The Employee Retirement Income Security Act (ERISA) of 1974 is a federal law that sets strict guidelines and minimum standards for pensions, health plans, and eventually all welfare benefit plans that were designed by employers in the private sector. The specificity and broad scope of the ERISA’s standards quickly allowed the act to become the trusted backbone of private retirement plans and eventually the basis of the employer-based healthcare system. Ultimately the ERISA provided much needed transparency, accountability, and reliability for participants and greatly decreased the ability of the plan sponsor/employer to take advantage of or discriminate against any employee. By first analyzing the different facets of the ERISA and how it impacted pensions, then scrutinizing its unique impact on health plans, we will see the importance of the ERISA to the well-being of all private sector employees, especially those of anesthesia management companies. Not only should such private employees understand their personal rights and protections, but as members of the healthcare industry it is critical to understand the rights that are afforded to one’s patients and how holding an ERISA qualified health plan may even affect their coverage.
Title I of the ERISA, entitled “Protection of Employee Benefit Rights”, is by far the most comprehensive and important section of the act, carefully delineating all of the requirements that plans must now meet and establishing the crucial fiduciary responsibility for employers. In order to provide transparency, ERISA mandates that all of the aforementioned welfare benefit plans be placed in writing and given to participants, with participants also having the right to be notified promptly of the pension’s worth upon request. ERISA also establishes specific timelines regarding when an employee will become a participant in a benefit plan, when portions of the plan become nonforfeitable, and how long a participant can be away from their job before they lose active benefits. These minimum standards have immensely benefitted employees, allowing them to receive benefits even after job termination and leave a job with a set amount of retirement benefits intact.
However, the fiduciary responsibilities that are established in the ERISA are perhaps the act’s most important feature, as they are critical in ensuring that the plan managers are only operating with the best interest of the participants in mind. The fiduciary standard requires that all risk be minimized, that the best possible coverage be provided, and most importantly, that there is no conflict of interest between the principal (participant) and the agent (employer/plan manager). While holding the employer to the fiduciary standard is critical to preserving accountability, it can be a large, complex burden for the employer, leaving every financial decision open to scrutiny, as even major corporations such as Fidelity Management Trust Co. have very recently been named in a class action suit that claims that the fiduciary responsibilities had not been properly upheld.
If the employer is not making sufficient payments, protecting funds in a separate trust, or if any other part of the EIRSA is breached by the employer, all plan participants have the right to hold employers accountable, as the ERISA gives employees the ability to sue for monetary damages without any fear of retribution. This has allowed employees to be treated fairly and to view retirement plans as a reliable and defensible source of income. ERISA even further strengthened the reliability of these plans by establishing the Pension Benefit Guaranty Corporation in Title IV of the Act that is able to insure participants whose pensions were lost due to the closing of the company. Finally, it is important for all members in anesthesia management companies to note that the ERISA never requires a private employer to create a benefit plan or details what benefits the plan should include, but rather works to regulate the plans that are already in existence.
While the ERISA was originally created to address retirement plans, its broad interpretation has extended to health plans, and because ERISA is a federal law, it preempts any state law that would otherwise regulate the health plan, allowing the plan to face all of the specific ERISA guidelines and federal regulation, but be completely exempt from the content requirements that are usually set by states. Nonetheless, amendments to ERISA in regards to covered health plans have allowed for crucial reform that healthcare providers and anesthesiologists should be aware of. The Consolidated Omnibus Budget Reconciliation Act (COBRA) allowed families to receive healthcare even after a job had been lost, and the first part of HIPAA was passed in order to prevent discrimination or coverage refusal based on a disability or preexisting condition. Thus despite operating primarily as a means to protect retirement funds, ERISA has also become a crucial tool in ensuring fair and comprehensive health coverage from private employers.