HIGHLIGHTS
- Employers have been found to improperly endorse voluntary benefits where the employer permitted employees to pay for the voluntary benefits on a pre-tax basis through the employer’s Section 125/cafeteria plan. TRANSLATION: IF VOLUNTARY BENEFITS ARE PRE-TAXED THE EMPLOYER IS SUBJECT TO ERISA’S FIDUCIARY OBLIBATIONS.
- An employer may be found to have received consideration for voluntary benefits if the employer benefits from use of commissions related to the coverage to pay for such things as a “free” online enrollment system. TRANSLATION: FREE CAFETERIA ADMINISTRATION AND ENROLLMENT PLATFORMS ARE NOT FREE – SOMEONE IS PAYING AND IT’S COMMON FOR INSURANCE AGENTS TO CEDE A PORTION OF THEIR COMMISSIONS TO BE ABLE TO TOUT “FREE, NO COST” ENROLLMENT SYSTEM.
- If the “voluntary benefits” exemption does not apply the employer’s obligations would include compliance with ERISA’s fiduciary obligations. TRANSLATION: EMPLOYER IS OBLIGATED TO PRACTICE DUE DILLIGENCE IN THE PROCUREMENT OF VOLUNTARY BENEFITS AND MUST SEEK FULL COMPENSATION DISCLOSURE FROM INSURANCE AGENTS SELLING PRODUCTS. n
- Not all PLAN SPONSORED benefit plans are subject to ERISA
