Overview

The Employee Retirement Income Security Act of 1974 ("ERISA") is comprehensive federal legislation which was enacted in 1974 and amended several times. This overview briefly summarizes our understanding of ERISA and is not a legal opinion. ERISA is extremely detailed and complex. You should consult your legal counsel for advice on your specific situation and how ERISA affects you. An employer is solely responsible for complying with all of the ERISA requirements that apply to its plan, not WPS. Failure to comply may be costly, either through enforcement actions and penalties assessed by the Department of Labor or through employee lawsuits.

Applicability

Many employee benefit arrangements that provide non-pension fringe benefits are "employee welfare benefits plans" covered by ERISA. Most private-sector employers (corporations, partnerships, and sole proprietorships) are subject to ERISA including non-profit organizations. However, certain employee welfare benefit plans are exempt from all ERISA requirements. Generally, an exempt plan has one or more of the following characteristics:

• It is for the benefit of persons other than employees
• It is administered by a government body or agency
• It is a "church" plan as defined by ERISA; or
• It is established solely to comply with a workers' compensation law or other state disability law.

In addition, certain "voluntary employee-pay-all" arrangements are exempt.

Plan Administrator

An employer subject to ERISA is required to have the "Plan Administrator" of an employee welfare benefit plan furnish certain materials to participants under that plan. A "participant" is any employee or former employee who is eligible to receive any benefit under an ERISA plan or whose beneficiaries may be eligible to receive such benefit. An employer must name a Plan Administrator for its welfare plan. WPS is not the Plan Administrator, plan sponsor, or plan trustee of the plan.

Summary Plan Description

The Plan Administrator, not the insurer or third-party administrator, is responsible for furnishing the Summary Plan Description ("SPD") to participants, although WPS will furnish documents to the employer that may be used as part of the SPD including the Certificate of Insurance. The SPD is important because it outlines all of the plan rights and obligations to the participants. SPDs, updated SPDs, and summaries of material modifications must be written in a manner determined to be understood by the average participant.

A SPD must be distributed within 120 days after the effective date of an employee welfare benefit plan. If there are plan amendments, revised SPDs must be given to participants every 5 years. Summaries of material modifications must be distributed within 210 days after the year in which there are any material modifications to the terms of the plan. A SPD must be given to a new employee within 90 days after becoming a participant.

Procedures for Processing Benefit Claims

Claims procedures have been a part of ERISA since inception, however, recently these claims procedures have been updated and revised. As before, every plan has an obligation to establish and maintain reasonable claims procedures.

Definitions. Some important definitions:

• Adverse Benefit Determination - a denial, reduction, or termination of, or a failure to provide or make payment, in whole or in part, for a benefit.
• Concurrent Care - an on-going course of treatment provided over a period of time or number of treatments.
• Pre-Service Claim - any claim for a benefit that is conditioned, in whole or in part, on approval of the benefit in advance of obtaining medical care.
• Post-Service Claim - any claim for a benefit that is not a pre-service claim.
• Urgent Care Claim - a claim for medical care or treatment that if applying non-urgent care time frames would seriously jeopardize the life or health of the claimant, seriously jeopardize the ability of the claimant to regain maximum function, or in the opinion of the physician determines it is an urgent care situation (without care or treatment it would subject the claimant to severe pain that cannot be adequately managed.)

Timeframes. Once a claim is filed it must be processed within the following timeframes:

• Urgent Care Claim - 72 hours or less, with no extensions. If the claim is incomplete, the claimant must be notified 24 hours or less after receipt of claim. The claimant has 48 hours to respond.
• Pre-Service Claim - 15 days or less, a 15 day extension is permitted with notice. If the claim is incomplete, the claimant must be notified 15 days or less after receipt of claim. The claimant has 45 days to respond.
• Post-Service Claim - 30 days or less, a 15 day extension is permitted with notice. If the claim is incomplete, the claimant must be notified prior to the expiration of the 30-day period. The claimant has 45 days to respond.
• Adverse Benefit Determination of Concurrent Care - in advance of reduction or termination of care to allow time for the claimant to appeal.

Timeframe for appeals is as follows:

• Urgent Care Claim - 72 hours or less, with no extensions.
• Pre-Service Claim - 30 days or less, with no extensions.
• Post-Service Claim - 60 days or less, with no extensions.
• Adverse Benefit Determination of Concurrent Care - in advance of reduction or termination of care to allow time for the claimant to appeal.

Content of Denial Notices

Written or electronic notification of any adverse benefit determinations must be given to the claimant and must include the following:

• Specific reasons for the adverse benefit determination and the specific plan provisions relied upon.
• A description of any addition information necessary and why such information is necessary.
• A description of the appeals process including time limits. Also, a statement of the claimant's right to bring a civil action under ERISA.
• If appropriate, the rule, guideline, protocol, etc., relied upon in making the adverse benefit determination or a statement indicating that a copy of such rule, guideline, protocol, etc., will be provided free of charge upon request
• If appropriate, an explanation of the scientific or clinical judgement used for the adverse benefit determination or a statement that such explanation will be provided free of charge upon request.

Appeal Process

A plan must provide at least 180 days in which a claimant can decide whether to appeal an adverse benefit determination. Once an appeal is filed, it must receive a full and fair review of the claim and adverse benefit determination by a named fiduciary of the plan. WPS is the fiduciary of insured plans. A plan must also:

• Provide the opportunity for claimants to submit written comments, documents, etc. and such comments, documents, etc. must be taken into account during the review.
• Provide that a claimant will be provided, upon request and free of charge, access to and copies of information relevant to the claim.
• Provide for a review that does not give deference to the original decision.
• Consult with a health care professional if any adverse benefit determination was based on a medical judgment.
• Identify any medical or vocational experts whose advice was obtained.
• If claim involves urgent care, an expedited review process.

A plan may not require a claimant to file more than two appeals of an adverse benefit determination prior to bringing a civil action.