What is ERISA?
ERISA stands for the Employee Retirement Income Security Act of 1974. ERISA is a federal law that provides minimum standards for how private companies run their employee benefits plans. This includes health plans and retirement plans. The goal of the law is to protect employee members of the plans. The U.S. Department of Labor’s Employee Benefits Security Administration enforces and administers ERISA.
Why is ERISA Important?
Congress passed ERISA in response to notable examples of pension fund mismanagement. This includes the misuse of the Teamster’s Central States Pension Fund. It infamously funded mafia-owned casinos in Las Vegas through loans. Several examples of misuse led to the law, but this big case brought national attention to the mismanagement of pensions.
ERISA is an important law because it protects the financial interests of employees who have benefits plans. It protects them from abuse, mismanagement, and fraud. A mismanaged fund or fraudulent actions can cost workers a lot of money that they rely on for retirement.
Who Does ERISA Cover?
The law mostly covers private industry health and retirement benefit plans for workers. It does not cover all employee benefit plans. ERISA does not cover:
- Government benefit plans
- Plans created by churches for their employees
- Any plans created by companies with the sole purpose of complying with laws related to disability, unemployment, or workers’ compensation
- Benefit plans that companies maintain outside the United States
How Does ERISA Protect Workers?
ERISA does not require employers to offer retirement and health benefits. It only sets guidelines and rules for how they must be created and administered. Several provisions of the law protect plan beneficiaries from financial harm:
- Fiduciaries, anyone with control of a plan, must provide plan members with detailed information that includes benefits offered, qualifications, plan limitations, and how to obtain benefits.
- There must be a written policy for how employees file claims and how they can appeal a denial of claims.
- Appeals processes must be conducted fairly and in a timely manner.
- Fiduciaries are accountable to the federal government and must submit reports.
- The law includes rules of conduct for fiduciaries and managed care health plans.
- Plans must be provided in the best interests of members.
- Discrimination in obtaining benefits is prohibited.
- The Pension Benefit Guaranty Corporation provides some ongoing benefits if a plan is terminated, such as when a company goes out of business.
Lawmakers amended ERISA twice to add more major protections for workers:
- The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). COBRA provides workers who have lost their jobs with ongoing healthcare coverage. Before COBRA, terminated workers had their coverage cut off immediately. As long as an employee is let go for any reason other than gross misconduct or has voluntarily left, they can keep the healthcare plan for up to 18 months at additional cost. The law also applies to spouses and dependent children.
- The Health Insurance Portability and Accountability Act of 1996 (HIPAA). Lawmakers passed the HIPAA amendment to protect plan members’ privacy and to make healthcare coverage more secure. It limits restrictions on preexisting conditions and also protects individual healthcare information from misuse.
Other laws and amendments included even more protections for workers. These include changes to maternity coverage and hospital stay lengths for mothers and newborns, mental health parity in healthcare coverage, and breast reconstructive surgery for women with cancer.
What if My Employer Violates ERISA?
If you believe your employer is violating the law with respect to your benefits plans, you have a few options. You may be able to resolve the issue with your employer. For instance, if they have not provided benefit plan information, request it. If they still do not comply, you can take further steps.
More serious violations, or refusal of an employer to address concerns, you may want to file a complaint with the Employee Benefits Security Administration (EBSA). EBSA benefit advisors take consumer complaints and reply within 30 days. They try to resolve the issues informally. If this fails, they may review the complaint further and may decide to investigate your employer.
What if My Benefits Claim is Denied?
Claims denied under benefits plans may be valid. You can appeal a decision through that plan. Your employer should provide you with information on the appeals process. There is a time limit on appeals and reviews, so it is important to know the rules. The plan must review the appeal and answer within 120 days.
If your claim is still denied after the review, you can file a lawsuit under ERISA. These lawsuits fall under federal jurisdiction. You will need a lawyer who specializes in administrative law and ERISA in particular. They can represent you in front of an administrative law judge who will make the final decision on your claim.
ERISA passed to protect workers from abuse and mismanagement of benefit plans and funds. You have rights under this law to fair treatment, information, plans managed in your best interests, and an appeals process. If you believe your rights have been violated, contact an ERISA lawyer for guidance.