Traps for the Unwary in Administration of Employee Benefit Plans

Abstract

Plan sponsors historically have had few limitations under the Employee Retirement Income Security Act or the Internal Revenue Code on the types of benefits or the level of benefits provided through a health plan. However, recently, the Equal Employment Opportunity Commission has increased its enforcement of claims against employers under various federal discrimination statutes. In addition, counsel for participants are using these discrimination statutes to challenge claim denials that are based on exclusions in the plan. As a result, benefit professionals should be reviewing plan benefits to determine whether potential discrimination issues exist. In addition, in considering whether to terminate an employee, employers should review whether the employee is about to vest in one of the employer’s plans or whether the employee has received benefits from one of the employer’s plans. Section 510 of ERISA prohibits an employer from dis- criminating against an employee for exercising a right under a plan or to interfere with the attaining of a right under a plan.