CEBS GBA Exam 3
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1. An employee 1) There must be a plan, fund or program.
welfare benefit 2) The plan, fund or program is established or maintained by an employer.
plan has four 3) The plan, fund or program is for the purpose of providing specifically listed
basis elements. benefits, through the purchase of insurance or otherwise.
What are these 4) Benefits are provided to participants and beneficiaries.
elements? (Mod
1.1)
2. Explain how a The phrase "plan, fund or program" is not defined in ERISA but rather has been
"plan, fund or laid out in several court cases. Courts have held a "plan, fund or program" under
program" for an ERISA is established if, from the surrounding circumstances, a reasonable person
employee bene- can ascertain the intended benefits, the class of beneficiaries, the source of
fit plan is defined financing and the procedure to receive benefits.
(Mod 1.1)
3. Describe the pro- No particular formalities are required to create an ERISA plan and no single
cedures required action in and of itself necessarily constitutes establishment of ERISA employee
to establish an welfare benefit plan. Thus, ERISA plans have been deemed to be "established
ERISA employee or maintained" by a practice that would cause a reasonable EE to perceive an
welfare benefit ongoing commitment by the ER to provide EE benefits. This would include any
plan (Mod 1.1) contributions by an ER toward payment of benefits or by the ER simply adminis-
tering 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).
4. List the types 1) Governmental Plans: includes plans established by the US Gov't, the gov't of
of employee wel- any state or political subdivision and any agency of any of the foregoing or a plan
fare benefit plans to which the Railroad Retirement Act applies, as well as certain plans associated
not covered un- with Native American Tribal gov'ts.
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der ERISA and 2) Church plans: a plan established and maintained for its EE's by a church or by
specifically ex- a convention or association of churches is exempt from tax under IRC Sec 501.
cluded under the 3) A plan maintained to comply with state laws on Worker's Comp, Unemployment
statute (Mod 1.1) 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.
5. List the types a) Medical, Surgical or Hospital Care or Benefits
of benefits pro- b) Benefits in the event of sickness, accident, disability, death or unemployment
vided by ERISA c) Vacation Benefits
health and wel- d) Apprenticeship or other training benefits
fare, and provide e) Day-care centers
examples of such f) Scholarship funds
plans (Mod 1.1) 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.
6. Discuss whether The payment of an employee's normal compensation in full or in part out of the
plans that involve employer's general assets for periods when the employee is physically or men-
payroll practices tally
are treated as unable to work—that is, an unfunded short-term disability plan—is generally
ERISA health and not a
welfare plans welfare benefit plan subject to ERISA. However, if a disability program provides
(Mod 1.1) 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
, CEBS GBA Exam 3
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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.
7. For a voluntary a) No ER or EE organization contributions
benefit arrange- b) Participation is completely voluntary
ment to be ex- c) No ER consideration except for reasonable compensation and administration
empt from ERISA d) No employer endorsement
based on the
DOL safe har-
bor, it must meet
certain require-
ments, which
are? (Mod 1.1)
8. Explain the Means an ER can publicize, collect premiums, remit premiums, provide employee
meaning of the information to an insurance company and maintain a
term "no employ- file on the voluntary plan. However, an employer cannot express positive norma-
er endorsement" tive
(Mod 1.1) judgment and cannot urge/encourage employee participation. The participation
of
the employer or employee organization should be limited to the duties specified
in
the regulation, none of which involve the exercise of discretionary duties. An
, CEBS GBA Exam 3
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employer hoping to rely on this exemption should also be careful not to create
the
impression that the benefit is part of its benefit package by, for example, including
it
in enrollment materials or encouraging employees to enroll. DOL warns in the
final
Family and Medical Leave (FMLA) regulations that if a plan is intended to be
exempt from ERISA under this provision, the ER should not pay an EE's premium
while the EE is on FMLA leave.
9. Define each of (a) Plan administrator/plan sponsor
the following A plan administrator is a person with statutory responsibility for ensuring that all
ERISA terms: of the required filings with the federal government are timely made and is the
a) plan adminis- person upon whom the statute imposes authority to make important disclosures
trator/sponsor to participants about plan benefits. Generally, the plan administrator is designat-
b) participant ed in the plan document. However, if the plan administrator is not so designated,
c) beneficiary then the responsibility defaults to the plan sponsor, which is usually
(Mod 1.2) the employer. Generally, in a single employer situation, the employer is the plan
sponsor. Therefore, the employer is ultimately responsible for all reporting and
disclosure requirements and should implement a process to make certain those
responsibilities are followed.
b) Participant:
The term participant has been interpreted broadly to include employees in, or
reasonably expected to be in, currently covered employment. This would include
employees who are eligible for a plan but who are not enrolled. However, em-
ployees in a class not eligible to participate in a plan are not participants
under the ERISA definition. In addition, because the definition is not limited to
current employees, it can include COBRA-qualified beneficiaries, covered retirees
and other former EE's who may remain eligible under a plan.
