The Employee Retirement Income Security Act, or ERISA, is a federal law that regulates certain group-sponsored benefit plans. The law requires employers to disclose plan information to all eligible employees, subject to strict guidelines. As an employer, here’s what you need to know.
Who is subject to ERISA? Churches and government employers are exempt from ERISA regulation. Most other private-sector corporations, partnerships, and proprietorships must comply with this set of laws. When in doubt, employers should consult a business planning attorney.
Which group benefit plans fall under ERISA regulation? Most employer-sponsored plans, such as medical, dental, and vision plans are subject to ERISA, along with health savings accounts, healthcare FSA, and HRA accounts. Even vacation and scholarship plans fall under the law.
However, ERISA typically does not apply to:
- Cafeteria Plans
- Premium-Only Plans
- Section 125 Plans
- Premium Conversion Plans
- Pre-tax Premium Plans
- Health Savings Accounts when employers have limited involvement
- Dependent Care FSAs
- Dependent Care Assistance Plans
- Transit and parking plans
- Adoption Assistance
- Educational Assistance and Tuition Reimbursement
- Paid time off
- On-site medical clinics for the purpose of providing first aid
*Even minimal endorsement, such as using the company name on brochures, could make the plan non-exempt from ERISA.
What is the Summary Plan Description and how must employers provide it? The SPD communicates rights and obligations to plan participants and beneficiaries and summarizes the main provisions of the plan. Employers must provide a SPD to beneficiaries within 90 days of coverage, via email, regular mail, or hand delivery. Failure to comply with this requirement can trigger fines from the Department of Labor.
What is an ERISA “wrap”? A wrap document can help small employers in particular meet their ERISA obligations. The Wrap SPD requirement applies to all employer sponsored group health insurance offerings, including a one-person plan. A wrap document “wraps around” all ERISA health and welfare benefits and includes required disclosures that are not typically found in other documents. These include details like the allocation of duties and responsibilities between the employer and the insurer, or the rights participants are entitled to under ERISA
What else do employers need to know about ERISA? ERISA regulations can become complicated. This document outlines 18 things employers need to know about ERISA compliance, in order to avoid violations and potential fines.
We can also help you to understand your employer-sponsored benefits plans. Call us with any questions you might have about plan administration, and we will be happy to help.