Plan Wraps and SPDs Structuring Documents to Ensure Compliance with - PowerPoint PPT Presentation

Presenting a live 90-minute webinar with interactive Q&A ERISA Employee Welfare Benefit Plan Wraps and SPDs Structuring Documents to Ensure Compliance with ERISA and to Avoid Participant Challenges Due to Inconsistent Terms TUESDAY, NOVEMBER 27, 2012 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Stephen F . Herbes, Assistant General Counsel, 1199SEIU National Benefit & Pension Funds , New York Jennifer Kobayashi, Partner, Wang Kobayashi Austin, LLC , Chicago Please print and follow the PDF handout, "Reference Materials" during this presentation. The handout is accessible under the "handouts" tab in the "Conference Materials" section on the left panel of your screen, and also at the following link: http://www.straffordpub.com/products/erisa- employee-welfare-benefit-plan-wraps-and-spds-2012-11-27. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .

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Presenting a live 90-minute webinar with interactive Q&A That’s a Wrap! USING WRAP PLAN DOCUMENTS AND SPDS WITH ERISA WELFARE PLANS TUESDAY, NOVEMBER 27, 2012 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Stephen F . Herbes, Assistant General Counsel, 1199SEIU National Benefit & Pension Funds – New York Jennifer Kobayashi, Partner, Wang Kobayashi Austin, LLC - Chicago The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .

6 Agenda 6  When ERISA Applies  What ERISA Requires  What are Wrap Plans and Wrap SPDs  Why Have a Wrap Plan and SPD  What a Wrap Plan and SPD Should Include  Wrap Document Drafting and Planning Considerations  Questions Stephen F. Herbes, Assistant General Counsel 1199SEIU National Benefit and Pension Funds

7 Who Is Subject to ERISA? 7  ERISA applies to private employers  Note: ERISA does not have a small employer exception  ERISA generally does not apply to government employers, Indian tribal governments, or churches  Churches can elect to be subject to ERISA Stephen F. Herbes, Assistant General Counsel 1199SEIU National Benefit and Pension Funds

8 What Is Subject to ERISA? 8  Employee Welfare Benefit Plans or Welfare Plans  Employee Pension Benefit Plans or Pension Plans Stephen F. Herbes, Assistant General Counsel 1199SEIU National Benefit and Pension Funds

9 Employee Welfare Benefit Plans 9 “any plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services, or (B) any benefits described in § 302(c) of the Labor Management Relations Act, 1947 (other than pensions on retirement or death, and insurance to provide such pensions)” -ERISA § 3(1) Stephen F. Herbes, Assistant General Counsel 1199SEIU National Benefit and Pension Funds

10 “any plan, fund, or program” 10  intended benefits  class of beneficiaries  source of financing  a procedure to apply for and collect benefits - Donovan v. Dillingham , 688 F.2d 1367, 1372 (11th Cir. 1982) Stephen F. Herbes, Assistant General Counsel 1199SEIU National Benefit and Pension Funds

11 “any plan, fund, or program” 11  In addition, the arrangement must require an ongoing administrative responsibility or scheme to determine eligibility and calculate benefits before the arrangement will be considered a plan, fund, or program - Fort Halifax Packing Co. v. Coyne , 482 U.S. 1 (1987) Stephen F. Herbes, Assistant General Counsel 1199SEIU National Benefit and Pension Funds

12 Certain Arrangements Are Not Considered ERISA Plans 12  One-time, lump-sum severance bonuses with no ongoing administrative scheme - Rodowicz v. Mass. Mut. Life Ins. Co. , 192 F.3d 162 (1st Cir. 1999)  Gross up pay to law firm partners needing health insurance coverage for dependents - Bilow v. Much Shelist Freed Denenberg & Ament , 67 F. Supp.2d 955 (N.D. Ill. 1999), aff’d, 277 F.3d 882 (7th Cir. 2001) Stephen F. Herbes, Assistant General Counsel 1199SEIU National Benefit and Pension Funds

13 “established or maintained by an employer” 13  Department of Labor (DOL) takes the position that employer-funded insurance arrangements are ERISA plans (unless insurance arrangement qualifies for DOL safe harbor)  Courts have agreed that employer’s purchase of insurance or contribution toward insurance gives rise to an ERISA plan Stephen F. Herbes, Assistant General Counsel 1199SEIU National Benefit and Pension Funds

14 DOL Safe Harbor A group or group-type insurance program will 14 not be subject to ERISA if:  no contributions are made by employer or employee organization  participation is completely voluntary  employer’s or employee organization’s sole function is to allow insurer to publicize program, collect premiums, and remit to insurer Stephen F. Herbes, Assistant General Counsel 1199SEIU National Benefit and Pension Funds

15 DOL Safe Harbor 15 A group or group-type insurance program will not be subject to ERISA if:  employer or employee organization receives no consideration, other than reasonable compensation for administrative services - DOL Reg. § 2510.3-1(j) Stephen F. Herbes, Assistant General Counsel 1199SEIU National Benefit and Pension Funds

16 DOL Safe Harbor Contributions by employer or employee 16 organization  any contributions will take plan outside safe harbor  partial contributions  insignificant contributions  contributions that are limited to certain employees Stephen F. Herbes, Assistant General Counsel 1199SEIU National Benefit and Pension Funds

17 DOL Safe Harbor Contributions by employer or employee 17 organization  payment of insurance premiums reported as gross income on employee’s W -2 not a “contribution” B-T Dissolution, Inc. v. Provident Life & Accident Ins. Co. , - 175 F. Supp. 2d 978 (S.D. Ohio 2001)  payment of insurance premiums through cafeteria plan not a “contribution” - Hrabe v. Paul Revere Life Ins. Co ., 951 F. Supp. 997 (M.D. Ala. 1996) Stephen F. Herbes, Assistant General Counsel 1199SEIU National Benefit and Pension Funds

18 DOL Safe Harbor Participation must be completely voluntary 18  participation cannot be requirement of employment  requirement that employees remain in plan for a limited period of time may cause plan to be involuntary  BUT, requirement that a minimum number of employees participate should not cause plan to be involuntary Stephen F. Herbes, Assistant General Counsel 1199SEIU National Benefit and Pension Funds

19 DOL Safe Harbor Limited employer or employee organization 19 involvement  Permitting insurer to publicize program to employees is allowed:  insurance presentations in workplace  intermediary between employees and insurance company’s agent  providing employees with insurance company’s contact information  BUT, employer should not recommend plan or make positive statement on it Stephen F. Herbes, Assistant General Counsel 1199SEIU National Benefit and Pension Funds