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Washington D.C. Benefits Law Blog

Who qualifies for Consolidated Omnibus Budget Reconciliation Act?

If you have a job with health insurance, then you may not want to do anything to jeopardize your access to those benefits. What happens if you leave your job though? You may assume that you'll become uninsured if you do. That's not necessarily the case though. You may qualify for Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage.

COBRA is a type of temporary health insurance that's offered to individuals who've recently lost their jobs. Many part- and full-time workers who were previously covered by health insurance for one day or more qualify for COBRA upon termination from their role. It doesn't matter whether the individual left their role involuntarily or voluntarily in such instances.

How long do insurers have to respond to health insurance claims?

The Employment Retirement Income Security Act of 1974 (ERISA) is a piece of federal legislation that oversees administrators of certain private and public industry retirement, health insurance and other welfare plans. These groups must adhere to certain standards when responding to claims and inquiries about these different plans. Any administrator that fails to adhere to these protocols and deadlines may be exposed to legal liabilities.

Plan administrators are required to adhere to specific time limits when evaluating medical claims and approving or denying them. How long they're given greatly depends on the type of claim that is filed.

How long does an ERISA claim take?

You need coverage for specific costs and decide to file a claim through the Employee Retirement Income Security Act of 1974 (ERISA). How long is it going to take to get that claim reviewed? You're worried that you'll be kept waiting for weeks or even months with no resolution.

The good news is that specific time limits have already been established by ERISA, so you can find out roughly how long it will take, giving you a window of time in which you can expect results. There are three different categories with their own limits, which are as follows:

  • An urgent care claim. These claims should always get addressed within 72 hours, as technically, officials are supposed to do it as soon as possible.
  • A pre-service claim. Though perhaps not as urgent as the above, this is still before the service is provided and so it makes sense that you want to know relatively quickly. Therefore, it should not take more than 15 days. The government notes that they strive to do it "within a reasonable time period," so it could happen far faster than that.
  • A post-service claim. The goal for officials here is twice as long as the above, giving them a maximum range of 30 days. Again, they should review all claims within a reasonable time period.

The Employment Retirement Income Security Act protects your money

The Employment Retirement Income Security Act (ERISA) was signed into law by President Gerald Ford on Sept. 2, 1974. Although it's undergone many updates since then, it has much the same aim as it originally did. ERISA was enacted to make sure that those who manage health insurance, retirement accounts and other welfare programs are held to high standards and to make sure that they're properly managed.

Three federal agencies administer ERISA. There's the Internal Revenue Service which is run by the U.S. Treasury Department, the Pension Benefit Guaranty Corporation and the Employee Benefits Security Administration, a section of the U.S. Department of Labor.

ERISA lawsuit challenges Salesforce's plan management

A major employer in Washington, D.C., and around the country, Salesforce is facing an ERISA lawsuit over claims that it did not properly handle its retirement program. Specifically, the plan administrators are accused of breaching their fiduciary duty to plan members and beneficiaries. Salesforce, its board of directors and its investment committee are all named as defendants in the suit, which alleges that the company failed to save the assets of its plan members by opting for lower-fee investment management options. The large retirement plan had over $2 billion in assets in 2018, which the plaintiffs say gives it significant leverage in negotiating a better deal.

They say that Salesforce, in violation of its ERISA obligations, failed to reduce plan expenses or use its judgment to determine which investment options would best reflect the interests of plan participants and beneficiaries. The plan invests in a number of mutual funds, but the plaintiffs say that Salesforce did not take advantage of lower-cost share classes, causing the fund as a whole to lose out on income over the years. They also said that the investment committee did not consider alternative options that would provide significant savings.

Supreme Court Favors Plaintiffs in 'Actual Knowledge' Ruling

The recent US Supreme Court Ruling on the Intel ERISA Challenge stemming from a recent lawsuit regarding employee benefits has set a new framework for the establishment of "actual knowledge" in such cases. While this update out of Washington DC isn't major news for many political and commercial entities, it does have profound implications for employers across the country and members of the retirement planning industry.

The Supreme Court's unanimous ruling, which is defined in a 14-page document, favors the plaintiffs in the lawsuit known as Intel Corporation Investment Policy Committee v. Sulyma. The full extent and range of the ruling's impact has yet to be determined, but it has already had important consequences for companies in the retirement planning industry.

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D.C. residents who have corporate pensions should take note of a recent spate of lawsuits against companies who have allegedly breached their fiduciary duties by underpaying joint and survivor annuity benefits (JSA). Recently, there was a lawsuit filed against UPS which was the latest suit to claim that a company effectively shortchanged those who elected to take their pensions as a joint and survivor annuity as opposed to a single life annuity (SLA).

Retirees have the option to take their pension as a JSA so that their beneficiaries can continue to receive their pension after they die. A JSA is a lower amount than an SLA. Companies cannot simply choose any percentage that they want for a JSA. Instead, it must be the actuarial equivalent of an SLA.

ERISA lawsuit filed against Shell Oil and Fidelity

Many people in the District of Columbia have benefits plans through their jobs that are governed by the Employee Retirement Income Security Act. Workers might want to be aware of a lawsuit that has been filed against Shell Oil and Fidelity for alleged violations of ERISA.

According to the complaint, the plaintiffs allege that Shell Oil failed to exercise its bargaining power to secure lower asset management and record-keeping fees for the benefit of the plan participants. The plaintiffs also allege that Shell allowed Fidelity to use the confidential data of the plan participants, including their Social Security numbers and investment choices, to engage in aggressive marketing campaigns for Fidelity's other financial products outside of the 401(k) plan.

ERISA case settled by large defense contractor

A major defense contractor with employees in Washington, D.C., and across the country is settling a class action suit linked to its retirement plan. Members of Northrop Grumman's 401(k) plan brought a lawsuit under the Employee Retirement Income Security Act (ERISA), a law that protects employee benefits from misuse, mismanagement or violation of fiduciary duties. Members of the plan said that the participants' assets were placed at risk by management decisions, including charging excessive fees and overpaying for plan administration.

The case began in 2006 with allegations that Northrop Grumman's retirement plan was paying excessive fees, wasting employees' retirement funds. While this suit was settled for $16,750,000, it only addressed the issue of excessive charges prior to May 11, 2019. However, they brought a new lawsuit in 2016, saying that they continued to pay excessive fees and that their plan holdings were put at risk by the company's investment choices. However, by August 2019, the case continued with one remaining claim, that the defense contractor violated its duties to plan participants by choosing active management for one of its funds, which is more expensive than a passive management style. By 2014, the company had shifted to passive management for all of its 401(k) plans.

Lawsuit accuses Trader Joe's of mismanaging retirement fund

Workers in Washington, D.C., and across the country rely on their employee benefits, including their retirement programs, health insurance and disability insurance. This is one reason why the Employee Retirement Income Security Act, or ERISA, regulates these programs in order to protect employees from the consequences of wasteful, destructive or even fraudulent practices. In one case, popular supermarket chain Trader Joe's is facing a lawsuit over its retirement plan, specifically over the services and fees paid to an investment management company and accusations of poor choices for investment options for the plan.

The Trader Joe's defined contribution retirement plan holds at least $1.6 billion in funds for its employees. Capital Research serves as the plan's recordkeeper and investment manager. The company also works for American Funds, a mutual funds group. The lawsuit alleges that the fund management company has a conflict of interest because it receives fees based on the amount of money invested in the American Funds while also receiving record-keeping fees as direct compensation from plan members. It says that Trader Joe's did not provide sufficient disclosure of the agreement with Capital Research and that excessive compensation to the management firm is wasting plan participants' money.

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