(c) Beneficiary:
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1. An employee 1) There must be a plan, fund or program.
welfare benefit 2) The plan, fund or program is established or maintained by an employer.
plan has four 3) The plan, fund or program is for the purpose of providing specifically listed
basis elements. benefits, through the purchase of insurance or otherwise.
What are these 4) Benefits are provided to participants and beneficiaries.
elements? (Mod
1.1)
2. Explain how a The phrase "plan, fund or program" is not defined in ERISA but rather has been
"plan, fund or laid out in several court cases. Courts have held a "plan, fund or program" under
program" for an ERISA is established if, from the surrounding circumstances, a reasonable person
employee bene- can ascertain the intended benefits, the class of beneficiaries, the source of
fit plan is defined financing and the procedure to receive benefits.
(Mod 1.1)
3. Describe the pro- No particular formalities are required to create an ERISA plan and no single
cedures required action in and of itself necessarily constitutes establishment of ERISA employee
to establish an welfare benefit plan. Thus, ERISA plans have been deemed to be "established
ERISA employee or maintained" by a practice that would cause a reasonable EE to perceive an
welfare benefit ongoing commitment by the ER to provide EE benefits. This would include any
plan (Mod 1.1) contributions by an ER toward payment of benefits or by the ER simply adminis-
tering 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).
4. List the types 1) Governmental Plans: includes plans established by the US Gov't, the gov't of
of employee wel- any state or political subdivision and any agency of any of the foregoing or a plan
fare benefit plans to which the Railroad Retirement Act applies, as well as certain plans associated
not covered un- with Native American Tribal gov'ts.
, CEBS GBA Exam 3
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der ERISA and 2) Church plans: a plan established and maintained for its EE's by a church or by
specifically ex- a convention or association of churches is exempt from tax under IRC Sec 501.
cluded under the 3) A plan maintained to comply with state laws on Worker's Comp, Unemployment
statute (Mod 1.1) 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.
5. List the types a) Medical, Surgical or Hospital Care or Benefits
of benefits pro- b) Benefits in the event of sickness, accident, disability, death or unemployment
vided by ERISA c) Vacation Benefits
health and wel- d) Apprenticeship or other training benefits
fare, and provide e) Day-care centers
examples of such f) Scholarship funds
plans (Mod 1.1) 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.
6. Discuss whether The payment of an employee's normal compensation in full or in part out of the
plans that involve employer's general assets for periods when the employee is physically or men-
payroll practices tally
are treated as unable to work—that is, an unfunded short-term disability plan—is generally
ERISA health and not a
welfare plans welfare benefit plan subject to ERISA. However, if a disability program provides
(Mod 1.1) 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
, CEBS GBA Exam 3
Study online at https://quizlet.com/_j7iiag
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.
7. For a voluntary a) No ER or EE organization contributions
benefit arrange- b) Participation is completely voluntary
ment to be ex- c) No ER consideration except for reasonable compensation and administration
empt from ERISA d) No employer endorsement
based on the
DOL safe har-
bor, it must meet
certain require-
ments, which
are? (Mod 1.1)
8. Explain the Means an ER can publicize, collect premiums, remit premiums, provide employee
meaning of the information to an insurance company and maintain a
term "no employ- file on the voluntary plan. However, an employer cannot express positive norma-
er endorsement" tive
(Mod 1.1) judgment and cannot urge/encourage employee participation. The participation
of
the employer or employee organization should be limited to the duties specified
in
the regulation, none of which involve the exercise of discretionary duties. An
, CEBS GBA Exam 3
Study online at https://quizlet.com/_j7iiag
employer hoping to rely on this exemption should also be careful not to create
the
impression that the benefit is part of its benefit package by, for example, including
it
in enrollment materials or encouraging employees to enroll. DOL warns in the
final
Family and Medical Leave (FMLA) regulations that if a plan is intended to be
exempt from ERISA under this provision, the ER should not pay an EE's premium
while the EE is on FMLA leave.
9. Define each of (a) Plan administrator/plan sponsor
the following A plan administrator is a person with statutory responsibility for ensuring that all
ERISA terms: of the required filings with the federal government are timely made and is the
a) plan adminis- person upon whom the statute imposes authority to make important disclosures
trator/sponsor to participants about plan benefits. Generally, the plan administrator is designat-
b) participant ed in the plan document. However, if the plan administrator is not so designated,
c) beneficiary then the responsibility defaults to the plan sponsor, which is usually
(Mod 1.2) the employer. Generally, in a single employer situation, the employer is the plan
sponsor. Therefore, the employer is ultimately responsible for all reporting and
disclosure requirements and should implement a process to make certain those
responsibilities are followed.
b) Participant:
The term participant has been interpreted broadly to include employees in, or
reasonably expected to be in, currently covered employment. This would include
employees who are eligible for a plan but who are not enrolled. However, em-
ployees in a class not eligible to participate in a plan are not participants
under the ERISA definition. In addition, because the definition is not limited to
current employees, it can include COBRA-qualified beneficiaries, covered retirees
and other former EE's who may remain eligible under a plan.
(c) Beneficiary:
