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The provider is really irrelevant. It's a plan asset, and a plan problem. How much of an issue depends on the details. When was the original payment made, was there notice and consent or was it a forceout, were there taxs withheld, was it reported on a 5500, 1099, 945, 8955, etc... It should be deposited to the trust, he participant should be default enrolled, and payment process should start over (and other steps as necessary). If participant does not receive your payment, go to your missing participant procedures. I do not think that sending the check to the sponsor is reasonable as it should be handled on a plan level.

Before answering your question, if a difficulty is about explaining provisions that apply differently to different groups, consider making two (or more) summaries. Even for an ERISA-governed plan, the regulations expressly approve that method. Each summary would describe the provisions that apply to a particular class of participants. 29 C.F.R. § 2520.102-4 https://www.ecfr.gov/cgi-bin/text-idx?SID=3a755c0fd8410a941af9b029f61c0e60&mc=true&node=se29.9.2520_1102_64&rgn=div8 There are potential benefits of good communication beyond doing the decent thing of furnishing information a participant needs to protect her rights and interests. As you suggest, having furnished written information might set up a response to a “why didn’t anyone tell me” criticism. Similarly, it might shorten a statute of limitations or other time limit on a participant’s (or beneficiary’s) lawsuit or claim. Many court decisions treat a person furnished a disclosure document as having knowledge of the information one could learn by reading the document. Knowledge sometimes invokes a shorter time limit. For some kinds of claims, knowledge might defeat a claim entirely.

There are 2 methods of developing the cost of claims in a plan. Experience rated is a method whereby the groups actual claims experience is used to calculate the next years expected claim cost. The larger the group enrollment the more predictable the claim experience. Non experienced is a method that does not take into account the actual claim experience of the group, rather it uses the carriers pool or book rates. Self funding is not the same, it is a method to fund the plan. Self funding transfers some/all of the risk to the plan sponsor. As a general rule, self funding uses “experienced-rated” costs, but in recent years you can find level Funded self funded plans utilizing non-experience rated costs. A fully insured plan can have both experience and non-experienced rated.

It is if you're not fully reconciling assets (we are, generally). I'm not arguing with you, it's not complicated if your systems are set up right. Maybe I don't get out much but I get the sense that there is widespread noncompliance.

Amend the plan to cease permitting the purchase of life insurance. That rule will then apply to everyone. Patricia Neal Jensen

Yes. Often when you hear bizarre statements like this, it is the client re-stating what they think they heard from the TPA, not what the TPA actually said. This is not always the fault of the client. It is incumbent on us to constantly strive to communicate clearly with clients. It is difficult, as this is a very technical area where logic doesn't necessarily apply, and our industry jargon does not help. A favorite of mine, how many times has a prospect or advisor told you their HCEs keep getting ADP refunds because the plan is "top heavy"?