The Significance of Legal Services in Employee Benefits
As the legal landscape surrounding employee benefits continues to evolve, the role of legal services has become increasingly important for both employees and employers. For employees, legal services provide essential support and advice regarding the complex realm of benefit entitlements, qualifications, and regulations. Employees often face challenges in making claims for benefits or navigating the process of establishing their entitlements . Benefits counseling helps ensure employees understand their entitlements and provides guidance on how to best protect their rights and interests.
For employers, legal services act as a preventative measure against potential conflicts and disputes regarding benefits. They help employers stay informed on the vast array of laws and regulations that govern employee benefits. With the complexities inherent in interpreting these laws correctly, having access to legal counsel is vital to managing risks and avoiding costly litigation related to benefits disputes.
Common Legal Compliance Concerns in Employee Benefits
Business must comply with an ever-increasing number of federal laws and regulations related to employee benefits. In addition, state benefits laws must be considered as well. ERISA governs the reporting and disclosure requirements for welfare plans and many 401(k) plans; the Affordable Care Act (ACA) requires group health plans to cover certain benefits, abide by requirements for reporting the cost of the coverage on Forms W-2, and complete other tasks; and there are several other federal laws, such as the USERRA (military leave) and HIPAA (confidentiality and security of medical information laws), that impact employee benefit practices. Moreover, employers are finding it necessary to provide retirement and health coverage to an increasingly diverse workforce. Rather than building expertise in all aspects of employee benefits laws, companies are often better served by hiring experienced counsel to handle the compliance responsibilities. Such counsel can provide advice on a wide variety of compliance obligations and help identify cost-effective, efficient approaches to meeting the legal requirements.
Types of Employee Benefits that Require Legal Review
Many types of employee benefits require legal oversight and/or management. While this may not come as a surprise to some, the sheer number of programs that come under these definitions does amaze most. Below are the types of benefits commonly scrutinized through either federal or state regulations.
Health Insurance
Group health benefit plans are those that provide medical care & services, either for an employer or an entire unincorporated labor organization. These plans are organized by employers, trade unions/trade associations, or even insurance companies.
Retirement Benefits Plans
Referred to as pension plans, this type of employee benefit is provided by employers for the provision of retirement – most commonly through annuities, life insurance, and death benefits.
Employer Group Insurance
Offered by employers to supplement group health plans or plans that provide protection from financial losses, these benefits offer coverage for financial losses incurred due to disabilities, work-related accidents, or losses caused by death.
Welfare & Fringe Benefits
These employee benefits are not required by federal law. Instead, they are offered to employees based on discretionary stipulations determined by the employer. These include benefits such as child care, legal services, and even life insurance that is sponsored by a nonprofit organization.
How Legal Services Can Improve Benefits Strategies
Lawyers help businesses design, implement and manage employee benefit strategies. At the outset of an engagement, lawyers help clients assess their options, evaluate changes in benefit plan funding, and study other methods for achieving goals for employee health plans and/or retirement savings plans.
Lawyers then help clients in deciding which plans to adopt or amend, and lawyers ensure that those plans comply with state and federal laws. Later, lawyers might help clients select a third-party plan service provider, or draft plan service provider contracts. Lawyers can also negotiate with service providers on behalf of clients.
As the plans are administered, lawyers can help clients manage claims under the ERISA plan claims procedure regulations, including claims procedure rules under Health Care Reform. If disputes arise between claimants and the employer, or between item service providers to whom the employer has delegated its administrative responsibilities, lawyers can represent their clients . Lawyers also help clients with voluntary compliance programs and periodic self-audits. In the event an audit occurs, lawyers represent clients in administrative hearings before the U.S. Department of Labor, U.S. Equal Employment Opportunity Commission, or other governmental agencies.
While many employers conduct internal investigations and prepare their annual Form 5500s, lawyers can advise the human resources department on when to involve them in the process. Human resources departments can rely on lawyers for questions involving pre- and post-adoptive benefits, or in the interplay between benefits and employment issues concerning ministerial employment actions.
For employers facing benefits-related litigation or audits, be sure to involve lawyers early in the process. Because of the depth of knowledge and continuity of advice that lawyers develop with their clients over time, lawyers can meaningfully assist clients with legal issues involving employee benefit matters at every stage of the lifecycle.
Selecting Appropriate Legal Services for Employee Benefits
When it comes to handling legal services for employee benefits, companies should carefully consider a range of factors to select the right professional support. Different options are available for handling legal matters related to employee benefits, such as retirement plans, health insurance, and other employee perks. Here are some key factors that can guide companies in choosing the most suitable legal services for their employee benefits:
Expertise: One of the most important factors to consider is the level of expertise that a legal service can offer. It is essential to work with legal professionals who specialize in employee benefits, as they have the necessary knowledge and experience to navigate complex laws, regulations, and requirements. Firms with a focus on employee benefits will have greater familiarity with common issues and challenges, and can provide more effective solutions.
Experience: Beyond expertise, having extensive experience in handling employee benefits matters is crucial for a legal services provider. More experienced professionals will have dealt with a wider range of scenarios, and can better anticipate issues and develop effective strategies. Looking at a firm’s track record of success and case studies can provide valuable insights into their experience.
Industry Knowledge: A deep understanding of the specific industry in which a company operates, as well as its unique needs and challenges, can be a major asset when handling employee benefits. Industry-focused legal services can provide more targeted insights and advice.
Level of Support: Companies should consider the level of support they need from their legal services for employee benefits. Different providers may offer a range of services, from basic legal assistance to more comprehensive support such as compliance monitoring, drafting and reviewing plan documents, and education and training for staff and employees.
Cost: Of course, cost is always a factor when it comes to legal services. Businesses should evaluate the different options available, and choose the legal support for employee benefits that is most suited to their budgets.
Customer Service: Companies should also consider the level of customer service that a legal services provider offers. Having prompt communication and an attentive approach can make a significant difference when it comes to resolving issues and providing effective support.
Overall, selecting the right legal services for employee benefits is an important consideration for any business. By evaluating all the aforementioned factors, companies can more effectively navigate complex laws, avoid legal issues, and ensure that they provide the best for their employees.
Emerging Trends in Employee Benefits and Associated Legal Issues
The future of employee benefits will be influenced by the digital revolution currently transforming industries around the world. The application of artificial intelligence and big data will support the provision of more personalized benefits packages, with multiple flexible options for employees to select from, which will also support productivity.
Many of the emerging trends in employee benefits have the potential to create legal issues for employers. The health insurance plan sponsored by an employer may be forced to evolve into a cash-wrapped health plan to maintain currency with vigorous competition from insurance companies that use the latest technologies to innovate insurance products. Employers are not necessarily experts in the health industry. Consequently, investing in insurance technology may be a double-edge sword for employers. For example, Human Capital Management ("HCM") vendors are experiencing exponential growth as they support employers with the implementation and integration of emerging programs for managing well-being (e.g. , concierge services, telemedicine, financial counseling).
The major case law arising out of the Affordable Care Act ("ACA") makes clear that an employer base pay is the bottom line consideration for any plan. In determining whether payments to an HSA account qualify as "mass transit and parking benefits," it is important to look at whether the payments bear a "direct-relationshp" to "compensation." Employees should defer to their plan to determine how to identify "compensation" per legislative intent.
Flexible benefits programs utilize "wrap documents" to ensure the different benefits options offered into an employee benefits package are compliant with regulations. Vendor Digital Transformation Practice takes further steps to support employers through uploading benefit documents onto secure portals for online access, while Co-Counsel Digitization Practice focuses on legal issues surrounding flexible benefits.
