ERISA Amendments Overview

The Employee Retirement Income Security Act (ERISA) provides pension or insurance companies and private employers with guidelines on how to administer employee benefit plans. Although ERISA was enacted in 1974, there have been a number of important healthcare amendments to it over the years. The following contains a brief synopsis of some of the ERISA Amendments:

Consolidated Omnibus Budget Reconciliation Act (COBRA)

The Consolidated Omnibus Budget Reconciliation Act (COBRA) was enacted in 1985. Prior to this amendment, an employee who was terminated would no longer have healthcare coverage. COBRA was enacted to provide continuing healthcare coverage for a certain period of time to employees who were let go for any other reason besides “gross misconduct” or those who voluntarily resigned.

To qualify for COBRA:

• The individual must have had healthcare coverage before the termination as an employee, employee's spouse, or employee's dependent child.

• There must have been a “qualifying event” or some situation which caused the employee or employee's spouse to lose coverage, such as termination or divorce.

If a former employee or his or her spouse purchase COBRA coverage, it will be out of their own expenses. COBRA coverage will begin on the first day of termination and lasts for 18 months for the employee, and may last up to 36 months for an employee's spouse and dependent child.

Health Insurance Portability and Accountability Act (HIPAA)

In 1996, the Health Insurance Portability and Accountability Act (HIPAA) was added as an ERISA Amendment. It aims to make healthcare coverage more secure for employees and their dependents. One of the ways it does so is by limiting preexisting medical conditions. A preexisting condition is a condition that an individual received medical care or treatment for during the 6 month period before enrolling in a new plan. Prior to HIPAA, health plans were not allowed to exclude an individual's preexisting condition for more than 12 months.

Now, according to the U.S. Department of Labor, HIPAA requires that employers must give new employees credit for the time they held previous health coverage. Employees should receive a Certificate of Creditable Coverage automatically when they lose their coverage prior to a new job, which can be shown to the new employer. These certificates must include information on the time the employee and any dependents had coverage,and for plans after July 2005, should also include a statement about the employee's HIPAA rights.

Newborns' and Mothers' Health Protection Act

The Newborns' and Mothers' Health Protection Act (the Newborns' Act) was enacted in 1996 in order to provide certain protections relating to the length of hospital stays after childbirth for mothers and their newborns. The Act requires plans that offer maternity coverage to pay for at least a 48 hour hospital stay following vaginal childbirth, or 96 hours for a cesarean section. However, if the attending physician decides to discharge the mother earlier, he may do so as long as it is not induced by the plan administrator.

Because many states have their own version of the Newborns' Act, state law may govern in lieu of the federal laws. Therefore, it is important to determine which law applies to your plan.

Mental Health Parity and Addiction Equity Act

Another important ERISA amendment, the Mental Health Parity and Addiction Equity Act (MHPAEA) was enacted in 2008 to ensure that mental illness is treated as equally as other medical issues. The MHPAEA requires that group health plan financials (deductibles and co-pays) and treatment limitations for mental health or substance use disorder be no more restrictive than limits applied to all other medical benefits.

The MHPAEA applies to health insurance issuers who sell coverage to employers with more than 50 employees and to plans sponsored by public and private sector employers with more than 50 employees. This Act does not require that health plans provide mental illness benefits but that if they do provide such benefits, they must comply with the provisions in the MHPAEA.

Women's Health and Cancer Rights Act

The Women's Health and Cancer Rights Act (WHRCA) was signed into law in 1998 and was made to protect patients who decide to have breast reconstructive surgery after a mastectomy. The Act requires that plans who offer coverage for a mastectomy must also provide coverage for patients who decide to have breast reconstruction in connection with the mastectomy and other benefits that relate to it. According to the U.S. Department of Labor, the annual deductibles and coinsurance may apply to mastectomy benefits.