Understanding the finer details of ERISA
ERISA, also known as the Employee Retirement Income Security Act of 1974, is in place to establish and regulate minimum standards for health, retirement and other benefit plans, such as disability and life insurance.
All in all, ERISA is used to regulate employee benefit plans. While it does not require that companies provide employees with a benefits plan, it does regulate the operations of any plan that is provided.
Once an employer decides to offer a benefits plan, it must be managed in order with the rules set forth by ERISA. This includes the following:
— Reporting and accountability.
— Procedural safeguards.
— Financial and best interest protection.
Over the years, ERISA has been amended many times. This includes two changes that address health insurance plans:
— The Health Insurance Portability and Accountability Act of 1996.
— The Consolidated Omnibus Budget Reconciliation Act of 1985.
Are all businesses required to adhere to the regulations of ERISA? While most employers must understand and adhere to this act, there are some, such as governments and churches, that do not. These organizations are exempt from ERISA.
Company owners, HR professionals and employees should all be familiar with ERISA, as this can have an impact on the administration of benefits. When an employer does not understand its obligations as they pertain to ERISA, it is possible he or she could make an error that puts workers at a disadvantage in regards to their benefits. If this happens, the affected employee needs to understand his or her rights and what can be done to make changes for the better.
Source: TASC, “ERISA Plan,” accessed July 27, 2015