EBSA Web Chat Focuses on Regulatory Agenda, Healthcare Rules

Employee Benefits DocumentsDuring the DOL’s Employee Benefits Security Administration’s (EBSA) live web chat held on Tuesday, EBSA Assistant Secretary Phyllis Borzi responded to questions aimed at the pension and welfare benefit initiatives contained in the DOL’s Semiannual Regulatory Agenda, as well as the interim final regulations outlining the procedures for internal and external review of adverse health benefit claims decisions.  Borzi noted that in the coming months the EBSA will focus on completing its work in pension and welfare plan transparency initiatives.  In particular, the agency plans to finalize the interim final rule relating to reasonable contracts and arrangements under section 408(b)(2) of ERISA. The EBSA will also consider whether and to what extent similar fee and compensation disclosure requirements will be applied to service relationships in the welfare plan context.

Borzi also noted that the agency plans to propose amendments to current regulations that would clarify the circumstances under which a person would be considered a “fiduciary” when providing investment advice to employee benefit plans and their participants and beneficiaries of such plans. The EBSA plans to hold a public hearing on this topic on March 1, 2011. In addition, the EBSA intends to proceed with its “lifetime income” initiative, “which involves consideration of steps we can take to encourage the offering of lifetime income options to participants and beneficiaries of defined contribution plans and the education of participants and beneficiaries with respect to such options.”

Several chat participants posed questions regarding the interim final regulations governing the internal and external review for denied health claims. For example, one person asked whether, with respect to a non-grandfathered, self-funded group health plan, the new internal claims rules under the Affordable Care Act apply in a situation where there is no rescission of a benefit eligibility determination, but rather a prospective termination. Borzi responded that “If there is no rescission of coverage, the prospective cancellation of coverage is not, itself, subject to internal appeal. However, if the individual has a claim denied for ineligibility, that claim may be appealed under the Department’s regulation.” Similarly, for such non-grandfathered, self-funded group health plans, rescission of coverage would be deemed an adverse benefit determination eligible for internal appeals. Borzi further clarified that while an employee’s contribution towards premiums is not an adverse benefit determination that can be appealed, an employee’s cost-sharing (e.g., coinsurance, co-payment, deductible) can be a partial denial of a claim and thus subject to appeal.

Another chat participant asked whether a health plan that is part self-insured is subject to federal and state external review processes. In response, Borzi explained that if “the plan is not a grandfathered health plan, to the extent it is insured, the health insurance issuer is responsible for complying with applicable state law. To the extent the plan is self-insured, the federal rules would apply.”

Other highlights of the web chat include the following:

  • In response to a question regarding electronic delivery of ERISA-mandated disclosure documents, Borzi claimed that the agency intends to issue within the next six to eight weeks a Request for Information (RFI) to help the EBSA evaluate “whether, and possibly how, the current regulatory standards for electronic distribution of required plan disclosures under ERISA should be updated to reflect changes in technology and the workplace.”
  • With respect to whether delivering a prospectus would satisfy the requirements contained in the target date fund disclosure proposed rule, Borzi clarified that “the new target date fund disclosure proposal would amend two existing regulations – the QDIA Regulation and the Participant-Level Disclosure Regulation. It is not likely that the delivery of a prospectus will, in and of itself, satisfy the requirements of the proposal. However, information from a current prospectus may be used to satisfy at least some of the content requirements of the proposal.” Borzi noted that at this time, the agency has no plans to develop a model format for the disclosures.
  • Regarding late filing of Form 5500, Borzi reiterated that if the form is filed late after an extension is given, a civil penalty is calculated from the original due date.

A complete transcript of the web chat can be found here.

Photo credit: maxexphoto

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.