NEW YORK –Trustees to the Teamsters Local 272 Welfare Fund in New York City have agreed to amend the fund to resolve a lawsuit filed by the U.S. Department of Labor, regarding a fund requirement that participants bear 90 percent of the cost of medical and pharmacy claims above certain annual thresholds.
The consent judgment, filed in the U.S. District Court for the Southern District of New York, followed an investigation by the department’s Employee Benefits Security Administration.
The department’s suit alleged violations of the Employee Retirement Income Security Act and the Affordable Care Act when the Local 272 fund and its trustees replaced annual benefits limits – $125,000 for medical claims and $5,000 for pharmacy claims – with a cost-sharing arrangement requiring participants to bear all but 10 percent of the cost of claims in excess of the same limits.
The department alleged that the fund and trustees denied participants the ACA’s consumer protections in two ways. First, with the new 90 percent cost-sharing requirement, the fund lost its grandfathered status, then failed to cap participants’ annual out-of-pocket expenses, as the ACA requires. The department alleged in the alternative that the 90 percent cost-sharing requirement constituted an annual limit, in violation of ERISA and the ACA.
The trustees have agreed to amend the fund to eliminate the 90 percent cost-sharing requirement, and to provide relief to participants affected by that cost-sharing requirement...
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