Many of our clients do not understand what ERISA is and how it impacts them. That is why we created this list of ten facts and common myths about ERISA. Read on to learn more about ERISA and its application to your own situation. 1) What is ERISA? ERISA stands for The Employee Retirement Income Security Act of 1974. The act establishes minimum standards for retirement, health, and other welfare benefit plans. Additional parts of the act include disability insurance, life insurance, and apprenticeship plans. 2) Who usually administers ERISA provisions? ERISA is administered by the Employee Benefits Security Administration (EBSA), a division of the U.S. Department of Labor. 3) Which parties must abide by ERISA law? Unfortunately, ERISA only applies to private employers and not government ones. ERISA does not require employers to offer plans, it only establishes the rules for benefits that employers may choose to offer. 4) Are plan documents optional? Although some people may insist that plan documents are optional, ERISA has strict requirements for these documents. According to experts, these documents “… are required in almost all circumstances and serve as a written instrument to provide participants with a notice of benefits offered, obligations under the plan and relevant procedures and guidelines.” 5) Considering how large the Act is, what are the important provisions of ERISA? According to experts, ERISA regulates and sets standards and requirements in the following provisions: • Reporting and Accountability: ERISA requires accountability and detailed reporting to the federal government. • Conduct: ERISA rules regulate the conduct for managed care and the people that are financially responsible for the retirement plan's administration. • Best-Interest Protection: ERISA acts as a safeguard to assure that plan funds are protected and delivered in the best interested of the plan members. • Prevention of Discrimination: ERISA also prevents discriminatory practices regarding plans for qualified individuals. • Disclosures: Certain disclosures must be provided to plan participants. • Safeguards: ERISA requires that a written policy be established as to how claims should be filed, as well as a written appeal process for claims that are denied. • Time Requirements: ERISA also requires that claims and appeals be handled in a fair and timely way. 6) My plan is really small; does ERISA still apply? When it comes to ERISA regulations, the law applies to virtually all employer-sponsored benefit plans, regardless of their size. Additionally, the Department of Labor does prevent certain types of group health plans from be a part of ERISA. Even those offered by non-private employers such as municipalities or churches can benefit from ERISA protection. 7) I heard that my voluntary benefit plan is exempt. Is this true? The truth is that ERISA has an exception for voluntary benefit plans (short-term disability, critical illness, dental, life insurance, etc.), but it only applies if the employer has no involvement other than allowing the voluntary carrier to advertise the plans to employees, and to collect and remit employee salary reductions toward the premiums. If the employer has any significant involvement, including the appearance of endorsing the voluntary plan or offering employees the opportunity to make premium payments through a cafeteria plan, the plan is probably subject to ERISA. 8) I have heard that I cannot be a fiduciary for my plan. Is this correct? Individuals or entities other than the “official” plan administrator can become a fiduciary for their plan without realizing it. That’s because the Labor Department bases fiduciary status on functions performed for the plan, not on a person’s title or specific designation. Understanding the fiduciary status of your plan is important even after the responsibilities they may be given, fiduciaries can also be legally liable. 9) I have heard that the likelihood of an audit is low. Is this true? This is not true. In the past, 401(k)s and pension plans have been the primary target for a significant number of Labor Department audits. After the passage of the Affordable Care Act, health plans have also receiving the same scrutiny. This means plan participants should be extra careful and be sure to understand all the requirements and legal regulations. 10) Do I really need an attorney for my ERISA issues? A comprehensive knowledge of ERISA is crucial for ensuring you are in compliance with the law. This means that support from an ERISA attorney is very important. It is far better to be safe than sorry!
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Only an attorney with knowledge of the appropriate laws can help you get you the outcome you deserve for your ERISA case. The legal team at J. Price McNamara ERISA Insurance Claim Attorney is waiting to help you resolve your case. Call us today to schedule your free case review and get an experienced insurance attorney on your side.
J. Price McNamara
Attorney
Losing my own brother, then my father and sister after long, disabling illnesses just a few months apart drove a career change for me. Before that experience, I never truly understood the place you’re in. I never understood the dramatic impact that receiving (or not receiving) the disability and life insurance benefits you paid for and counted on can have on your life especially when you need to focus on family and healing. What I experienced with my own family now drives the way I view my clients and my work, and I will never forget it!
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