Impact of New CA Law ??

[Guest halka]

Would like to see some reactions from CA and non-CA recordkeepers to a new CA law which prohibits many uses of social security numbers effective 7/01/02 (w/ various exceptions).

S.B. 168 adds Confidentiality of Social Security Numbers to the California Civil Code. This new section of the CA Civil Code prohibits any person or entity from using an individual's social security number (SSN) in certain ways, specifically:

"... 5. Printing an individual's SSN on any materials that are mailed to the individual, unless state or federal law requires the SSN to be on the document to be mailed. Notwithstanding this provision, applications and forms sent by mail may include social security numbers...."

The actual bill/law can be viewed at: http://www.sen.ca.gov/

I'm just curious as to the reaction of people who routinely mail a multitude of EB materials to CA participants. THANKS

[Kirk Maldonado]

It would seem that there is an ERISA preemption issue here.

[Guest dmj1998]

Sgt. - I'm not a recordkeeper, but as a citizen I am very happy to see legislation like this. The SSN has been abused for the longest time and it is the most dangerous aspect of identity theft. I also don't think an ERISA preemption is applicable here. ERISA outlines how benefit plans must be designed and administered, but where does it cover how they must perform recordkeeping? The IRS requires tax reporting using the SSN, but that doesn't mean all records need to filed under the SSN. It will be interesting to see how vendors handle the opt-out provisions as well.

[Kirk Maldonado]

dmj1998:

Read ERISA Section 514.

[david rigby]

I agree with Kirk. A plain reading of ERISA sec. 514 would lead one to believe that the state law has no jurisdiction over what the plan sends out.

However, it still might be a good idea, just not enforceable under state law.

[Guest dmj1998]

kirk/pax:

i agree that erisa preempts state laws, but where in erisa does it outline how tpa's and plan administrators actually keep records and that they can or cannot use an SSN? why can't they use the employer assigned company id number? i would refer you to the privacy act of 1974 and how it outlines the proper use of the SSN. just because participants haven't challenged it yet, doesn't make it right.

http://www.epic.org/privacy/laws/privacy_act.html

[MoJo]

I would question how the CA law "relates to" an Employee Benefit Plan such that it is preempted by ERISA. The use of a SS# is a convenience, not at all essential to the provision of benefits to participant. True, for tax reporting, the distribution must bear the SS#, but I don't see why statements must....

[Blinky the 3-eyed Fish]

dmj1998 - you are my big toe.

[Guest dmj1998]

An army without leaders is like a foot .. without a big toe.

[david rigby]

Recent article related to this issue:

http://www.shrm.org/hrnews/articles/defaul...age=020702a.htm

[JWK]

I think the preemption argument is that the prohibition on using SSN identifiers is a restriction/requirement on how a plan is admnistered. dmj1998, I think your view of preemption is a bit narrow--ERISA also does not dictate how many days a patient has to spend in the hospital for amputation of a big toe, but a state law containing such a mandate would certainly preempted for self-funded health plans. Looking at this another way, what if one state mandated use of SSNs on patient ID cards, while CA prohibited it--so much for uniform national administration. The fact that ERISA is silent on a particular issue doesn't mean that preemption doesn't apply--that's the whole point to complete preemption.

I think this law has to be preempted, at least for self-funded plans (I won't get into the insurance issues here), or chaos would ensue.

[mbozek]

If administrators/ recordkeepers are performing a function of the plan required under ERISA such as maintaining accounts, processing loan applications or determining eligibility for plan benefits then this law should be preempted since these functions relate to administration of the plan. E.g., ssa form must be filed upon distribution to participant with vested benefit. NJ has enacted legislation regarding mandatory disclosure of certain types of health benefits required under state laws but employers have ignored the law without any lawsuits or regulatory action.