regulatory and compliance issues and considerations

protection, and the reimbursement of reasonable expenses incurred in the execution
of the duties of the position shall not be considered compensation.
12 CFR § 701.33 (2) (ii) provision of reasonable health, accident and related types of
personal insurance protection, supplied for officials at the expense of the credit
union: Provided, that such insurance protection must exclude life insurance; must be
limited to areas of risk, including accidental death and dismemberment, to which the
official is exposed by reason of carrying out the duties or responsibilities of the
official’s credit union position; must cease immediately upon the insured person’s
leaving office, without providing residual benefits other than from pending claims, if
any;
NCUA General Counsel Letter No. 99-0621 (Excerpt): Our regulations permit
FCUs to provide health insurance to officials that is reasonable in coverage and
amount. 12 C.F.R. §701.33(b)(2)(ii). An FCU may reimburse officials for their actual
health insurance costs pursuant to written policies adopted in compliance with 12
C.F.R. §701.33. No official, other than the designated compensated official, "may
receive compensation for performing the duties or responsibilities of the board or
committee position to which the person has been elected or appointed." 12 C.F.R.
§701.33(b)(2)(1). Therefore, the FCU’s written policies must include limits and
documentation requirements that ensure the FCU is not compensating officials, and
monitor the direct application of funds to health insurance premiums. The policies
would need to address the extent of coverage for which the FCU will provide
reimbursement as the costs of coverage may vary depending on factors such as
individual age and health. The policies would also need to provide that
reimbursement of health insurance costs would terminate immediately upon the
insured individual’s leaving office. 12 C.F.R. §701.33(b)(2)(ii). See also, NCUA
General Counsel Letter No. 00-0508.
In addition to the state and common law rules addressing the Board’s duties to the Credit Union
and its members, all Credit Unions must consider the ideals of Sarbanes-Oxley and NCUA
Letter 03-FCU-07. With these heightened duties so very much in the NCUA’s and public’s
domain, any activity that exceeds the duties of the utmost good faith and fair dealing, or the
slightest appearance of impropriety must be avoided. Thus, any attempt to structure a benefit
that is otherwise prohibited as set forth above herein is inappropriate. Further, any activity that
exceeds these prohibitions may subject the Credit Union, its Board and/or its management to
report same.
In short: (1) The benefit in question is prohibited; and (2) perhaps more importantly in light of the
ethical standards mentioned -- no person, volunteer or otherwise should expose themselves or
the Credit Union to the potential NCUA or membership based penalties, fines or potential claims
that could arise from any action that is contrary to the plain and clear laws and regulations noted
herein.
C. Honorary Titles are just that “Honorary Titles!”
See Legal / Compliance Consultation Note at the end of this Section.
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Revised February 2010
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