ERISA - Employee Retirement Income Security Act

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ERISA is the federally enacted Employee Retirement Income Security Act. Enacted in 1974, ERISA has been amended to provide security in health care as well as retirement investments. ERISA was formed in response to rapid growth of employee benefit plans and the increase in concern for the welfare of employees and their rights to proper coverage.

ERISA sets standards for pension programs and 401K programs offered voluntarily by an employer. The act also sets time frames concerning time away from work and any effect on the pension. It is a requirement of ERISA that involved employees receive proper and timely information regarding any investments. ERISA does not require employers participate in a pension program. ERISA states all employees must be allowed to participate in a company's pension program if a program is offered.

ERISA also encourages employers to participate in employee benefit plans for the benefit of the employees. ERISA also protects employees from breaches in appropriate handling or management of any investments. The act provides for a grievance system when plans are mismanaged and allows employees to sue for benefits and breaches in management or fiduciary duty. ERISA also governs other employee befits, such as life insurance and disabilities insurance. Under ERISA, the federal government decides when coverage is applicable and when third parties are eligible to coverage after death.

ERISA overrides all state laws regarding employee health and retirement benefits. When denied benefits are appealed, a judge, and not a jury, decides the validity of the case.

Amendments to ERISA include COBRA. COBRA, or Consolidated Omnibus Budget Reconciliation Act allows families and individuals who lose medical coverage due to loss or change in employment, to continue coverage for a certain length of time. Medical coverage is also a focus of the amendment HIPAA, or Health Insurance Portability Accountability Act. This amendment to ERISA protects individuals and families from discrimination of health coverage due to pre-existing medical problems.

Plans not covered under ERISA include those funded by the federal government or a church body and any coverage existing outside the borders of the United States.

In general, ERISA is a plan enacted to protect employees from mishandling of retirement and investment funds, protect and ensure proper health coverage and offer alternatives when possible and applicable.

Employers are required to follow regulations of ERISA if choosing to offer employee benefit programs and are encouraged to offer such plans.


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