Non-compliance with plan docs

[sbutler]

I have a client whose group insurance benefit is different for different classes of employees. The classes are based upon hours worked for the previous quarter. Most of the employees work under short-term government contracts so their hours can vary widely quarter to quarter. The employer has determined they are going to place employees in the class they estimate they would be under. What are the penalties for non-compliance with the plan docs? What is the remedy they will have to employ?

[J Simmons]

Why not amend the plan document first?

The penalty/remedy is likely that each impacted EE may insist benefits payments based on the richer of the two coverages--based on either the current-quarter estimate or the prior quarter actually worked hours. For non-compliance, the plan's fiduciaries--those that choose not to follow the documents--could possibly be held personally responsible if the ER is not capable of making the payments.

[GBurns]

Since this is under a government contract how can this method of handling hours and job classification satisfy the Service Contract Act benefits requirement ?