The Employee Retirement Income Security Act (ERISA) establishes minimum standards for companies offering retirement and health plans to employees. Employee benefit consultants can help human resource managers understand these guidelines.
The U.S. Department of Labor created ERISA in 1974 to set minimum standards for retirement and health benefit plans in the private industry. However, the act does not require employers to establish a plan. Instead, ERISA gives plan managers standards of conduct that must be followed, such as provisions for reporting to the government and the recording of participants' information. The law helps protect plan funds while ensuring qualified participants receive their benefits.
New health laws expanded the act following the passage of the Consolidated Omnibus Budget Reconciliation Act (COBRA) and Health Insurance Portability and Accountability Act (HIPAA). ERISA misconceptions exist, including a common belief that an insurance company's Certificate of Insurance is a Summary Plan Description, an explanation of the benefits available to an employee. ERISA misunderstandings can create tension between employers and workers.
Employee benefit services can clarify any misconceptions surrounding ERISA. Consultants can answer any questions surrounding ERISA while educating human resource professionals about reporting and disclosure information.
