CEBS GBA Exam 3 Q Bank, Answered-An employee welfare benefit plan has four basis elements. What are these elements? (Mod 1.1)
- 1) There must be a plan, fund or program.
2) The plan, fund or program is established or
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CEBS GBA Exam 3 Q Bank, Answered-An employee welfare benefit plan has four basis elements. What are these elements? (Mod 1.1)
- 1) There must be a plan, fund or program.
2) The plan, fund or program is established or maintained by an employer.
3) The plan, fund or program is for the purpose of providing specifically listed benefits, through the purchase of insurance or otherwise.
4) Benefits are provided to participants and beneficiaries.
Explain how a "plan, fund or program" for an employee benefit plan is defined (Mod 1.1)
- The phrase "plan, fund or program" is not defined in ERISA but rather has been laid out in several court cases. Courts have held a "plan, fund or program" under ERISA is established if, from the surrounding circumstances, a reasonable person can ascertain the intended benefits, the class of beneficiaries, the source of financing and the procedure to receive benefits.
Describe the procedures required to establish an ERISA employee welfare benefit plan (Mod 1.1)
- No particular formalities are required to create an ERISA plan and no single action in and of itself necessarily constitutes establishment of ERISA employee welfare benefit plan. Thus, ERISA plans have been deemed to be "established or maintained" by a practice that would cause a reasonable EE to perceive an ongoing commitment by the ER to provide EE benefits. This would include any contributions by an ER toward payment of benefits or by the ER simply administering the benefit.
It is easy to have a plan, fund or program - generally any ongoing administrative scheme will satisfy this condition. Showing that an ER maintains a plan is also easy
- any contribution by the ER towards payment of benefits or administration of the plan is enough (including a contribution toward insurance coverage).
List the types of employee welfare benefit plans not covered under ERISA and specifically excluded under the statute (Mod 1.1)
- 1) Governmental Plans: includes plans established by the US Gov't, the gov't of any state or political subdivision and any agency of any of the foregoing or a plan to which the Railroad Retirement Act applies, as well as certain plans associated with Native American Tribal gov'ts.
2) Church plans: a plan established and maintained for its EE's by a church or by a convention or association of churches is exempt from tax under IRC Sec 501.
3) A plan maintained to comply with state laws on Worker's Comp, Unemployment or Mandated Disability Insurance.
4) A plan maintained outside the US primarily for nonresident aliens.
5) Plans that cover only self-employed individuals and that cover no "common-law employees" generally not subject to ERISA.
6) Plans that cover only married shareholders of a corporation are not treated as ERISA plans.
ER should be aware that is may be required to comply with other federal laws that affect EE benefit plans.
List the types of benefits provided by ERISA health and welfare, and provide examples of such plans (Mod 1.1)
- a) Medical, Surgical or Hospital Care or Benefits
b) Benefits in the event of sickness, accident, disability, death or unemployment
c) Vacation Benefits
d) Apprenticeship or other training benefits
e) Day-care centers
f) Scholarship funds
g) Prepaid legal services
Ex: Medical Insurance, Dental, Vision, Prescription Drug Plans, Drug or Alcohol Treatment programs, FSAs, EAPs, Wellness Programs, AD&D and STD/LTD Plans.
Discuss whether plans that involve payroll practices are treated as ERISA health and welfare plans (Mod 1.1)
- The payment of an employee's normal compensation in full or in part out of the
employer's general assets for periods when the employee is physically or mentally
unable to work—that is, an unfunded short-term disability plan—is generally not a
welfare benefit plan subject to ERISA. However, if a disability program provides
more than an employee's normal compensation or is funded in any way—for
example, it is provided through insurance - the program will be a welfare benefit plan subject to ERISA.
The Dept of Labor (DOL) regulations list additional types of payroll practices as not being ERISA plans. These include plans where compensation is paid to an EE:
a) While absent on holiday/vacation
b) While absent on active military duty
c) While absent for jury duty/witness
d) On account of periods of time during which the EE performs little or no work while in training
e) EE is relieved of duties while on sabbatical leave or while pursuing further education.
For a voluntary benefit arrangement to be exempt from ERISA based on the DOL safe harbor, it must meet certain requirements, which are? (Mod 1.1)
- a) No ER or EE organization contributions
b) Participation is completely voluntary
c) No ER consideration except for reasonable compensation and administration
d) No employer endorsement
Explain the meaning of the term "no emp
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