Health Plan Benefits and the Law
The cost of medical treatment can easily bankrupt families who lack health insurance or can only afford minimal coverage. Unfortunately, individual insurance is often too expensive for many working families to afford. Considering the high cost of health care, it's no wonder health plans are among the most desirable benefits of employment.
In order to protect these vital benefits, the federal government has put in place a number of laws related to employer-provided health plans. Below, you'll find an explanation of these laws and how they affect your rights as a health plan beneficiary.
ERISA and Your Health Plan
Employees' health insurance plans are governed by the Employee Retirement Income Security Act, or ERISA. The Act covers both retirement benefits, like pensions, and health insurance. The health insurance portion of ERISA has been amended several times, but two of the amendments are particularly important for workers.
First, the Consolidated Omnibus Budget Reconciliation Act, or COBRA, allows workers to continue on their employer's health plans even after getting fired. Second, the Health Insurance Portability and Accountability Act, or HIPAA, creates a way for insurance companies to transfer a patient's medical records to a different doctor or insurance company without impinging on the patient's privacy. While the Affordable Care Act is not an amendment to ERISA, it does have a large impact on how health insurance generally works and what health care providers should charge for routine and preventative care.
ERISA and its amendments do not cover every single health plan, only those that are purchased through an employer or a group, such as a union, for the benefit of the employees or members. Furthermore, ERISA does not require employers to provide health insurance. It only requires that any health plan provided complies with ERISA's requirements.
How ERISA Protects an Employee's Health Benefits
ERISA is a large and complicated statute with many different protections for health plan participants. Fortunately, patients and employees generally do not have to worry about ERISA compliance — that burden falls on the employer or the plan administrator, who is responsible for keeping an employee benefit plan in compliance and for managing the plan for the benefit of the members. Here are the basic ERISA requirements that health insurance plans must meet:
- All beneficiaries must be informed in writing about the plan's benefits. The Affordable Care Act further provides that the information must be in an easy-to-understand Summary of Benefits, and that it must also include a web address where the information can be found online.
- If a beneficiary makes a written request to the employer for additional information concerning the plan, it must be provided in a reasonable amount of time.
- Employers have a "fiduciary responsibility" to the plan beneficiaries. That means that when negotiating plan benefits, employers must always act in the best interests of their employees.
- Claims for benefits must be decided in a timely fashion. If the claim is denied, there must be a process for review. This provision is especially important to employees who have Health Maintenance Organizations (HMOs), deciding what care employees should receive.
- If an employee's benefits are terminated, it must be for a bona fide reason. For example, an employer is not allowed to terminate its older workers' benefits simply because their health care needs would make their benefits more expensive than those of younger workers.
If you think your employer or health plan is in violation of ERISA, you can file a complaint with the Employee Benefits Security Administration, or EBSA. You complaint will then be investigated. If it is sustained, your employer or health plan may be subject to civil and criminal penalties. In addition, it may be in your best interests to contact a local employee rights or ERISA lawyer, who can best advise you on your rights.
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