The regulatory environment for retirment plans is constantly changing to improve the plans offered to Americans. Most small to mid sized comapnies are ill prepared to deal with these changes. Their focus is on running their business, as it should be, rather than running an efficient and effective retirement plan. These companies would offer great plans by outsourcing much of the fiduciary responsibilities to independent fiduciaries(cough, cough).

Is a business protected if it has a third-party adviser (TPA)?Having a third-party adviser does not offer protection. It is up to the individual business to ensure that its TPA is on top of this issue and managing its plan to the new guidelines. In addition, business owners and HR directors can be held personally liable for not complying with plan changes.

What changes are coming into effect in 2012?

One amendment requires a change to the annual limit amount. If your plan adopted the restricted annual limits until 2014 — when annual limits on essential health benefits no longer are permitted — the annual limit amount for the 2012 plan year must be increased to $1.25 million.

In addition, there are changes to claims procedures. Although there have been delays in appeals requirements over the past year, those changes finally will be applicable in 2012. However, they do not apply to grandfathered plans.

The foreign language requirement is also changing. For plan years starting on or after Jan. 1, 2012, plans must start providing explanations of benefits (EOBs) in foreign languages if sent to an address listed in guidance as having a certain threshold of foreign language speakers. This guidance is found in the preamble to the appeals amendment (visit www.dol.gov/ebsa). Plans also must be able to provide claims assistance in these languages if requested.

What else is changing?

Also for plan years starting on or after Jan. 1, 2012, EOBs must contain additional content, including denials codes and additional information to identify claims. Plans also must provide diagnosis and treatment codes and their meanings to claimants upon request.

The new legislation also requires external review. Self-funded plans must be contracted with at least two independent review organizations by Jan. 1, 2012, in order to meet the nonenforcement safe harbor and must contract with three of these organizations by July 1, 2012.

The main message of this article is that plan sponsors are responsible for the compliance of their retirement plan. When plan sponsors rely on their service providers for their plan compliance they may be asking for trouble.. Only an independent analysis will assure compliance and an excellent benefit fore their employees.

Please comment or call to discuss how this affects you and your company.