The Employee Retirement Income Security Act of 1974, or ERISA, was designed to give people a sense of security when it comes to their employee benefit plans, knowing that there are standards for their financial management that have to be upheld.
There are more than half a million retirement plans and millions of health and welfare benefit plans that are covered under ERISA, protecting around 141 million workers.
Transparency, accountability and a fiduciary duty
Essentially, ERISA protects the benefits under its umbrella from financial abuses. The Act sets minimum standards for both retirement and health plans in private sectors, and those standards are endorsed through the Employee Benefits Security Administration division of the Department of Labor.
ERISA provides protections in the following ways:
- It applies a fiduciary duty to anyone who is in charge of managing a plan’s funds or other assets. That creates a legal responsibility for that person to act in the best interest of the participants. If they don’t, they can be held legally and financially responsible.
- It governs the requirements your company can impose on participation in any employer-sponsored benefit plans, including retirement and disability programs.
- It requires employers to provide employees with clear information about the benefits the plan offers, and their right to withdraw funds from their retirement plans.
- Through the Health Insurance Portability and Accountability Act (HIPAA), it limits the ways that employers can restrict coverage under employee benefit programs due to pre-existing conditions.
- Through the Consolidated Omnibus Reconciliation Act (COBRA), it permits people to extend their insurance coverage after they lose their employment for a period of time through self-pay.
That’s not where ERISA stops, however. Of particular importance to those with short-term or long-term disability coverage through their employer is the fact that ERISA provides you the right to appeal claim denials. If the appeal is unsuccessful, you can even sue to compel coverage.
When your security is on the line, don’t hesitate to seek out experienced legal guidance.