The Employee Retirement Income Security Act of 1974, also known as ERISA, was designed to define the rules and standards for retirement and healthcare benefits. It was created to protect the assets of those who are retiring and to set out rules for how employers manage their healthcare plans. If you are an employer who offers a group health insurance plan, whether self-insured or fully insured, then ERISA most likely applies to your plan. There are very few types of plans that are not subject to it. All private companies are required to comply with ERISA laws. So you need to know what ERISA is, what protections it offers your employees, and what rules you are subject to as an employer.
What Is ERISA?
According to the U.S. Department of Labor, ERISA sets “minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans.” For employees, this means that they will be afforded certain protections under this law when they participate in retirement and health insurance plans through their employer. For you, the employer, it means that you need to take certain steps to protect your employees’ retirement savings from any mismanagement or abuse. You also need to make sure that their healthcare plans are being managed in the best interest of the plan participants. Under ERISA, you also have duties to disclose certain information regarding your plan to your employees, as well as to set out guidelines for how your employees should file claims.
ERISA’s Rules
As an employer, ERISA requires you to adhere to rules surrounding the following:
- Conduct- ERISA sets standards of conduct for plan managers. Because managing your employees’ benefits plan might be complicated and time consuming, you may choose to hire an outside professional (sometimes called third-party service providers). Or you can use an internal administrative committee or human resources department to manage some or all of your plan’s day-to-day operations. Under ERISA, you need to make sure that anyone who is managing your plan is acting in the best interest of your employees.
- Disclosures– ERISA requires you to provide any employees participating in your plan with information about funding and the different features of the plan. There are set standards for how companies regulate participation in the plan, including defining how long an employee has to work for the company before they can join the plan.
- Reporting & Accountability– ERISA requires that you, or the third-party plan manager, provide detailed reporting and accountability to the federal government about the plan and participants.
- Notification of Benefit Determination– ERISA requires that you have a written policy in place that states exactly how claims should be filed, as well as have an appeal process for claims that are denied. Any and all claims appeals have to be conducted in a fair and timely manner.
Further Protection
ERISA is all about making sure that your plan’s funds are protected and delivered in the best interest of plan members. It also prohibits any discriminatory practices when granting plan benefits to qualified individuals. In addition to the rules laid out above, there have also been two amendments to ERISA that are meant to further protect employees. These are:
- The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA)- This was created to give workers and their families the right to continue their health coverage for a limited time after certain events, like losing their job.
- The Health Insurance Portability and Accountability Act of 1996 (HIPAA)- This offers protection for workers and their families who might suffer discrimination in health coverage based on factors that relate to an individual’s health.
Offering a healthcare plan to your employees can be beneficial to you (think: tax breaks), but you need to comply with all ERISA rules. Not complying with the rules will not only lead to the loss of your tax advantages, but also to penalties such as thousands of dollars in fines.
If you need advice on group health insurance or need more information on how ERISA works, speak to an EZ.Insure agent. Our agents are highly knowledgeable about group insurance and have access to all the top-rated insurance companies in your area. We will review your needs, make sure you are in compliance with any and all rules, and find ways for you to save money. To get free instant quotes, simply enter your zip code in the bar above, or to speak directly to an agent, call 888-998-2027.
