Outsourcing and Legal Requirements

Benefits outsourcing has implications across a range of legal and regulatory frameworks that must be managed appropriately: 

• HIPAA – Vendors will have access to employee medical data, so Business Associate Agreements (BAAs) mandating HIPAA controls and PHI compliance are required. 
• PPACA – Outsourced benefits administration impacts ACA reporting processes, forms generation and compliance. Ensuring your vendor’s ACA expertise is essential. 
• COBRA – Providers often manage COBRA eligibility tracking, notices, premium collection and compliance documentation. Ensure capabilities meet COBRA legal needs. 
• ERISA – Employee Retirement Income Security Act impacts claims administration, participant disclosures and retirement plan governance. Include ERISA adherence in vendor agreements. 
• FMLA – Tracking of Family and Medical Leave Act eligibility and return-to-work procedures must integrate properly with outsourced benefits administration. 
• State laws – Local regulations around benefits notifications, leave programs and required offerings should be addressed in provider contracts and SLAs. 

Confirming vendor fluency with legal needs, coupled with solid contracts and audits, keeps outsourcing arrangements compliant and low risk.