“When the student is ready the teacher will appear” is credited to Lao Tzu and I have referenced it in different subjects many times. But, how does it apply talking about ERISA compliance? In this case it means employers tend to ignore the ERISA boogyman until it is actually at their own door.
Every year we start warning clients and businesspeople about how important it is to keep up with ERISA, and the changes that happen annually. And yet, every year somebody gets caught in a foreseeable audit and they call in a panic asking how to fix the problem.
ERISA was enacted in 1974 and its primary purpose was to protect the interests of participants in employee benefit plans by setting standards for the conduct of plan fiduciaries. It has become an increasingly punitive governmental regulation program that can impose fines that can drive a company out of business.
Here are two examples, and yes, I selected these to get your attention. You can CLICK HERE for details.
$110/per day/participant Summary plan document (SPD). This is a basic requirement not typically provided by your insurance provider. An SPD must be provided to every employee and it must be updated every year for ERISA compliance and language agreement with your employee hand book. The penalty – $110/per day per participant affected. And it can be retroactive to the original date of non compliance.
$710,310 GINA – § 502(c)(10)(D)(iii)(II) . GINA is a provision that protects against discrimination based on genetic information and the required language is typically included in a well prepared SPD. The penalty cap in 2024 for non compliance can be $710, 310.
And how much does it cost to be in compliance?
Well, the SPD and compliance documents can be obtained for between $100 and $500 at most compliance administrators. Using an ERISA attorney will be many times that expense but it might be worth it if you get a noncompliance notice.
So the teacher is available – are you ready to recognize the problem and respond?