Disputes between plan sponsors and plan service providers are not new. As with any contractual relationship, things don’t always go according to “plan” or at least, as the sponsor expects. When that happens, one of the first things sponsors (and their attorneys) will do is review the provider’s contract. Some sponsors will be surprised to find some very provider-friendly provisions, such as:
a provision specifying that the provider is permitted by the contract to act negligently (as long as the conduct does not rise to gross negligence or intentional misconduct), or
a provision indicating that the sponsor has contractually waived its right to participate in a class against the provider.
Unfortunately for sponsors, a provider’s willingness to fix an error often comes down to how much the provider wants to continue working with the sponsor on a go forward basis. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Kevin Selzerhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngKevin Selzer2024-01-26 10:33:202024-01-26 10:33:20Take the Power Back . . . Negotiating Provider Contracts for Benefit Plans
Inevitably, an employee will wake up from their holiday food coma and realize that they made a mistake in open enrollment. “But I didn’t mean to elect family coverage! My spouse is covering the kids this year!” Employers are allowed to set enrollment rules for their self-funded medical plans. One response to the employee is the hard line that the door was closed at the end of the enrollment period. But what if you want to be more flexible?
If the employee catches their mistake before the ball drops on New Year’s Eve, the IRS won’t care. But if the question comes up in January, it’s likely too late. The IRS’s rules on cafeteria plan elections don’t make any exception for mistake. Elections can only be changed if the employee has a change in status event like a divorce or new dependent. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Beth Nedrowhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngBeth Nedrow2024-01-12 10:45:212024-01-12 10:45:21A Change Would Do You Good, But Do The Section 125 Cafeteria Plan Rules Permit It?
One of the many benefits-related provisions in the Consolidated Appropriations Act of 2021 prohibits the use of “gag clauses” in group health plan agreements. Before this law, medical plan service agreements would often include provisions preventing the employer from sharing data like pricing and health plan outcomes available to another party. Hopefully employers have worked to make sure that there are no such clauses in their agreements. But there’s one more step on the compliance ladder. Beginning in 2023, plans must annually attest to their compliance with the gag clause prohibition. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Becky Achtenhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngBecky Achten2023-12-04 09:52:122023-12-04 10:33:19Signed, Sealed, Delivered … Have You Completed Your Plan’s “No Gag Clauses” Attestation?
If you ever want to see a benefits lawyer get nervous, start talking about corporate intent. Yes, the company intended to grant options at an earlier and lower exercise price, and yes it may have made promises to the individuals who would receive the awards; everybody seems to be in agreement. But there may be inadequate documentation, or worse, none at all, and the tax implications have to be considered. The foundation for any equity grant will be corporate action, and the experienced perspective is that if there is doubt about the corporate action, it will be hard to defend.
The Incentive Stock Option (“ISO”) regulations and the Code Section 409A regulations (“Section 409A”) both provide guidance on when an equity grant is actually made for the purposes of those Code Sections. For ISOs, the “date or time when the granting corporation completes the corporate action” constituting an offer under the terms of a statutory option which is not considered complete until the maximum number of shares and the minimum price are fixed or determinable. For Section 409A, the date when the “granting corporation completes the corporate action” necessary to create a legally binding right to the option which is not complete until the date on which the maximum number of shares and the minimum exercise price are fixed or determinable, and the class of underlying stock and the identity of the service provider are designated. Obviously, the regulations have similarities, but the common and essential element is the requirement for a corporate action. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00John Ludlumhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngJohn Ludlum2023-11-10 10:46:052023-11-10 10:46:05I’ve Been Trying to Get Down to the Heart of the Matter – the Board Action
The IRS has announced the 2024 cost of living adjustments to qualified plan limits. Below are the highlights, and our full historical chart can be found here for easy reference. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Lyn Domenickhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngLyn Domenick2023-11-01 13:19:182023-11-02 10:34:12Bring me a Higher Limit…2024 IRS Limits Announced
Employers try to provide a benefits package that employees appreciate and understand. Beyond the traditional offerings like 401(k), match, medical and dental, employers often try to be responsive to employees’ requests for other programs and features they would find useful (example – fertility benefits). One of the current requests employers may be hearing from their employees is request for assistance with student loan debt. Congress has been hearing those pleas, as well, and has provided employers with two potential avenues for giving relief to their employees. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Beth Nedrowhttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngBeth Nedrow2023-10-11 12:37:582023-10-11 12:37:58Don’t Know Much About History … But I Do Know How Employers Can Help Their Employees With Student Loan Debt!
The time may have come to add a welfare plan committee to your company’s governance of employee benefit plans. New legal obligations and other developments impose fiduciary risks for welfare plans similar to what already exist for retirement plans.
