Why Benefit Funds Need Legal Counsel

The regulation of welfare benefits under the Internal Revenue Code (Code or IRC) is substantial, affecting the tax treatment of employer contributions to, and employee benefits under, welfare benefit plans, such as health, vision, dental, life, dependent care assistance, educational assistance, health expense reimbursement, and cafeteria plans. These Code requirements govern the formation and ongoing administration of all welfare benefit plans established and operated in the United States.

In addition to the IRC requirements, many other laws impose additional complex requirements on welfare benefit plans. These laws include HIPAA, COBRA, the Mental Health Parity Act and the Mental Health Parity Addiction Equity Act, the Newborns’ and Mothers’ Protection Act, the Women’s Health and Cancer Rights Act, and the Medicare secondary payer rules -- just to name a few. With the passage of the Affordable Care Act (ACA) in 2010, which added significant new legal requirements for welfare benefit plans, this already complicated legal landscape has become even more complex.

The consequences of failing to comply with the above laws and IRC requirements can be devastating. These consequences could range from the imposition of significant monetary penalties on the individuals who are in charge of the benefit funds to complete IRS disqualification of the non-compliant plans. If a plan is disqualified, all contributions to and distributions from the plan will fail to qualify for favorable tax-treatment for all years in which the failures occurred. That is why it's critically important to have experienced legal counsel to help you navigate this turbulent landscape.

Several NYSUT local associations have established formal benefit funds. Other locals may not have formally created a benefit fund but may be providing benefits that require compliance with state and federal laws. A local's Labor Relations Specialist (LRS) can help determine what level of support that a local requires when it comes to offering benefits.

In addition, the NYSUT Accounting Department offers face-to-face presentations regarding Managing Fund Finances that cover key topics of interest pertaining to locals and their benefit funds’ financial operations -- including best practices, fiduciary responsibility, regulatory issues, and much more. To learn more about scheduling a presentation for your local, please contact Jaclyn Ferrucci, Manager of NYSUT Accounting Department, at 800-342-9810, ext. 6602 or jferrucc@nysutmail.org.

NYSUT Member Benefits can also assist your local's benefit fund. This website contains a variety of information regarding various benefit fund-related topics, including a pre-recorded Benefit Fund Best Practices webinar provided by the law offices of Blitman & King. Member Benefits also holds a biennial Member Benefits Conference that offers face-to-face presentations from experts on key topics of interest to benefit funds such as best practices, fiduciary training, ACA-related topics, etc. The next conference is scheduled to be held in Fall 2020.

Do you need to speak with an attorney? Member Benefits has contracted with the law offices of Blitman & King and Lipsitz Green Scime Cambria to provide a free one-hour consultation to locals and benefit funds that have any questions and would like to discuss hiring them to represent the local or fund relating to benefit related matters. Both firms provide competitive rates to NYSUT locals and benefit funds. To access their services, please contact the Member Benefits Coordinator covering your region by clicking here.