Do I Really Need Employee Benefits Counsel?

If the recommendation comes from a trusted advisor, then the answer is yes. Here are a few key reasons why EB counsel can make a significant difference in managing group health plans.

1. Reliance on Legal Opinion

   While specialty advisors who work with insurance consultants can provide important guidance, information and even strategy, they cannot form an attorney-client relationship with you. This means, among other things, that they cannot issue a legal opinion. Only properly engaged legal counsel can form an attorney-client relationship with the employer and provide a legal opinion. Of course, the assistance of these specialists might mean an employer won’t have to spend as much on a legal opinion, but it cannot serve as a substitute for it.

   If an agency such as the Department of Labor or the Internal Revenue Service audits an employer, the employer can point to a legal opinion as the basis for their actions. That’s a far superior position and one that can go a very long way toward demonstrating a reasonable, considered, and diligent process in decision-making. The same holds true for employers considering an acquisition or sale or looking for an infusion of capital. If their approach here is challenged, the employer can again point to its engagement of legal counsel to help explain its decision-making process.

2. Access to Attorney-Client Privilege

   Attorney-client privileged legal advice is another advantage of engaging EB counsel. This privilege ensures that sensitive communications between a company and its legal advisors remain confidential, which is crucial when addressing complex legal issues. This privilege provides a secure environment for discussing potentially risky legal matters and making informed decisions without exposing the company to unnecessary legal risks that would be otherwise discoverable in the event of litigation.

3. Enhanced Risk Management Beyond Day-to-Day Compliance

   Insurance consultants and their teammates provide crucial support when it comes to regulatory requirements, but sometimes outside counsel is best equipped to fully address the broader strategic risks associated with certain employee benefits decisions. Dedicated EB counsel can help identify and mitigate these risks through a comprehensive legal lens. Consider a company contemplating a major acquisition or sale, for example, a scenario that can significantly alter employee benefits plans. Without EB counsel, the company might face several risks, including:

   • ERISA compliance: If the company’s benefits plans are not properly integrated post-merger, there could be ERISA violations stemming from improper updating of plan documents, disclosure and reporting, and failure to ensure continuity of benefits for all eligible employees and participants.
   • COBRA requirements: Companies must ensure compliance with COBRA requirements for offering continued coverage to existing COBRA participants and to new COBRA-qualified beneficiaries in an acquisition. While default rules regarding liability can be contractually shifted, employers must assess these considerations before the deal closes.
   • ACA obligations: The ACA imposes specific requirements for health coverage, including the timely provision of benefits and accurate reporting. During an acquisition or sale, it’s crucial to address potential issues such as ensuring no gaps in coverage for employees and compliance with reporting requirements. Additionally, if the transaction results in the buyer becoming an applicable large employer (ALE), it must now adhere to ACA mandates and reporting obligations to avoid penalties.

4. Customization of Documents and Policies

   Group health plans are not one-size-fits-all. Each organization has unique goals, requirements, and challenges. When an employer chooses to self-fund their benefits, a myriad of choices and associated risks will follow, much of that falling on the HR professional. A privileged conversation with EB counsel can help you better understand those risks and options. This tailored approach ensures that a company’s health plans are designed to comply with applicable laws while addressing its goals and individual circumstances.

Conclusion

Again, while insurance consultants and their teammates provide essential services, dedicated EB counsel provides an extra layer of expertise for HR professionals charged with managing the complexities of employee benefits.

Specialized EB counsel ensures that all aspects of benefits management are thoroughly addressed, including:

• Navigating intricate regulatory requirements
• Tailoring policies for specific organizational needs
• Guiding employers through an audit, acquisition or other scenario in which a position they’ve taken is questioned

This comprehensive approach helps companies mitigate legal risks, stay in compliance, and align benefits strategies with their overall objectives.