What Does ERISA Cover?
ERISA stands for the Employee Retirement Income Security Act of 1974. It is a federal law that applies to many private employers, but not to all. The simplest way to understand ERISA is that it establishes minimum standards for retirement (pension plans), health, and other welfare benefit plans, including life insurance, disability insurance, and apprenticeship plans, to protect employees, but also to protect employers. It does not require employers to offer plans but sets important standards for employers that do.
Who Administers ERISA?
ERISA is administered by the Employee Benefits Security Administration (EBSA), a division of the U.S. Department of Labor (DOL). If you have complaints, concerns, and questions about ERISA laws, you should start by contacting your local DOL office. There are also many lawyers who specialize in ERISA laws, should you have a legal matter either as an employee or employer that you need to discuss.
Who Must Abide by ERISA Law?
The protective laws under ERISA only apply to private employers (non-government) that offer employer-sponsored health insurance coverage and certain other benefit plans to employees. ERISA does not require employers to offer any plans, either health insurance or for retirement; ERISA only set rules (minimum standards) for certain types of benefits that an employer chooses to offer to employees.
ERISA has its limitations; it is a complicated area of law if you need to pursue a civil claim against an ERISA employer, but it still offers some protection to employees who may be wronged due to the financial mismanagement of plan fiduciaries (the people financially responsible for the plan's administration).
For example, an employee may be able to sue the fiduciary of a plan if he/she mismanaged the plan and caused a loss to the employee(s). ERISA laws do not apply to privately purchased individual insurance policies or benefits.
You can find additional regulations specifically governing ERISA-covered plans provided for under the Benefit Claims Procedure Regulation (29 CFR 2560.503-1). These regulations stipulate (and substantially change) how benefits are determined when an employee files a claim. These standards control how claims, appeals, and decisions can be made, as well as new disclosure rights for employees who make claims.
Provisions Under ERISA
According to TASC, a well-known third-party plan administrator, ERISA regulates and sets standards and requirements for:
- Conduct: ERISA rules regulate the conduct of managed care (i.e., HMOs) and other fiduciaries.
- Reporting and Accountability: ERISA requires detailed reporting and accountability to the federal government.
- Disclosures: Certain disclosures must be provided to plan participants (i.e., a Plan Summary that clearly lists what benefits are offered, what the rules are for getting those benefits, the plan's limitations, and other guidelines for obtaining benefits, such as obtaining referrals in advance for surgery or doctor visits);
- Procedural Safeguards: ERISA requires that a written policy be established as to how claims should be filed, as well as a written appeal process for claims that are denied. ERISA also requires (although the language is somewhat loose) that claims appeals be conducted in a fair and timely manner.
- Financial and Best-Interest Protection: ERISA acts as a safeguard to assure that plan funds are protected and delivered in the best interest of the plan members. ERISA also prohibits discriminatory practices in obtaining and collecting plan benefits for qualified individuals.
Other Areas Addressed Under ERISA
ERISA has been amended to include two additional areas that specifically address health insurance coverage. These laws are: