Benefit Statements for Defined Benefit Plans – When to Send and What to Say

Section 105 of the Employee Retirement Income Savings Act of 1974 (“ERISA”) (29 U.S.C. §1025) requires the plan administrator for defined benefit plans, such as pension plans, to provide benefit statements to the participants and beneficiaries of the plan. The benefit statement is essentially a notice that contains information about the plan, including the rights of the participants and the benefits available to the participant or beneficiaries, among...

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District Court Decision Reminds Plan Administrators About the ERISA Disclosure Rules

A recent district court decision from California serves as helpful reminder to ERISA plans about their obligation to disclose certain documents upon request. In Zavislak v. Netflix, a California District Court reviewed whether an ERISA health plan adequately complied with ERISA’s disclosure rules and, if not, whether it should be subject to the daily penalty under ERISA Section 502(c)(1). Background The Plaintiff was a Netflix employee who was a covered participant...

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HRA vs. FSA vs. HSA: What’s the Difference?

As the price of healthcare continues to increase, employers can assist employees by providing employees the opportunity to enroll in special accounts to help pay for medical expenses. Some of these accounts enable the employer to share the cost burden with the employee while providing tax-savings to each. Generally, there are three (3) employer-sponsored vehicles that are commonly used to help pay for qualified medical expenses: (1) Health Reimbursement...

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Is Your Denial Letter Good Enough?

Plan administrators are engaged to administer claims on the plan’s behalf, which include determinations of eligibility and denying coverage, among other services. When a claim is denied, the plan administrator is required to provide adequate notice to the participant, among other things. The Employee Retirement Income Security Act of 1974 (“ERISA”) generally requires the notice to include the specific reasons for the denial and to provide citations to the...

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AbbVie v. Payer Matrix Pending Litigation

Introduction: In May 2023, AbbVie, a pharmaceutical manufacturing company, filed suit against Payer Matrix, a company that provides alternate funding options for their clients, usually health plans, by way of enrolling participants in the health plan into programs aimed at providing expensive specialty medication for low income and uninsured participants. After realizing Payer Matrix’s business model, AbbVie filed suit against Payer Matrix and alleged that Payer Matrix violated, and continues...

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Roth 401(k) Accounts

When planning for retirement, employers can offer a wide variety of investment vehicles. One such vehicle is a Roth 401(k). A Roth 401(k) operates similarly to a traditional 401(k); your employer sponsors the plan, you contribute money to the account, you choose how the money is invested, and you can begin withdrawing the money after you retire. As discussed in greater detail in the next section, the differences between...

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Recovering Overpayments After the SECURE Act 2.0. How do Plans Proceed?

Multiemployer benefit plans are governed by the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Internal Revenue Code. The SECURE Act 2.0 (“SECURE Act”) became effective on December 29, 2022, as part of the 2023 Consolidated Appropriations Act. The law brings significant changes to the Department of Labor (“DOL”) and Internal Revenue Service (“IRS”) regulations on benefit overpayments, which occur, for example, when retirees, or their beneficiaries,...

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The Growing Popularity of “Weight Loss” Drugs – And The Impact on Health and Welfare Plans

By now, most people are aware of the new weight loss “wonder drugs” like Ozempic, Wegovy, Rybelsus, and Mounjaro. Through clever marketing and catchy jingles these drugs have made their way from Hollywood to main street U.S.A. And while many are being used off-label, some manufacturers are asking the U.S. Food and Drug Administration to approve them for weight loss treatment. As demand for these drugs continues to grow, plan...

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Withdrawal Liability and How it Can Affect Successor Employers

Multiemployer pension plans are defined benefit retirement plans maintained pursuant to a collective bargaining agreement between employers and a union. A defined benefit plan is a retirement plan structure that guarantees a specific retirement benefit at retirement. The benefit amount may either be a pre-established set amount, or an amount based on a specific formula which typically considers factors such as time of employment and age. In 1974, Congress...

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IRS Substantiation Rules Update

The IRS’s Chief Counsel released a memorandum that confirmed the IRS’s position on the substantiation of medical and dependent care expenses. See IRS Chief Counsel Memorandum 202317020. The guidance addressed two questions: (1) How are medical reimbursements treated if they are not properly substantiated and (2) Whether plans can adopt short-cuts to the substantiation rules, such as “sampling,” self-certification, de-minimis rules, or treating certain providers as “favored.” While the...

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