Benefit plan administrators are facing a brave new world with the impacts COVID-19 continues to make on our healthcare system and financial markets. From uncertain plan participants to business leaders concerned with the barrage of changing local rules, state regulation, and federal legislation, plan administrators are struggling more than ever to stay on top of the changes and meet their fiduciary duties. This isn’t likely to slow down anytime soon.
Retirement Plan Fiduciaries
All fiduciaries of ERISA-governed plans have certain duties they must meet. These include the duty to act prudently, the duty to diversify plan assets, and the duty to comply with the plan, among others. In today’s climate, the duty to act prudently becomes foremost as plan administrators struggle to understand exactly what this means and how to do their best for plan participants and avoid future litigation. Prudent behavior may include more research, asking questions, and otherwise seeking expert advice as plans and investment options are reassessed and decisions are made. Fiduciaries should take care to document the steps they take so in the future they can show that they took steps to comply with this duty.
Diversification is also important, and hopefully it is a strategy a plan already has in place. Plans can limit their liability through proper diversity, and fiduciaries must continue to monitor investment options to ensure their plans remain appropriately diverse and contain the best possible combination of offerings. Again, it’s important to comply with plan processes and document the steps taken to ensure continued diversification and future performance.
It is a good practice for fiduciaries to reach out to their service providers to ensure those service providers are taking proper steps to comply with their own duties relative to plan documentation and operation. Everyone responsible for administering and making decisions for the plan needs to work together, considering both the short-term and long-term best interests of plan participants. Plan sponsors often fail to take the critical step of having their third-party service provider agreements reviewed by ERISA counsel, and when mistakes are made the full weight of the law lands back on the plan sponsor.
Health Plan Fiduciaries
Many larger health plan providers are adjusting their policies specifically related to COVID-19 and virus testing. This information needs to be communicated to plan participants so there is a clear understanding of what is and is not going to be covered. Communication is key in this situation, with participants asking questions of their human resources teams and plan providers, and plan sponsors working intentionally and proactively with attorneys, financial advisors, medical experts, and governments to make the best decisions about coverage.
This is a good time for sponsors of all types of plans to take advantage of heightened participant attention levels and provide some valuable education. Plan sponsors should demonstrate how the COVID-19 situation will impact the plan’s operation relative to the way the plan normally works
.
The Hall Benefits Law team has been paying careful attention to this situation and will continue to provide updates as it progresses. We can expect significant new regulations and legislation in the future, meant to help mitigate the impacts to the economy and the health and wellbeing of our nation. To speak with someone about how we can be a resource for your employee benefits legal compliance needs, call 678-439-6236, or visit the
Hall Benefits Law website
for more details.
