ERISA is the acronym for The Employee Retirement Income Security Act and was enacted by the 93rd United States Congress on September 2, 1974. Designed to provide pension reform, the act is a federal law that sets standards and regulations of protection for individuals that are in private sector company retirement plans. ERISA requires the set plans to provide employees with accurate plan information, and important facts about:
An employer is usually called the fiduciary, and has to follow the plan guidelines, while the employee is called the qualified beneficiary. A written summary of the plan should be given to an employee at the time they begin participating in it. The fiduciary owes the beneficiary a duty of care.
ERISA establishes minimum standards of vesting, funding, and fiduciary relationships and a system of compulsory benefit insurance to protect the security of pension rights. Specifically, ERISA protects pension and benefit plan recipients and beneficiaries.
A fiduciary of an ERISA plan must make any decisions for the sole benefit of the plan, which includes doing their best to maximize the benefits of the plan and minimize the costs of running the plan.
ERISA defines three main types of benefits plans:
The welfare aspect of the plan must make clear outlines for the procedure of claims. Essentially how to file a claim for the benefit, what to expect, and what to do if the plan is denied.
ERISA typically does not cover employment plans:
There are three main protections provided by ERISA:
ERISA also guarantees the payment of certain benefits through a federally chartered corporation, the Pension Benefit Guaranty Corporation, in the event that an employee’s benefit program is terminated (resulting in their not receiving the benefit they are owed from that program).
Later amendments to ERISA include the Consolidated Omnibus Budget Reconciliation Act (COBRA), and the Health Insurance Portability and Accountability Act (HIPAA). COBRA allows some employees to continue their health benefits after a certain event, most often, the termination of their job. HIPAA prevents discrimination in health coverage based on a person’s health condition.
Compliance with ERISA is monitored through a series of reporting requirements. Failure to comply is a violation subject to civil liability and criminal penalties including costly Department of Labor penalties. Employees can also bring bad faith claims against their employers who deny them benefits that they are entitled to under ERISA.
Companies that comply with ERISA are offered tax breaks and incentives which encourage employers to follow ERISA guidelines. Failure to comply will result in loss of favorable tax treatment and other penalties. Companies know that they can be sued by their employees for ERISA violations.
ERISA plan administrators must file returns to the Department of Labor and the IRS. The returns must include information about the type of coverage offered and how any claims should be processed. They must also report any modifications that were made after the previous filed return.
If you believe your employer has acted improperly with regard to your benefits or pension, an employment lawyer near you can help you resolve the dispute and make sure you receive the benefits you are entitled to.
If you are an employer and are concerned about ERISA compliance, an employment attorney can help you establish a benefit plan that protects you and your employees.
Last Modified: 08-07-2018 11:55 PM PDTLaw Library Disclaimer
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