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Why are Health Care Plans covered under ERISA


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ERISA is the Employee RETIREMENT Income Security Act.

What do Health Plans have to do with Retirement?

Just something I've always wondered about.  I don't deal with Health Plans, so I can't figure out why there is overlap.

QKA, QPA, CPC, ERPA

Two wrongs don't make a right, but three rights make a left.

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2 minutes ago, BG5150 said:

ERISA is the Employee RETIREMENT Income Security Act.

What do Health Plans have to do with Retirement?

Just something I've always wondered about.  I don't deal with Health Plans, so I can't figure out why there is overlap.

Good question.  Most of ERISA does apply to retirement plans, but there is some impact on group health plans, dental, fsa, HRA's, life, disability, etc..  For these plans ERISA places requirements around employer responsibilities for communication of plan information to participants, fiduciary responsibility for plan assets, need for an appeals/grievance process, and it gives participants the right to sue.  There are some group health plans not subject to to ERISA, including; church, voluntary plans, and (sit down for this one) government plans. 

The good news for most employers, much of this is done by the carrier because so many of the plans are fully-insured.  For self-funded, the employer does need to check a little closer.

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2 minutes ago, BG5150 said:

I jsut find it odd that all that comes under the ERISA umbrella which is ostensibly a retirement income law.

Not surprising when one recalls the true name of the enabling legislation: Every Rotten Idea Since Adam.

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4 minutes ago, BG5150 said:

I jsut find it odd that all that comes under the ERISA umbrella which is ostensibly a retirement income law.

True, it grew out of the fraud and abuse that was occurring in the benefit industry, with participants being left without benefits.  I started my career in 1982, so  I was not in the industry at the time of passage, but it may have just been easier to include the "non-retirement" plans as opposed to writing a new law for them. 

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An important part of the lobbying and legislative “deal” that moved the legislation that became ERISA was big businesses’ desire to get national preemption of State laws.  See, for example, State v. Monsanto Co., 517 S.W.2d 129 (Mo. Sup. Ct. Dec. 16, 1974) (Before ERISA, Monsanto’s provision of health and welfare benefits was insurance subject to State regulation.)

Also, a preceding Federal law, the Welfare and Pension Plans Disclosure Act of 1958, had already treated those different kinds of plans together.

For more information, see James A. Wooten, The Employee Retirement Income Security Act of 1974: A Political History (2004).

 

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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36 minutes ago, Peter Gulia said:

An important part of the lobbying and legislative “deal” that moved the legislation that became ERISA was big businesses’ desire to get national preemption of State laws.  See, for example, State v. Monsanto Co., 517 S.W.2d 129 (Mo. Sup. Ct. Dec. 16, 1974) (Before ERISA, Monsanto’s provision of health and welfare benefits was insurance subject to State regulation.)

Also, a preceding Federal law, the Welfare and Pension Plans Disclosure Act of 1958, had already treated those different kinds of plans together.

For more information, see James A. Wooten, The Employee Retirement Income Security Act of 1974: A Political History (2004).

 

Thanks for filling in the missing information. 

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In 1974 when ERISA was enacted, there were very few provisions (any, as a practical matter?) that regulated the administration or mandatory benefits under health plans. The first big health plan provision didn't happen until the addition of COBRA rights for employees and their dependents, in 1985. Later amendments to ERISA added additional mandatory health benefits, especially the Affordable Care Act, enacted in 2010. Both 'pension' and 'welfare' plans are employer-provided benefits, so they're under the same tent as a federal government regulatory matter.

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I've always figured H&W was mostly a throw-in afterthought that has become it's own multi-headed monster only after many years of additional laws piling on, as Dave noted.  COBRA, HIPAA, Section 125, FMLA, ACA, MHPAEA, CAA, etc.  

18 hours ago, Peter Gulia said:

An important part of the lobbying and legislative “deal” that moved the legislation that became ERISA was big businesses’ desire to get national preemption of State laws. 

Great point, Peter.  Also a sleeper issue that's been brewing under the radar related to state and local paid family and medical leave laws.  It's the most complex nightmare you could ever imagine at this point for nationwide employers, so groups like the Business Roundtable have been pushing for a few years now to get a federal program that includes a preemption clause in the same manner as ERISA for H&W benefits.

Here's an example:

https://www.businessroundtable.org/paid-family-and-medical-leave-policy

As Congress and the Administration consider paid family and medical leave legislation, Business Roundtable urges policymakers to enact uniform standards and procedures that would apply nationwide and preempt overlapping state and local requirements. A single federal standard should apply to all covered employees.

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Insurance company and large employer lobbies (pretty much what Peter said).

Why are insurance policies at the heart of the ACA? Insurance companies.

Why are health benefits historically provided by employers? Relatively good risk pools of healthy folks with families (employees) lying around to insure, plus in WWII providing health coverage was a way around wage and price controls, so became a fixture in industry. Here's a pretty good podcast on that: https://www.npr.org/transcripts/917747287

 

Luke Bailey

Senior Counsel

Clark Hill PLC

214-651-4572 (O) | LBailey@clarkhill.com

2600 Dallas Parkway Suite 600

Frisco, TX 75034

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