common Pitfalls
In assessing a plan sponsor’s administrative manual, common issues often include:
- Absence of a manual.
- Outdated, missing, or incorrect information.
- Information contradicting plan documents.
- Limited accessibility to involved parties.
To mitigate these concerns, it is advisable to enlist individuals with industry expertise and a comprehensive understanding of relevant laws and regulations to periodically draft or review the manual. This proactive approach safeguards against regulatory pitfalls, ensuring the manual remains a reliable guide for effective plan administration.
Invest in a Robust Plan Administration Manual
As the landscape of employee health plans continues to evolve, plan sponsors are urged to reassess their administrative approach. Embrace the opportunity to enhance plan administration by investing in a robust Plan Administration Manual. Engage with industry experts to ensure compliance with dynamic regulations and fortify the fiduciary foundation of your health plan. The time for careful planning and strategic action is now. Elevate your plan administration for seamless operations and lasting success.
Contact Us
For more information on this topic, please contact a member of Withum’s Self-Insured Health Plan Advisory Services Team.
