As discussed in our blog post here, effective as of February 10, 2021, an employer-sponsored group health plan that imposes nonquantitative treatment limitations (“NQTLs”) on mental health or substance use disorder (“MH/SUD”) benefits must have documentation of a “comparative analysis” that must demonstrate the NQTLs imposed under the plan for MH/SUD benefits are not more restrictive than the NQTLs that apply to substantially all medical/surgical benefits in a particular classification. Generally, an NQTL is a limitation on the scope of benefits for treatment that is not expressed numerically (e.g., a prior authorization requirement). Recent DOL FAQs state that, in the near term, the DOL expects to focus on the following NQTLs in its enforcement efforts: Prior authorization requirements for in-network and out-of-network inpatient services; Concurrent review for in-network and out-of-network inpatient and outpatient services; Standards for provider admission to participate in a network, including reimbursement rates; and Out-of-network reimbursement rates… Continue Reading
Plan participants now enroll, change elections, review benefits, apply for plan loans and hardship distributions, and access account information through websites and cellphone apps. As electronic access to plan information has increased, so has the interest of hackers in obtaining the wealth of information stored electronically. Recently, the DOL’s Employee Benefits Security Administration (the “EBSA”) issued the following cybersecurity guidance documents to help plan sponsors comply with their duties to protect plan information: Tips for Hiring a Service Provider with Strong Cybersecurity Practices: These tips are intended to help plan sponsors and plan fiduciaries meet their duties under ERISA to prudently select and monitor service providers. They include a list of questions to ask and considerations to make when evaluating potential service providers. Cybersecurity Program Best Practices: This guidance provides a list of 12 best practices intended to help plan fiduciaries mitigate cybersecurity risks and make prudent decisions when selecting… Continue Reading
The safe harbor rules for hardship withdrawals from a retirement plan permit such withdrawals for expenses and losses incurred by a participant due to a natural disaster declared by the Federal Emergency Management Agency (“FEMA”) under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, provided the participant’s principal residence or principal place of employment at the time of the disaster was located in an area designated by FEMA for individual assistance related to that disaster. FEMA issued a series of disaster declarations as a result of the February 2021 winter storms that impacted portions of Texas, Louisiana, and Oklahoma. A list of counties that have been designated by FEMA for individual assistance in those states can be found on FEMA’s website here. Those disaster declarations mean that affected participants may be eligible for hardship distributions from their 401(k) plan accounts. Plan sponsors with participants who live or work… Continue Reading
In conducting due diligence in connection with a corporate transaction, it is common for buyers to request copies of the target’s current contracts with its benefit plan service providers like the recordkeeper and third party administrator. Buyers should also consider obtaining information regarding how long the target has been using their current service provider. If there has been a change in service providers in the prior several years, buyers should also consider requesting copies of contracts with the target’s previous service providers. This is true especially if there is a concern that there might be operational errors that would require correction, since information will likely have to be obtained from the plan’s prior service providers.
The DOL has published changes to the final 408(b)(2) service provider fee disclosure rule. A plan fiduciary must receive the disclosures required by this regulation in order for the arrangement to qualify for the statutory exemption from prohibited transactions for reasonable contacts for legal, accounting or other services necessary for the establishment or operation of the plan. The final rule’s effective date has been extended to July 1, 2012, to allow additional time for compliance. Because the disclosure to participants in participant directed investment individual account plans flows from the fiduciary’s receipt of the disclosures from service providers, the effective date of the plan level and investment level disclosures for such plans is now August 30, 2012 and the first quarterly participant statement must reflect the additional disclosures and be furnished no later than November 14, 2012. Fully vested Code Section 403(b) annuity contracts and custodial accounts issued before January… Continue Reading