Health Insurance Requirements Under ERISA

Congress passed the Employee Retirement Income Security Act of 1974 (ERISA) to protect American employees’ retirement and pension plans, including employer-sponsored health plans.

The U.S. Department of Labor (DOL) and the federal government oversee the enforcement of ERISA. It also provides guidelines for employers and insurance companies for the management of employee benefit plans. Employers often appoint third-party administrators to oversee the management of employee healthcare plans and benefits.

ERISA aims to protect employees' interests by setting standards for disclosure and fiduciary responsibility. This ensures accountability in employers’ handling of ERISA plans.

In this article, we’ll explain how ERISA law works and how it helps protect your health insurance plans. Specifically, we’ll discuss how ERISA affects private-sector employers, their workers, and health insurance claims.

ERISA Coverage

ERISA governs an array of benefits. Health benefit plans fall under ERISA's jurisdiction. These plans cover various aspects like enrollment and health insurance coverage. Plan sponsors are the entities responsible for offering these employee welfare benefit plans. Sponsors must follow ERISA guidelines.

ERISA doesn't mandate specific benefits. Instead, it imposes standards on private-sector employers who offer employer-sponsored health plans. The government designed these standards to protect beneficiaries.

(Note: ERISA doesn't cover plans governed by state insurance laws. This includes workers' compensation or group health plans maintained by government entities.)

Requirements Under ERISA

ERISA outlines standards to ensure the fair operation of employee health benefit plans. Employers and plan sponsors act as fiduciaries. As such, they must manage funds exclusively to benefit plan participants and beneficiaries. They must avoid conflicts of interest in investment and benefit decisions.

ERISA also sets minimum standards for plan operations regarding health insurance claims processing. It establishes criteria for qualifying for benefits, including:

• Considerations for dependents
• Deductibles
• Minimum standards for disability claims

Plan sponsors and employers must provide employees with summary plan descriptions with important details, including:

• Retirement eligibility
• Vesting periods for pension benefits
• Timelines for filing health benefit claims

Employers must also communicate significant plan changes to employees.

ERISA Preemption

ERISA preemption rules play a crucial role in regulating employee benefit plans. Essentially, if a state law conflicts with ERISA, the federal law wins.

As a result, states cannot enact laws that interfere with the administration of ERISA-covered plans. However, certain areas fall outside ERISA preemption, including:

• Laws governing the insurance business
• Laws regulating healthcare providers

ERISA preemption ensures consistency in applying benefit plan rules. This reduces potential conflicts with varying state regulations.

ERISA and Health Insurance Claims

A plan administrator may not wrongfully deny a claim under a plan covered by ERISA. Once a plan participant files a claim, the plan has 90 days to inform them if it accepts or denies their claim.

If the plan administrators deny an employee’s claim, they must tell the participant how to appeal the denial and give the participant 60 days to do so. Once a participant submits a request for review, the plan must review the denial and decide within 120 days. If the participant still disagrees with the denial, they can file a lawsuit against the plan under ERISA.

Laws Related to ERISA Coverage

ERISA coverage relates to two other important laws: COBRA and the ACA.

The Consolidated Omnibus Budget Reconciliation Act (COBRA)

ERISA includes a safeguard known as the right to "COBRA continuation coverage." This means you can temporarily keep your group health coverage even if you would otherwise lose it due to specific life events. For example, if you lose your job.

The Affordable Care Act (ACA)

The ACA has its own rules for health plans. It prevents lifetime and yearly limits on essential health benefits. It also ensures coverage of preventive services at no extra cost. Health plans under ERISA must also follow these ACA rules.

Legal Help and Resources

The Employee Benefits Security Administration (EBSA) provides valuable assistance and information related to ERISA. If you have additional questions or you're having trouble with your employee benefits under ERISA, consider hiring an employment lawyer. They can determine how state and federal laws apply to your unique situation and help you decide what to do next.