Erisa Law, Essay Example

Steifel (2007) has made the contemporary observation that “two of the largest problems facing [Americans] are the rising numbers of uninsured and the ballooning costs of [benefits] paid by the government” (p. 684). A century ago, only the largest industrial employers were solvent enough to offer retirement plans to their employees. These pensions were viewed as monetary expressions of gratitude from successful companies to their most loyal and tenured employees at or following their retirement.

Following the Great Depression, Social Security came into being, and under new tax incentives, companies could receive limited tax deductions when contributing to their employee’s retirement funds. This encouraged them to do so. After World War II, under progressive tax structure, the “shelters” offered to employers and employees through retirement accounts became increasingly desirable.

Over time, private, defined pensions were required to provide full disclosure of fund performance. Since the employees had no say in the management of such funds, the government deemed that they had the right to information of the integrity of the management.

The Employee Retirement Income Security Act (ERISA) became a federal law in 1974, because numerous employees were losing such benefits when they did not meet the often-strict qualifications or unreasonable tenure of service requirements. There were numerous company plans that simply failed, because of low cash reserves, to pay out the amounts of retirement income that they had promised to their work force. Still more plans would go defunct before they reached sufficient revenue to be able to pay out benefits. ERISA rose to ensure that more employees found less circuitous routes toward employee investiture and to establish more realistic participation rules, platforms, and guidelines. The handling of company plans also came into reform as the law made it mandatory that retirement plans function, for workers and beneficiaries, in much the same way and with similar features on a national scale.

The number of workers whose quality of life has prospered because of ERISA is legion; however, the United States has millions more who have neither work benefits plans coverage nor the ability to pay for them even if they were readily available. The current congressional debate over health care is proof of the strong and powerful lobbying efforts that protect status quo over fear that by offering more to all, each will get less and the quality known now will decrease.

Critics of the current system, like Borzi (2008), charge Congress to do more:

In the nearly three-and-a-half decades since ERISA was enacted, Congress has never seriously returned to the two most fundamental questions that have arisen in the intervening years: whether employers should be required to either offer or contribute to health coverage for their employees and their families, or whether federal law should preempt state efforts to take such action. These questions have taken on heightened importance because of the landscape for delivering health benefits to individuals in ERISA-covered plans has changed so dramatically since 1974 (p. 669).

Is ERISA, then, as administered by the United States Department of Labor, also concerned with the employee benefits of employer sponsored health plans and other areas of benefits? This fair and logical question has tossed around ever since the law went into effect. The legal language that causes the quandary goes by the name, “preemptive clause.” The clause reads this way: “[ERISA] shall supersede any and all state laws insofar as they relate to any employee benefit plan” (Feller, 2006, p. 21). This collides in immediate conflict with state law and employee benefits. Health care is a benefit plan, so is it included? The truth is that states cannot force employers to pay for health coverage, but states can regulate insurance, because it is a business. States that challenge ERISA usually lose in court, but the tactic of using the preemptive clause as a defense for state actions is quite common. Elrod, as an observer of health care litigation, has remarked, “As the federal and state laws and cases proliferate, lawyers need to keep abreast of what is happening across the country” (2007, p. 590).

The volume of cases requires legal expertise, so it is no wonder that, out of necessity of specificity, there are those whose practices lie solely with health cases related to health care.

Over time, ERISA has collected a series of amendments that seek to strengthen its protection of those covered through group health insurance plans. As large groups of insured people groups polarize around a particular need or peculiar situation, ERISA amendments exist to spell out specific protocols. A handful of the most prevalent amendments bear more discussion as this brief report continues.

ERISA holds expectations for the management, reporting, and litigation of employer plans against a legal standard. The most striking feature to emerge out of the group, or company, health insurance component of ERISA is one of its amendments, passed in 1986, known as the Consolidated Omnibus Reconciliation Act (COBRA). Employees who stop work and would otherwise lose their health coverage may elect, under COBRA, to retain health insurance, paying for it themselves, for a limited time.

The benefits of COBRA support not only former employees, but their spouses and children too. Employers are required to provide former employees with information concerning their rights under COBRA. Former employees have designated periods to decide on their participation. The existence of COBRA provides a seamless transition for those who wish to retain, and can afford to retain, no interruption of their health insurance benefits. This appears to difficult to do.

The problem of the uninsured in this country continues to grow. Over the past five years, proportion of uninsured Americans has risen from 14.6% to 15.9% of the population. The statistics show disparities in insurance coverage among the                                  various races, between native-born and nonnative born citizens, and between other groups. (Steifel, 2007, p. 683)

After COBRA ends, some former employees may be eligible for coverage, again at personal expense, under The Health Insurance Portability Act or (HIPAA). The same is true for those whose new work might not offer group health options. HIPPA makes sure that workers can relocate their coverage without having prohibitions placed on them because of preexisting medical conditions or the onset of medical issues that present themselves since their original group health plans took effect.

