Understanding Employee Assistance Programs (EAPs), ERISA, Wrap Plans, and Form 5500 filings has proven to be complex for many of our clients. We thought a deeper dive into EAPs would provide some insight on this murky topic.
What are EAPs?
EAPs lack a universal definition, but according to the Employee Assistance Professional Association, an EAP is a program designed to help employers address productivity issues and assist employees in resolving personal issues that may affect job performance (e.g., health, marital, family, financial, alcohol, drug, legal, emotional, stress, etc.).
How Did They Start?
EAPs started in the 1930s to tackle workplace alcoholism but gained more attention in the 80s. This led to regulatory involvement by the IRS, DOL, and HHS (“The Departments”), expressing concerns that “employers do not act to shift primary coverage to a separate “EAP plan,” exempt from the consumer protection provisions of title XXVII of the PHS Act, part 7 of ERISA, and chapter 100 of the Code, including the mental health parity provision.” Meanwhile, EAPs are now accredited under The Council on Accreditation (COA), which has provided accreditation for EAPs since 1999.
Understanding ERISA
Determining whether an EAP is an ERISA welfare plan or a referral service exempt from ERISA is crucial. Under Section 3(1), an ERISA welfare plan must be established and maintained by the employer and offer medical, surgical, hospital care, or pre-paid legal services. Therefore, if the EAP does not provide ERISA welfare plan benefits but only offers a referral service, the plan is not an ERISA welfare plan.
A Case Study: Publix Super Markets
To shed light on referral services, Publix Super Markets, Inc. had requested and received Opinion 91-26A, stating that their EAP program was a referral service only and not subject to ERISA. The Publix EAP was limited, and an employee was advised they could do one of two things. The employee could call the National Institute for Drug Abuse (NIDA), and NIDA would recommend an appropriate counselor. Publix did not reimburse the counselor(s), but if insured, treatment was potentially covered under the insurance plan. Payment was made between the insurance company, the provider(s), and the employee. Publix did not make any additional claims payments or even pay a referral fee. The second form of referral under the Publix EAP was that an employee could call a number in Human Resources. The Human Resources person who took these calls had no specialized training and was not a social worker or a counselor. The HR employee would refer to an annual publication by the Florida Department of Health and Rehabilitation and direct the employee to a listed counselor in the area. Again, payment was between the insurance carrier, the employee, and the provider. Publix did not pay. The Department of Labor deemed this a referral service only, and Publix did not create or maintain an ERISA welfare plan.
Stand-Alone EAPs and ACA Compliance
If an EAP offers medical benefits and operates independently, it qualifies as a group health plan under ERISA. Since the Affordable Care Act (ACA), stand-alone EAPs must meet the definition of an "excepted benefit" to comply with ACA provisions. Excepted benefits must not provide significant medical benefits and cannot be coordinated with benefits under a group health plan.
Therefore, it is essential for all employers who sponsor stand-alone EAPs to ensure that there is a plan document or that the EAP is included in a wrap plan. Form 5500 should be completed where applicable, and EAP separately listed.
Embedded EAPs and Wrap Plans
Embedded EAPs within group health, life, or disability plans have emerged. While embedded plans in life or disability insurance likely qualify as excepted benefits, those embedded in a medical plan may not. The inclusion of embedded EAPs in a wrap plan depends on the plan's structure. If certificates of coverage are incorporated by reference, there's no need for a separate listing on Form 5500.
In conclusion, understanding the nature of EAPs, whether stand-alone or embedded, is essential for employers navigating the intricacies of ERISA, Wrap Plans, and Form 5500. Compliance with excepted benefit rules, proper documentation, and clear communication with EAP administrators are key to successfully managing these programs. As the landscape continues to evolve, staying informed and proactive remains essential for employers striving to create comprehensive and compliant benefit programs.
