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The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for employee benefit plans maintained by private-sector employers.  ERISA includes requirements for both retirement plans (i.e. 401(k) plans) and welfare benefit plans (i.e. group health plans).  ERISA has been amended many times over the years, expanding the protections available to welfare benefit plan participants and beneficiaries.

ERISA includes standards of conduct for those who manage an employee benefit plan and its assets, who are called "fiduciaries."  This article* includes a set of frequently asked questions (FAQs) to help employers understand the basic fiduciary responsibilities applicable to group health plans under ERISA.

Who is a fiduciary?
Many of the actions involved in operating an employee benefit plan make the person or entity performing them a fiduciary.  Using discretion in administering and managing a plan or controlling the plan's assets makes that person a fiduciary to the extent of the person's discretion or control.  Thus, fiduciary status is based on the functions performed for the plan, not just a person's title.

Group health plans can be structured in a variety of ways.  The structure of the plan will affect who has fiduciary responsibilities.  Most employers sponsoring self-funded group health plans exercise some discretionary authority and therefore are fiduciaries.  If the employer sponsors a fully-insured plan, fiduciary status depends on whether the employer exercises discretion over the plan.

A plan must have at least one fiduciary (a person or entity) named in the written plan, or through a process described in the plan, as having control over the plan's operation.  The named fiduciary can be identified by office or by name.  For some plans, it may be an administrative committee or a company's board of directors.

A plan's fiduciaries will ordinarily include:
• Plan administrators, trustees and investment managers;
• Individuals exercising discretion in the administration of the plan; and
• Members of a plan's administrative committee (if applicable) and those who select committee officials.

Who is not a fiduciary?
Attorneys, accountants and actuaries generally are not fiduciaries when acting solely in their professional capacities.  Similarly, a third-party administrator (TPA), record keeper or utilization reviewer who performs solely ministerial tasks is not a fiduciary; however, that may change if the entity exercises discretion in making decisions regarding a participant's eligibility for benefits.

Also, a number of decisions are not fiduciary actions, but rather are business decisions made by the employer.  For example, the decisions to establish a plan, determine the benefit package, include certain features in a plan, amend a plan and terminate a plan are employer business decisions not governed by ERISA.  When making these decisions, an employer is acting on behalf of the business, not the plan, and; therefore, is not a fiduciary.  However, when an employer (or someone hired by the employer) takes steps to implement these decisions, that entity is acting on behalf of the plan and, in carrying out these actions, may be a fiduciary.

Coming soon, Part 2 - What Does It Mean To Be A Fiduciary?

*LEGISLATIVE BRIEF Brought to you by The Bramlett Agency, March 2015, Zywave.

This information is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice.  Readers should contact legal counsel for legal advice.

Posted 3:37 PM

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