The Employment Retirement Income Security Act of 1974 (ERISA) is a federal law establishing standards for private pension plans. ERISA does not require employers to have pension plans, but enforces rules for those that do (affecting pension plans that began on or after Jan. 1, 1975). For instance, ERISA requires regular disclosure of retirement plan features and performance, sets minimum standards for vesting and funding, and allows participants to sue for breaches of fiduciary duty, among other provisions. FindLaw’s ERISA section covers the basics of this federal law and how ERISA affects the pension plans of private employees.
What is ERISA?
ERISA is the acronym for the Employee Retirement Income Security Act, a federal law that provides pensions, insurance companies, and private employers with guidelines regarding the administration of employee benefit plans. ERISA does not cover government health plans or plans established by churches for their employees. It also doesn't cover state regulated programs like unemployment or workers compensation. Although ERISA doesn't require private employers to provide pension plans it sets minimum standards for those that do.
ERISA Amendments
There are some significant amendments to ERISA that have been made since its creation in the 1970s. One significant amendment is entitled the Consolidated Omnibus Budget Reconciliation Act (COBRA.) COBRA ensures that employees that voluntarily resign or are let go under certain circumstances continue to receive healthcare coverage for a certain period of time
The Health Insurance Portability and Accountability Act (HIPAA) is another amendment that limited the preexisting medical condition exception for health insurance coverage and established a period of 6 months prior to enrollment where the development of a new condition could not be deemed preexisting.
The Newborns' and Mothers' Health Protection Act (The Newborns' Act) provides mothers with minimum coverage that permits at least 48 hours in a hospital following childbirth and a minimum of 96 hours hospital stay following a cesarean section.
ERISA Violations: Penalties and Punishments
ERISA imposes certain requirements on employers that administer their pension, retirement, or health insurance plans. These include the obligation to provide plan participants with key information about the plan's features and financing, fiduciary duties for those that manage assets covered by the plan, and procedures for employee grievances including an appeal process. ERISA also permits employees to sue employers or plan administrators for withholding benefits or breach of fiduciary duties.
Common ERISA violations include improperly denying benefits to current or former employees, breaching the fiduciary duty held toward employees covered by the plans, and interference with the rights of an employee covered by the plan. When there is a violation of the ERISA obligations of an employer there are two ways that penalties may be incurred.
An aggrieved plan beneficiary can file a complaint against a violator, beginning with the administrative procedures to seek corrective action and eventually filing a lawsuit when the administrative remedies are exhausted. The other way is for the Department of Labor's Employee Benefits Security Administration (EBSA) to initiate an action against the employer. Both civil and criminal penalties may result from ERISA violations.
