GT Alert

GT's New Flexible Welfare Benefit Plan Document and HIPAA Compliance Project

January 2003
By Steven B. Lapidus, Jeffrey D. Mamorsky, Michael R. Costa and David B. Spanier, Greenberg Traurig

  View or download the PDF version of this Alert here.

GT Flexible Welfare Benefit Plan Document

Employers generally are aware of the fundamental principles under ERISA that require that employee benefit plans subject to ERISA be in writing and that participants be provided with summary plan descriptions (“SPD’s”) for each of those plans. The SPD’s not only must describe the benefits under the plan, but also must contain certain additional information, such as the employer’s name and taxpayer identification number, the name, address and telephone number of the plan administrator, the name and address of the trustee and agent for service of legal process, a procedure for the handling of benefit claims, and a statement of each participant’s ERISA rights. SPD’s also must identify the plan’s contribution sources and explain how contributions are calculated, and must summarize the plan provisions governing the plan sponsor’s right to terminate the plan.

"Many employers, however, do not have the requisite documentation for some or all of their welfare plans."

Plan sponsors generally have been very careful to satisfy these documentation requirements for their pension, 401(k) and other retirement plans. Many (perhaps even most) employers, however, do not have the requisite documentation for some or all of their welfare plans. These include programs providing for health (including health care reimbursement accounts in cafeteria plans), dental, vision, life, disability, unemployment, vacation, apprenticeship or training, daycare centers, scholarship funds, or severance benefits. Many of these programs are offered pursuant to insurance contracts, and employers typically provide their employees with certificates of coverage and/or booklets provided by the insurance carriers to describe the benefits under their plans. These documents frequently do not, however, include all of the information required to be included in a plan document or a summary plan description. They also may not be frequently updated to reflect changes in coverage or applicable law.

To enable our clients to simply and efficiently comply with all of the legal requirements applicable to welfare plans, the Executive Compensation and Employee Benefits Group at Greenberg Traurig has developed a Flexible Welfare Benefit Plan document. Our document “wraps” around, and incorporates by reference, the booklets provided by insurance carriers for the benefits they provide, and contains text to describe the programs (such as cafeteria plans) that are not described in the booklets. Our document also includes all of the other information required to be provided in a summary plan description for all of these programs, and to comply with other applicable requirements under ERISA, HIPAA (including the new privacy rule) and COBRA. Further, with the creation of a single “wrap plan” that bundles all of their welfare plans under a single plan document, the plan sponsor need only file one Form 5500 with various Schedules A for each insurance contract offered under the “wrap plan,” rather than having to file separate forms for each plan, thereby reducing administrative costs.

Greenberg Traurig’s unique approach to the preparation of a “wrap plan” results in a combined plan document and SPD that is comprehensive, complete, up-to-date, highly readable, conveniently organized with a table of contents and alphabetical index, and thus is extremely easy to use. It also helps explain and coordinate complicated areas of health and benefits law such as COBRA, subrogation and coordination of benefits provisions in language “calculated to be understood by the average plan participant” (which is itself an important ERISA reporting and disclosure requirement).

Our “wrap plan” also incorporates the requirements imposed by recent law changes. For example, on May 29, 2002 the Department of Labor issued new claims procedure guidelines, that generally are to be effective for claims under health plans made on or after January 1, 2003. The revised guidelines require new claims processing procedures for health plans, more stringent deadlines with respect to responding to medical claims and the requirement that additional information be provided to participants or beneficiaries if their claims are denied.

Greenberg Traurig HIPAA Compliance Project

The new HIPAA privacy rules generally become effective April 14, 2003. The effective date for “small plans” (i.e., those with under $5,000,000 in annual premiums if the plan is fully insured or under $5,000,000 in annual claims if the plan is self-insured) is April 14, 2004. These new rules were summarized in a GT Memorandum concerning HIPAA previously distributed to our clients.

Under the new HIPAA rules, all group health plans and other HIPAA “covered entities”, and their “Business Associates” must comply with significant new regulations concerning how they create, store, process, transmit and use personally identifiable health information. The new HIPAA requirements cover electronic transaction standards, privacy safeguards, and security of information technology hardware and software systems. HIPAA promises to initiate some of the most far ranging and costly changes ever seen in the healthcare industry and will add new levels of complexity to compliance efforts (e.g. state privacy laws more liberal than HIPAA also apply thereby increasing compliance responsibilities where there are multi-state operations.)

The Greenberg Traurig HIPAA Compliance Team is fully prepared to assist employers who sponsor group health plans in complying with these new privacy rule requirements prior to the upcoming regulatory deadlines. The Compliance Team has developed a comprehensive five-step approach to a full HIPAA compliance program covering initial education and training sessions, formal gap analyses, policy and procedure development, post-implementation training and assistance and ongoing monitoring to ensure continued compliance. There is also available on-line web-based and video training for clients. The program can be tailored and adjusted to your needs and current state of readiness. The fees for program development and implementation assistance vary depending on the size and complexity of the organization and current state of HIPAA readiness but are usually accommodated on a flat fee basis. The HIPAA compliance program can be purchased separately or in combination with the GT Flexible Welfare Benefit Plan. When combined, clients can realize significant savings and help ensure overall compliance.

Please let us know if you would like more information with regard to our “wrap plan” or would like our assistance in helping ensure your company’s timely compliance with the new HIPAA privacy rules.

© 2003 Greenberg Traurig

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