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Sunday, August 8th,
2004
2:00 – 5:00 p.m.
Hyatt Regency Atlanta
Regency Ballroom V, Ballroom Level
The Joint Committee on Employee Benefits
(JCEB) Presents:
Outsourcing HR and Employee Benefits Onshore and Offshore
In recent years, the decision to outsource
critical HR and employee benefit functions, rather than
handling them in-house, has been made by a growing number
of plan sponsors. In the past, more traditional versions
of this decision were common, such as hiring a third-party
administrator (TPA) to handle health or pension claims,
buying a "bundled product" such as 401(k)
services, using master and prototype pension plans,
entering into an "administrative services only
contract" or ASO with an HMO to handle health benefits.
However, the types of outsourced functions and the extent
to which they are outsourced is expanding rapidly. In
addition, it is increasingly unlikely that all outsourced
functions will be handled by the service provider itself,
since these vendors may also outsource some or all of
the functions they have been hired to perform. Outsourcing
both within the territorial United States and outside
US boundaries presents important policy, legal and ethical
challenges for plan sponsors and participants. This
session will highlight some of those challenges for
both pension and health plans. A panel of HR and benefit
experts will address these topics, including:
- To what extent are HR and benefit plan functions
being outsourced today?
- What factors influence a plan sponsor's decision
to outsource?
- Which functions are typically contracted out? Which
are retained? Do plan sponsors view outsourcing of
401(k) plan administration and health plan administration
differently?
- What are the plan design implications of outsourcing?
Does the plan sponsor give up plan design flexibility
when benefits functions are outsourced?
- What are the contractual issues that arise?
- Is the entity to which the function is outsourced
a fiduciary or not?
- What are the policy, regulatory and compliance implications
of outsourcing?
- How does it affect ERISA Title I compliance?
Does outsourcing, particularly offshore, pose
any additional burdens on the fiduciary's duty
to monitor or audit service providers?
- How does it affect IRS operational compliance
issues? How can a plan sponsor be sure that the
service provider is in full compliance with the
tax rules?
- If a service provider hired by the plan outsources
some of its functions, does it have an obligation
to inform the client it is doing so, particularly
if this action results in sending jobs outside the
US? What if the service provider knows that the client
is opposed to extraterritorial outsourcing?
- Can you outsource legal services? Investment services?
- Are there any special problems associated with non-US
call centers or member services operations? With 401(k)
plan administration? With recordkeeping and data storage
and management?
- How does outsourcing affect participant and fiduciary
rights to sue under Section 502 of ERISA? Who do you
sue and where do you sue for breaches of fiduciary
duty? Benefit claims?
Moderator
Phyllis C. Borzi, O'Donoghue & O'Donoghue, Washington,
DC
Speakers
Andy Anderson, Hewitt Associates, Lincolnshire, IL
Michael Hager, Hager Strategic, Washington, DC
Martha Hutzelman, Ice Miller, Washington, DC
Cathy Jackson Lerman, Senior Corporate Counsel, ADP,
Miami, FL
David Pickle, Kirkpatrick & Lockhart LLP, Washington,
DC
Mary Ellen Signorille, AARP Foundation Litigation,
Washington, DC
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