Compliance December 1, 2006

DoL: Teacher Dental Plan Included under FMLA

December 1, 2006 (PLANSPONSOR.com) - The US Department of Labor (DoL) has sided with a teachers' union in asserting that benefits under a stand-alone, self-insured group dental plan provided by a school district need to be maintained while an employee is on leave under the Family and Medical Leave Act (FMLA).
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Paul DeCamp, an administrator in DoL’s   Employment Standards Administration of the Wage and Hour Division, stated the department’s opinion in a letter released earlier this year.

According to DeCamp, the union’s argument was valid because:

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  • the dental plan, which provided a wide range of dental services, came within the FMLA’s definition of “group health plan” – that is, “a plan of, or contributed to by, an employer . . . to provide health care (directly or otherwise) to employees,” among other individuals.
  • the dental plan failed to meet regulatory criteria for exclusion from the definition in that employees did not purchase individual policies (the employer contributed 100% of the premiums) and the employer’s involvement was “excessive.” The school district negotiated the cost of premiums, employed a claims administrator to assist employees in handling disputed claims and had authority to grant exceptions for denied claims.

The school district generally paid the teachers’ dental premiums up to a maximum amount per month for 12 months, even though the work year only lasted from August through June. However, it did not maintain dental coverage during FMLA leave or during summer break if FMLA leave was taken near the end of the school year, arguing that the dental plan was neither part of nor a supplement to the major medical plan (which was subject to the FMLA).

Noting that the regulations required that “coverage during FMLA leave for . . . dental care [among other benefits] must be maintained during leave if provided in a group health plan, including a supplement to a group health plan,” the DoL stated that the school district now had to keep up coverage under its group dental plan for employees on FMLA leave as though the employees were continuously employed during the leave.

Not only that, DeCamp said, but the FMLA regulations require teachers on leave at the end of the school year to be provided with any benefits over the summer vacation that the teachers would normally receive if they were working at the end of the school year.

The letter is here .

Reader Responses November 30, 2006

SURVEY SAYS: Will Your Plan Offer Advice Next Year?

November 30, 2006 (PLANSPONSOR.com) - A few weeks back, I asked readers to opine on what impact they thought would result from the provisions of the Pension Protection Act.
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But with only a few weeks left in 2006, this week we asked readers if they planned to expand participant access to investment advice via fiduciary adviser(s) next year?

The response rate was a bit lower than usual this week (some still sleeping off that turkey, apparently), but no less interesting.   More than one-in-five were already offering advice, including the reader who said, ” We are fiduciaries for picking this vendor, but the employee enters into a contract directly with the vendor.   We do not “sell” or push the product, just make it one of the approaches to investing in our plan.”  However, they went on to note, “We have very few employees taking advantage of it because they have to pay for it.”

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A comparable 21% said they “definitely” planned to do so next year, and 5% even said they planned to do so “enthusiastically.”   One looking ahead to next year said, “We walk the line between education and advice with our employees in our pension and 401(k) plans, and have for a long time.   After all, we are an employee benefits broker and consultant.   Retirement plans are part of that.   However, we are contracting with an outside firm to act as a Fiduciary Advisor beginning 1-1-07.   We understand some of our employees are reluctant to discuss their financial matters with a “fellow co-worker” and we see this as an added benefit to our retirement plans.”

However, roughly 16% said they were not planning to do so, and another 6% said they “probably” wouldn’t (among this group was a reader who admitted, “While we promote the idea to our clients by offering an independent companies investment advice services our HR department is still “considering” the idea for our own employees…” ).   Among the remaining respondents, 14% said they weren’t sure, including one reader who noted, “Once again, new laws stir up the marketplace and we want to see what shakes out.”  Another 16% were still “thinking about it”, and 2% said “other” (including one who observed, “We have an in-house advisor so it is a case of hog tying him to get an answer to any questions you may have. I suspect that not that many employees use his services as hog tying is not in our training manual.”

But this week’s Editor’s Choice goes to the reader who said, “We will absolutely use our plan advisors to expand our participant access to investment advice as soon as it gets “blessed” by their compliance department… and our compliance department…and our ERISA legal counsel…hopefully before the end of 2007…”

Thanks to everyone who participated in our survey!

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