What Is ERISA?
The Employee Retirement Income Security Act of 1974, commonly known by its acronym ERISA, is a federal law that applies to most private employers. ERISA protects plan participants and their beneficiaries by setting minimum standards for retirement, health, disability, and other welfare benefit plans.
ERISA does not impose any requirement on employers to create these benefit plans. Rather, ERISA sets important minimum guidelines for employers who voluntarily choose to establish these plans for employees. For instance, ERISA requires plans to provide certain information about the plan to participants, sets minimum standards for participation, funding, and vesting, imposes standards of conduct to prevent wrongdoing by plan managers and other fiduciaries, and provides enforcement mechanisms to ensure plan funds are protected and participants are able to challenge and appeal denials of benefits to which they are entitled.
How is ERISA Administered?
ERISA is administered by three bodies: the Employee Benefits Security Administration (EBSA), a division of the U.S. Department of Labor (DOL), the Treasury Department’s Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC). The EBSA provides regulatory and administrative enforcement of ERISA. The IRS administers vesting, participation, nondiscrimination, and funding. The PBGC guarantees benefits to be paid up to the maximum allowed if the plan is terminated or otherwise insolvent.
Which employers are subject to ERISA?
ERISA applies to almost all private-sector employers that maintain employer-sponsored retirement or welfare benefit plans for their employees.
Generally speaking, ERISA exempts two types of employers:
- Employers administering governmental plans. This exemption includes plans maintained by the federal, state or local governments; and
- Church organizations that offer church plans. In general, a church plan is any employee benefit plan established or maintained by a church or by a congregation or association of churches which are exempt from tax.
In addition, ERISA does not apply to privately purchased, individual insurance policies or benefits, or to state benefits such as unemployment, disability, or workers’ compensation.
Does ERISA apply to my benefits?
While your employer may be subject to ERISA, the law applies only to certain types of benefits. Generally speaking, ERISA applies to:
- Retirement and pension plans – which can include 401(k) plans, employee stock ownership plans (ESOPs), profit sharing plans, and others.
- Welfare benefit plans – which can include health insurance plans, long and short-term disability insurance plans (LTD & STD), long-term care insurance plans, life insurance plans, accidental death & dismemberment plans (AD&D), and others.
What do I do if I am denied benefits?
If you are denied benefits that are protected under ERISA, consider contacting an experienced ERISA attorney. Strict regulatory time frames govern ERISA benefit claims and if you miss any of them, your right to receive benefits may be lost forever. Challenging an adverse benefit determination, especially if your claim is governed by ERISA, can be a complex process that can be difficult to navigate alone. Moreover, while ERISA was initially designed to protect employees, it has developed into something that largely no longer serves that purpose but instead benefits big business and the insurance industry at the expense of individual employees. By consulting with an ERISA attorney, you can be made aware of the pitfalls of ERISA and the tactics often employed by insurance carriers and large companies.
If you would like assistance with your ERISA claim, we’re here to help. Simply click here or call (704) 377-4300 to speak to a member of our ERISA team.
Disclaimer: We are ERISA attorneys, but we are not your attorneys and this article does not create an attorney-client relationship. The information in this blog post is provided for general information purposes only, and may not reflect the current law in your jurisdiction. No information in this blog post should be construed or seen as legal advice, nor is it intended to be a substitute for legal counsel on any subject matter.