QUESTION 3. Our plan year begins October 1 for our group health plan. We currently have a lifetime exclusion for pre-existing conditions -- i.e., if a new hire was ever treated for a medical condition prior to her hire date (which is the date our plan coverage starts), the individual is never eligible to receive treatment for that condition under the plan. I know that to comply with HIPAA we must limit our pre-existing condition exclusion (PCE) period to 12 months starting October 1 (18 months for late enrollees), and that we must make a bunch of other changes too. Somebody told me that we must amend our plan document by October 1 or else we can't enforce any PCE until the subsequent plan year starting October 1, 1998. And I've heard that in addition to amending the plan, we must send out a special pre-existing condition notice letter to all new hires and to current employees who were hired during the last 18 months. Is this true? What if we don't get around to amending our plan, but we get the notices out by October 1?

A reader asks: "A plan sponsor maintains a 401(k) plan that permits hardship withdrawals. In making the hardship withdrawals, the plan administrator included post-1988 earnings in the amounts distributed (contrary to the provisions of the plan). Is APRSC available to correct the defect? What type of correction would be required?"

Answer is here.