How Should ERISA Plans Handle Powers of Attorney and Court-Appointed Guardians and the Absence of Such Agents for Participants Lacking Capacity?
How Should ERISA Plans Handle Powers of Attorney and Court-Appointed Guardians and the Absence of Such Agents for Participants Lacking Capacity? 54 Tax Mgmt. Memo. 351 (September 9, 2013)
9 Pages Posted: 13 Sep 2013 Last revised: 30 Mar 2015
Date Written: September 9, 2013
This article discusses when an ERISA plan may, and when it must, comply with directions of (1)an attorney in fact under a power of attorney, or (2) a court-appointed guardians. Such issues are not limited to cases in which an ERISA plan participant or beneficiary lacks the capacity to act on his or her own because a person able to act on his own may wish to appoint a third-party agent to act on his behalf, such as an investment manager. Moreover, lack of capacity may result not only from a participant’s disability, but also if there is a dispute about the identity of the beneficiary or a gap between the time of the death of the participant and the time a beneficiary assumes those responsibilities. There are issues about the plan investment responsibilities for self-directed plans if the participant or beneficiary lacks capacity, but the plan has not accepted an agent appointed by such person when he had capacity.
Administrators of employee benefit plans governed by ERISA, often have to deal with third-party agents who have been designated to act on behalf of participants and beneficiaries with respect to the certain aspects of the plans, including powers of attorney and court-appointed guardians. This article discusses (1) when a third party may act on behalf of an ERISA plan participant or beneficiary who may, but need not, be unable to act on his or her behalf, and (2) the responsibilities of an ERISA plan to a participant or beneficiary unable to act on his or her behalf if no third party is authorized to act on his or behalf. There may be issues regarding at least the following eight general rights: (1) to pursue a benefit claim; (2) to obtain plan and benefit information; (3) to make beneficiary designations; (4) to invest plan assets and to obtain information about the principal's investment options; (5) to select the time and form of benefit payment; (6) to assign benefit rights and thereby create a beneficiary; (7) to determine to whom the plan makes a benefit payment; and (8) to make employee contributions to the plan. Furthermore, there may be issues for ERISA healthcare plans about the authority of agents to make healthcare decisions for participants, and for healthcare reimbursement plans about the applicability of Health Insurance Portability and Accountability Act ("HIPPAA").
Keywords: agent, power of attorney, attorney-in-fact, guardian, conservator, investment advisor, ERISA, HIPAA, employee benefit, preemption
JEL Classification: G22, G23, J12, J26, J32, K12, K19
Suggested Citation: Suggested Citation