Most employers that sponsor a 401(k) plan or other retirement plan set up a committee to administer and oversee the plan. This is generally a best practice to ensure that the plan is properly administered in compliance with employee benefits laws and, for plans subject to the Employee Retirement Security Act of 1974 (ERISA), to have a process for following ERISA fiduciary duties. Fiduciary duties include acting prudently and in the best interests of participants, such as in overseeing service providers and monitoring plan fees. Read more
https://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.png00Brenda Berghttps://www.employeebenefitslawblog.com/wp-content/uploads/2022/10/logo_vertical-v2.pngBrenda Berg2023-09-28 13:04:152023-09-28 13:04:15The Time Has Come, A Fact’s A Fact: Consider Adding a Welfare Plan Committee
Take the Power Back . . . Negotiating Provider Contracts for Benefit Plans
/in Benefits Plan Creation, ERISA, Health & Welfare Plans, Retirement PlansBy Kevin Selzer
Disputes between plan sponsors and plan service providers are not new. As with any contractual relationship, things don’t always go according to “plan” or at least, as the sponsor expects. When that happens, one of the first things sponsors (and their attorneys) will do is review the provider’s contract. Some sponsors will be surprised to find some very provider-friendly provisions, such as:
Unfortunately for sponsors, a provider’s willingness to fix an error often comes down to how much the provider wants to continue working with the sponsor on a go forward basis. Read more
A Change Would Do You Good, But Do The Section 125 Cafeteria Plan Rules Permit It?
/in Cafeteria Plans, Fiduciary Duties, Health & Welfare Plans, IRSby Elizabeth Nedrow
Inevitably, an employee will wake up from their holiday food coma and realize that they made a mistake in open enrollment. “But I didn’t mean to elect family coverage! My spouse is covering the kids this year!” Employers are allowed to set enrollment rules for their self-funded medical plans. One response to the employee is the hard line that the door was closed at the end of the enrollment period. But what if you want to be more flexible?
If the employee catches their mistake before the ball drops on New Year’s Eve, the IRS won’t care. But if the question comes up in January, it’s likely too late. The IRS’s rules on cafeteria plan elections don’t make any exception for mistake. Elections can only be changed if the employee has a change in status event like a divorce or new dependent. Read more
Signed, Sealed, Delivered … Have You Completed Your Plan’s “No Gag Clauses” Attestation?
/in Health & Welfare Plansby Becky Achten
One of the many benefits-related provisions in the Consolidated Appropriations Act of 2021 prohibits the use of “gag clauses” in group health plan agreements. Before this law, medical plan service agreements would often include provisions preventing the employer from sharing data like pricing and health plan outcomes available to another party. Hopefully employers have worked to make sure that there are no such clauses in their agreements. But there’s one more step on the compliance ladder. Beginning in 2023, plans must annually attest to their compliance with the gag clause prohibition. Read more
I’ve Been Trying to Get Down to the Heart of the Matter – the Board Action
/in Corporate Governance in Benefits, Equity Compensation, Executive Compensationby John Ludlum
If you ever want to see a benefits lawyer get nervous, start talking about corporate intent. Yes, the company intended to grant options at an earlier and lower exercise price, and yes it may have made promises to the individuals who would receive the awards; everybody seems to be in agreement. But there may be inadequate documentation, or worse, none at all, and the tax implications have to be considered. The foundation for any equity grant will be corporate action, and the experienced perspective is that if there is doubt about the corporate action, it will be hard to defend.
The Incentive Stock Option (“ISO”) regulations and the Code Section 409A regulations (“Section 409A”) both provide guidance on when an equity grant is actually made for the purposes of those Code Sections. For ISOs, the “date or time when the granting corporation completes the corporate action” constituting an offer under the terms of a statutory option which is not considered complete until the maximum number of shares and the minimum price are fixed or determinable. For Section 409A, the date when the “granting corporation completes the corporate action” necessary to create a legally binding right to the option which is not complete until the date on which the maximum number of shares and the minimum exercise price are fixed or determinable, and the class of underlying stock and the identity of the service provider are designated. Obviously, the regulations have similarities, but the common and essential element is the requirement for a corporate action. Read more
Bring me a Higher Limit…2024 IRS Limits Announced
/in 401(k) Plans, 403(b) plans, 457(b) plans, Defined Benefit Plans, ESOPs, IRS, Retirement Plansby Lyn Domenick
The IRS has announced the 2024 cost of living adjustments to qualified plan limits. Below are the highlights, and our full historical chart can be found here for easy reference. Read more
Don’t Know Much About History … But I Do Know How Employers Can Help Their Employees With Student Loan Debt!
/in 401(k) Plans, Fringe Benefitsby Elizabeth Nedrow
Employers try to provide a benefits package that employees appreciate and understand. Beyond the traditional offerings like 401(k), match, medical and dental, employers often try to be responsive to employees’ requests for other programs and features they would find useful (example – fertility benefits). One of the current requests employers may be hearing from their employees is request for assistance with student loan debt. Congress has been hearing those pleas, as well, and has provided employers with two potential avenues for giving relief to their employees. Read more
The Time Has Come, A Fact’s A Fact: Consider Adding a Welfare Plan Committee
/in Cafeteria Plans, Corporate Governance in Benefits, DOL, ERISA, Fees, Fiduciary Duties, Fringe Benefits, Health & Welfare Plans, Legislation, Litigationby Brenda Berg
The time may have come to add a welfare plan committee to your company’s governance of employee benefit plans. New legal obligations and other developments impose fiduciary risks for welfare plans similar to what already exist for retirement plans.
Most employers that sponsor a 401(k) plan or other retirement plan set up a committee to administer and oversee the plan. This is generally a best practice to ensure that the plan is properly administered in compliance with employee benefits laws and, for plans subject to the Employee Retirement Security Act of 1974 (ERISA), to have a process for following ERISA fiduciary duties. Fiduciary duties include acting prudently and in the best interests of participants, such as in overseeing service providers and monitoring plan fees. Read more