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Employee Benefits and Employment Law


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It’s common for employers to provide certain benefits for their employees, many of which are subject to strict rules under the Employee Retirement Income Security Act (ERISA), the Internal Revenue Code, and other laws. Employee benefits can include:

Keep up with the latest changes in laws regarding employee benefits with the Benefits and Compensation Law Alert and the Benefits and Compensation Law for Non-Profits.


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Laws affecting employer benefit plans
There are many laws employers need to take into account when evaluating their benefits packages. Some of these laws include:

  • ERISA. The Employee Retirement Income Security Act (ERISA) sets standards for the establishment and operation of employee benefits plans. If you offer employees a health insurance plan or a retirement plan, chances are you’re covered by ERISA. Some ERISA requirements apply to both retirement and welfare benefit plans. (Welfare plans are generally those that provide health, life, or disability benefits.)
  • ADA. The Americans with Disabilities Act (ADA) and ADA Amendments Act prohibit discrimination in benefits based on disabilities. For example, employer health plans can’t single out a group of disabled people for lesser benefits than individuals who aren’t disabled.
  • Age discrimination laws. The Age Discrimination in Employment Act (ADEA) and the Older Workers Benefit Protection Act (OWBPA) protect older workers from discrimination in their employment benefits. Employers can be liable for discrimination against active employees as well as retirees. That means you can’t give lower benefits to employees or retirees based on their age.
  • HIPAA. The Health Insurance Portability and Accountability Act (HIPAA) also bars discriminatory practices in the handling of benefits. Additionally, HIPAA imposes portability, privacy, and certain other requirements on group health plans. On February 17, 2009, President Barack Obama signed an economic stimulus bill called the American Recovery and Reinvestment Act of 2009 (ARRA), into law, which expands HIPAA’s privacy and security regulations. Under the ARRA, business associates of covered entities will be directly subject to HIPAA. The stimulus plan also extensively changes HIPAA on other issues, including security breaches and related notification requirements, the rights of individuals regarding their protected health information, and increased enforcement and penalties for violations.
  • COBRA. The Consolidated Omnibus Budget Reconciliation Act (COBRA) was designed to protect employees and their families from losing health benefits if the employees lost their jobs. Under COBRA, an individual may usually keep health coverage through a previous employer’s health plan for up to 18 months by paying 102% of the cost of coverage. Under the ARRA, the federal government pays 65% of COBRA premiums for up to nine months for employees who were involuntarily terminated between September 1, 2008, and December 31, 2009. Members of Congress in both the U.S. House of Representatives and the U.S. Senate have recently introduced legislation that would extend the original COBRA subsidy created by ARRA.
  • Other laws. When evaluating benefits packages, employers also must take into account IRS regulations, the Uniformed Services Employment and Reemployment Rights Act (USERRA), the Mental Health Parity and Addiction Equity Act, the Medicare Modernization Act (MMA), Title VII of the Civil Rights Act of 1964, and the Equal Pay Act.

HR Guide to Employment Law: A practical compliance reference manual covering 14 topics, including health benefits

Potential changes to health insurance and how it might affect employers
President Obama has stressed the necessity of health care reform in 2009, and Congress has been working on health care reform legislation for the last several months. The U.S. House of Representatives recently passed the Affordable Health Care for America Act (H.R. 3962), legislation that combines three different health care reform bills approved by House committees this summer. The massive legislation would create an insurance exchange that offers insurance through private companies as well as through a government-run public option. The bill would have a tremendous effect on employers through several immediate reforms, most of which would be effective for plan years beginning January 1, 2010, and through many other provisions that would generally become effective in 2013.

The U.S. Senate is also working on its own version of health care reform legislation. Senate Majority Leader Harry Reid (D-Nevada) is still trying to consolidate two Senate health care reform bills before he takes a final bill to the Senate floor for debate. If the Senate passes its own health care reform bill, it would have to be reconciled with the House bill.

Audit your health benefits policies and practices with the Employment Practices Self-Audit Workbook

State laws on employee benefits
States have continued to weigh in on employment and benefits issues. There’s been a steady trend for states to require employers or insurance companies to cover certain medical conditions, with coverage mandates increasing over the years. States also have a history of regulating workers’ compensation insurance, a parallel health insurance system for work-related injuries and illnesses.

State-by-state comparison of 50 employment laws in all 50 states

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