How to manage employee benefits compliance post-Chevron
The ruling seems like ancient history, but efforts to adapt to it are just beginning.
The Supreme Court overturned the Chevron deference framework less than two months ago, fundamentally reshaping the relationship between federal agencies and the judiciary.
This ruling has far-reaching implications for benefits professionals tasked with ensuring their organizations remain compliant in an evolving regulatory environment.
Here is what you need to know about the changes and how to develop a robust compliance strategy going forward.
Understanding the Chevron overturn
The Chevron deference doctrine, established by the Supreme Court in 1984, mandated that courts defer to administrative agencies’ interpretation of ambiguous statutes if they were reasonable.
Related: Chevron overturned: How federal agencies’ loss of power impacts health care and benefits
With its overturn, courts are now expected to closely scrutinize agency interpretations rather than assume their validity.
This shift demands that benefits professionals stay vigilant and well-informed about legislative texts and judicial interpretations, which may now hold more sway than agency guidelines.
Implications for employee benefits brokers
The overturning of Chevron may have significant implications for employee benefits.
It means that agencies like the Department of Labor and the Internal Revenue Service may face increased judicial scrutiny of their rulemaking and enforcement actions.
Benefits professionals should anticipate that previously accepted interpretations by these agencies could be challenged and potentially invalidated, leading to significant shifts in compliance requirements.
Developing a proactive strategy
Considering these changes, it is crucial to adopt a proactive approach to assist brokerage clients with benefits compliance.
Here are some strategies to share with clients:
1. Continuous monitoring: Regularly monitor legal developments and court rulings that impact benefits regulations.
Staying up to date ensures that compliance strategies can be adjusted promptly in response to new judicial interpretations.
2. Encourage detailed documentation and record keeping: In the face of increased judicial scrutiny, it is essential to maintain thorough documentation of compliance efforts and decisions made.
This not only helps in defending against legal challenges but also aids in identifying potential areas for improvement.
3. Engage with compliance experts: Consider collaborating with compliance experts who have a deep understanding of employee benefits regulations and can provide insights on how to navigate the changing landscape effectively.
4. Create annual internal policies and procedures review: Annually or bi-annually, conduct a comprehensive review of internal policies and procedures related to employee benefits to ensure they align with regulatory requirements that may have shifted since the prior review.
5. Employee training and communication: Implement regular training programs and clear communication channels for benefits professionals to ensure they are informed about the latest regulations and compliance requirements.
Educated employees can help identify potential issues early and contribute to maintaining compliance.
6. Annual systematic review of benefit plans: Regularly review and update benefit plans to align with current legal standards and judicial interpretations.
This proactive measure can prevent compliance gaps and ensure that employee benefits are administered according to the latest legal requirements.
By implementing these strategies, brokers can better prepare their client organizations for the evolving regulatory landscape in a post-Chevron world.
Proactive compliance efforts not only safeguard the organization against legal risks but also develop client stickiness.
Keeping abreast of legal changes and maintaining a robust compliance framework will be critical to navigating this new era of employee benefits regulation.
The future
The recent decision to overturn the Chevron deference framework may have significant consequences for employee benefits compliance.
By understanding these changes and implementing proactive strategies, professionals can ensure their organizations remain compliant in a constantly evolving regulatory environment.
Continuous monitoring, thorough documentation, engaging with experts, reviewing internal policies, and developing training programs are all crucial elements of an effective compliance strategy going forward.
Staying informed and prepared is key to navigating this new landscape successfully.