Termination of self-funded plans

[Guest blackacre]

The question is this: In the case of a company that self-funds several plans, including medical and LTD, if the company ceases its business operations, does state or federal law require any time period during which claims must be processed and paid? Or, does the company's obligation to pay claims cease upon declaring the plans teminated?

What is the source of regulation if this process, if any?

Thanks very much for any help you can give.

[Guest b2kates]

What you appear to be asking is how long must a claim be administered?

1. As always review the plan and administration document to see the end point for processing claims. Just terminating the plan does not alleviate the ERISA obligations; particularly if claims are still outstanding.

2. Self funded plans, being governed by ERISA are generally exempt from state rules.

3. Failure to process claims post plan termination may expose both the Plan Sponsor and Plan Administrator as well as the Employer to direct liability.

[Larry M]

Your plan document should have a specific reference as to the length of time after which a claim may not be submitted, with a possible exception for special circumstances (e.g., a single person is in a coma for seven months and does not submit a claim until after that time ).

But, be wary. State law may come into play in determining whether the cut off date is reasonable for the specific claim.