Now that we’re a month into 2022, it’s time to evaluate some major changes happening in employee benefits–particularly to plans categorized under ERISA. Governmental efforts to increase transparency, protect employees and publicize valuable information create new responsibilities for both hospitals and employers. Today, we’ll explore how these responsibilities impact you as an employer.
What Exactly Is ERISA?
The 1974 Employee Retirement Income Security Act (ERISA) is a federal tax labor law that sets up minimum standards for pension and healthcare plans in the private industry. ERISA plans themselves are benefit plans provided by employers that are taxed. As such, the plans are a tax deduction for employers, and the federal government has regulations in place for the plans and deductions.
So Why Should You, as an Employer, Care About ERISA Compliance Laws and Regulations?
It’s important to understand the role of a plan fiduciary or responsible administrator. In the case of an ERISA plan offered by an employer, you serve as the plan fiduciary. As such, you are responsible for the decisions made regarding employee benefits–which come with significant responsibilities and liabilities. Even if you are working alongside a trusted broker, consultant or advisor, you’re ultimately the one holding responsibility as the fiduciary.
How Are ERISA Laws Changing in 2022, and What Will My New Responsibilities Be?
As part of the new regulations, the federal government wants to promote transparency and efficiency within the healthcare industry–the goal of which is to protect employees. This includes regulations like the 2021 requirement of hospitals to publish rates so consumers are aware of costs before treatment and can make financially-informed decisions about where they receive medical care.
Now, in 2022, the government is regulating what information employers, as plan fiduciaries, make available to their employees. This includes providing transparency for the amount of money paid for different services through a health insurance plan. Employees can request a list of the providers they may go to under their plan and the common procedural cost rate.
How Do New Transparency Laws Benefit My Employees?
In essence, these laws create an open-source of availability for employees to become consumers: if an employee requires a certain treatment, they can explore their options under their plan and see how much each option would cost. As the fiduciary, the employer must also list what monies in the benefit plan are going to these participating plan vendors.
The government’s main goal here is to make sure that when employees are making their required contributions, it’s clear to them where those dollars are going.
What Happens if I Fail to Follow These Laws?
As an ERISA group with 100 or more employees, if you aren’t in compliance with federal regulations, you’re opening yourself up to massive penalties and fines. You also can be randomly audited by the Department of Labor at any time, and employees can report you to the Department of Labor if they believe their plan is noncompliant. If you are audited, you must prove that you know where the money you and your employees spend is going. You must also prove there is an actual process in place that demonstrates why you make the benefit spending decisions you make.
At the end of the day, make sure that all of the people and entities involved in benefit decisions for your company are being held accountable to fiduciary requirements–and not creating liabilities for you.
How Do I Create a Compliant Benefit Plan My Employees Like?
It’s critical to recognize the importance of your role as the plan fiduciary. Your responsibilities go far beyond merely working with a broker to make sure you’ve dotted your i’s and crossed your t’s; rather, it’s about making sure that the benefits decisions you are making are made in the best interests of your employees and organization.
This starts with incorporating the voice of your employees into benefit decisions, and not just “business as usual” with your current plan. Take a serious look at how much money you’re spending and what your employees have to pay out of their paycheck and out of pocket. Use strategic surveys and data mining to generate honest employee feedback about what changes they’d like to see in their benefits that will create the transparency you need. Finally, prioritize working with vendors that are compliant and committed to financial transparency, and be more responsive to the needs and requests of your employees regarding benefits.
Need Help Building Benefit Transparency for Your Company?
At Waypoint Benefit Solutions, we specialize in data-driven, customized solutions for companies in need of a benefits overhaul. We believe in transparency in benefit plans, and use our unique employee surveys and data-mining processes to identify and remove conflicts of interest, hidden costs and excessive charges traditional brokers overlook. Learn more about our better benefits and lower costs by scheduling an introductory call today!