In recent years, more and more businesses have increased efforts to support the well-being of their employees. This means not only providing health care benefits, but also offering other initiatives designed to help workers cope with challenges such as substance dependence, financial planning, legal woes and mental health issues.
Among the options usually considered is an employee assistance program (EAP). These programs typically offer a set of benefits intended to address circumstances and challenges that might adversely affect employees’ ability to work. In recent years, more and more businesses have increased efforts to support the well-being of their employees. This means not only providing health care benefits but also offering other initiatives designed to help workers cope with challenges such as substance dependence, financial planning, legal woes, and mental health issues. Employee Retirement Income Security Act (ERISA) Benefits may include short-term mental health or substance abuse counseling or referral services, along with financial counseling and legal services.
When considering an EAP, business owners ask: Will the program be subject to the Employee Retirement Income Security Act (ERISA)?
Medical care
The structure of the EAP and the benefits it offers determine the answer. If an employer establishes or maintains a plan, fund, or program to provide ERISA-listed benefits, including medical services, it generally qualifies as an ERISA welfare benefit plan.
Indeed, medical care or benefits are the category of ERISA-listed benefits that an EAP is most likely to provide. Mental health counseling — whether for substance abuse, stress or other issues — is considered medical care. Accordingly, an EAP providing mental health counseling will probably be subject to ERISA. An EAP that only provides referrals and basic information without qualified counselors is unlikely to be an ERISA plan.
Even if an EAP primarily uses referrals, it could still be considered to provide medical benefits if the individuals handling initial phone consultations and making referrals are trained in an applicable field, such as psychology or social work. If the EAP provides any ERISA-covered benefit, the entire EAP, including non-ERISA benefits, must comply with the law.
Beyond ERISA
When considering an EAP, you should first determine whether it will be subject to ERISA. The law’s provisions address critical compliance matters such as:
- Creating a plan document and Summary Plan Description,
- Performing fiduciary duties,
- Following claims procedures, and
- Filing IRS Form 5500.
An EAP that’s considered a group health plan will also be subject to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) and certain other group health plan mandates, including mental health parity.
Another point to keep in mind: EAPs that receive medical information from participants — even if they only make referrals and don’t provide medical care — must comply with privacy and security rules under the Health Insurance Portability and Accountability Act (HIPAA).
An EAP might not be subject to other group health plan requirements. One that meets specified criteria is considered an “excepted benefit” and is exempt from HIPAA portability and certain Affordable Care Act requirements.
A worthy idea
The idea of offering your employees an EAP is well worth considering. This is particularly true now that businesses are under increased pressure to retain their workers. We can help you assess the costs, advantages and risks of one of these programs.
We welcome the opportunity to put our small business expertise to work for you. To learn more about how our firm can help advance your success, contact Kathy Corcoran at (302) 254-8240.
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