Employers that offer retirement and health plans for employees must provide, under ERISA, information to all concerned about any plan options. Many employers provide information routinely about plan updates. All employers must provide benefit plans at no charge to their employees. Plan Summaries are requisite, standard pieces of information, as are reports on annual plan progress, and employees should not have to ask for them.

By law, any plan that is involves making, managing, and altering financial investments is obligated to produce fiduciaries to oversee the operations of such funds. Fiduciaries, as a subcategory of ERISA, do things such as diversity fund portfolios in order to minimize risk and refrain from taking conflict of interest actions so that they act on behalf of the participants and not for themselves (Department of Labor, 2010). A failure to act faithfully in a fiduciary capacity can be punishable by imprisonment.

Another sub grouping under ERISA is the Newborns’ and Mothers’ Act. This implementation took effect in 1999 so that the hospitalized event of childbirth, for both mother and child, receives guaranteed coverage for a specified period prior to dismissal. This is true only for those group health plans that have this kind of coverage already built into the patient’s (and the child’s) existing health plan.

Not only are biological parents of infants a coverage concern under ERISA, in a motion toward egalitarianism, so are the parents of those who seek to adopt or accept foster children. Comprehensive health care policies account for parents to have unpaid leave from work in the Family and Medical Leave Act (FMLA). Childcare issues are of pronounced importance. Half of the preschoolers in the United States spend at least a portion of their day under the supervision of adults other than their parents (Cattan, 1991). For many in the work force, finding affordable childcare is a barrier to their job fulfillment.

Additionally, through the Fair Labor Standards Act (FLSA), some employers and employees can negotiate and prearrange expenses mutually so that adoption and placement expenses are prepaid. Hatch tells of a recent District Court of Appeals ruling that clarified the role of employees who initiate “proceedings or inquiries” (Hatch, 2005, p. 12) with their employers relative to ERISA matters. Mental Health is also a protected classification under ERISA in health plans that offer mental health coverage. The goal is parity, so there are lifetime dollar amount limits placed on surgical procedures and catastrophic instances. In any case, this does not include treatment that one might receive from having chemical or other drug or substance abuse problems.

It can be daunting for company compliance officers to administer ERISA. Numerous pamphlets, web sites, and meaningful publications exist, as sponsored by the federal government, to assist businesses with fulfilling their obligations to their employees and their responsibilities to law. The long list of protected people groups increase as situations cause them into being. For example, ERISA is concerned with the continuation of employment benefits for those who await deployment to the current global military conflicts in which we are engaging in Afghanistan and Iraq. ERISA educates employers how to advise reservist employees whose health care (and that of their dependent family members) transfer to the U. S. military following a suitable time of active duty.

Finally, women became a class of protection, as many women undergo radical mastectomies because of cancer. Their surgeries and their ensuing reconstructions disallow exclusion under the ERISA statute.

As a way of wrapping up ERISA’s link with health care, this comment suffices:

Proponents of ERISA had little inkling that this law would become a major factor in shaping the US health care delivery system. ERISA became a pivotal piece of     legislation because, to a large extent, it prevented    states from regulating the activities of employee health benefit plans (Hellinger & Young, 2005, p. 218).

If instruction from the past informs the future, we can expect ERISA to reform through future regulations. For instance, if the United States enacts any form of national health care, there is no way that ERISA can be unaffected. As Americans’ life expectancies continue to lengthen, their retirement needs will be more important and require careful approaches to the setup and nurturing of group plans.

ERISA can ill afford to go away. Its tasks of monitoring employee benefits on behalf of millions of people are too important to toss away. We can expect, however, to see future ERISA mandates enacted to ensure fiscal integrity between labor and management.

References

Borzi, P. (2008). There’s “private” and then there’s “private”: ERISA, its impact, and options for reform. Journal of Law, Medicine & Ethics, 15(4). 669-678.

Cattan, P. (1991). Child-care problems: An obstacle to work.” Monthly Labor Review, 114(10), 3-9.

Elrod, L. (2007). A review of the year in family law: ERISA, jurisdiction, and third-party cases multiply. Family Law Quarterly, 40(4), 545-590.

Feller, M. (2006). ERISA’S impact of state health policy. State Legislatures, 32(5), 21.

Hatch, D., Hall, J., & Kobata, M. (2005). ERISA provisions protect HR director.Workforce Management, 84(6), 12.

Hellinger, F., & Young, G. (2005). Health plan liability and ERISA: The expanding scope of state legislation. American Journal of Public Health, 95(2), 217-223.

Steifel, J. (2007). ERISA preemption of chapter 58: The future of the “pay or play” model of healthcare legislation. American Journal of Law, Medicine & Ethics, 33(4), 683-701.

S. Department of Labor. Health Plans and Benefits: Fiduciary Responsibilities. Retrieved February 21, 2010 from http://www.dol.gov/dol/topic/health-plans/fiduciaryresp.htm