What’s hot in benefits this summer? Fee disclosures – fee disclosures by providers to employers and fee disclosures by employers to participants. You may have seen some of the recent buzz about fee disclosure, but does fee disclosure apply to welfare plans? No, not yet.
Generally, the fee disclosures that are new in 2012 apply to retirement plans. The Schedule C on Form 5500 still applies for your providers who are not insurance providers and received more than $5,000 in compensation last year. Other than the Schedule C though, no specific disclosure is required. The DOL has reserved a location in the regulations for future fee disclosure requirements for welfare plans.
So, we may see specific requirements in the future. For now though, if welfare benefits are paid from plan assets (such as a VEBA), employers should focus on meeting their general prohibited transaction exemption under ERISA section 408(b)(2) – that is, consider and document the necessity of the services provided and the reasonableness of the compensation. If welfare benefits are paid from general assets, employers should consider whether welfare service provider arrangements are prudent and in the benefit interest of the participants.
Take the relief from fee disclosure and, instead, focus on the upcoming Summary of Benefits Coverage.
Today’s post was contributed by Megan Hladilek