Employee Retirement Income Security Act (ERISA)

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The Employee Retirement Income Security Act (ERISA), a federal law, sets standards for the establishment and operation of employee benefits plans. If you offer employees a health insurance plan or retirement plan, chances are you're covered by the Act. Some ERISA requirements apply to both retirement and welfare benefits plans. Welfare plans are generally those that provide health, life, or disability benefits.

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.

Related articles on ERISA
ERISA tools for Employment Law Letter subscribers

Fiduciary duties
ERISA requires employers that offer employee benefit plans to manage those plans with the best interests of their employees in mind. The three basic fiduciary duties are: loyalty, exclusive benefit, and duty of care.

Qualified retirement plans
Qualified retirement plans are those that meet the statutory and regulatory requirements to receive tax-favored treatment by the IRS. All qualified retirement plans are covered by ERISA. Generally, there are two categories of qualified plans, based on how the benefit is determined: defined-benefit plans, such as a traditional pension plan, and defined-contribution plans, such as a 401(k)s, 403(b)s, and 457s, profit sharing, simplified employee pension plans (SEPs), savings incentive match plans for employees (SIMPLEs), and employee stock ownership plans (ESOPs).

General plan requirements
ERISA imposes several requirements for health and welfare and retirement plans to keep participants informed about their provisions and any plan changes. These requirements include plan documents, summary plan descriptions, reporting and filing requirements, and claims procedures.

Severance pay
Virtually all group severance pay plans — whether offered as an incentive to voluntary separation or in connection with an involuntary layoff program — are covered by ERISA. Except for one-time-only cash payments, for example, plant closing payments, severance plans will generally be “employee benefit plans” under ERISA regulations.

Amendments to ERISA
Among the numerous amendments to ERISA are the Health Insurance Portability and Accountability Act (HIPAA) and the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA offers eligible workers and their families the option to continue their health coverage for a limited time after certain events, such as the loss of a job. HIPAA which, among other things, offers protection for coverage under group health plans to regulate exclusions for preexisting conditions, prohibits discrimination against employees and dependents based on their health status, and, under special circumstances, allows employees to enroll in a new plan for individuals.

Among the other later amendments to ERISA are the Newborns' and Mothers' Health Protection Act, the Mental Health Parity Act, and the Women's Health and Cancer Rights Act.

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Related articles on ERISA featured in HR Hero Line

• Supreme Court to Decide Key Employment Issues in 2010
  (Federal Employment Law Insider, December 2009)
• Employees Seek Loans, Withdrawals from Retirement Plans
  (New Hampshire Employment Law Letter, March 2009)
• Retirees Win Right to Sue for Fund Mismanagement
  (Rhode Island Employment Law Letter, October 2008)
• New DOL Rules Require More Disclosure to Workers with 401(k) Retirement Plans
  (New Hampshire Employment Law Letter, October 2008)
• 401(k) Fee Cases: Hot Area for Litigation
  (Georgia Employment Law Letter, April 2008)

HR Tools for ERISA

• Sample Policy - 401 (k) Retirement Savings Plan
• Sample Policy - Retirement Plan