Key ERISA Compliance Steps for Employer & Association Group Health Plans
Under the Employee Retirement Income Security Act (ERISA), employer-sponsored group health plans are subject to various regulations and compliance criteria. ERISA regulations help employers offer compliant, comprehensive health plans to employees or employer members under Association Health Plans (AHP). AHPs allow multiple small businesses or contractors to unite and provide affordable, ERISA-regulated health coverage. In this article, we explore key ERISA compliance criteria for Employer Group Health Plans and Association Health Plans. We also explain how these regulations impact both AHPs and traditional Employer Group Health Plans. We will also examine any differences in how AHPs are treated compared to standard group health plans under ERISA.
ERISA Compliance Criteria for Employer Group Health Plans
ERISA sets forth several rules and requirements to safeguard the availability and quality of health benefits provided through Employer Group Health Plans. The key ERISA compliance criteria applicable to these plans include:
- Fiduciary Responsibilities: Employer sponsors of Group Health Plans are considered fiduciaries and are obligated to act in the best interests of plan participants and beneficiaries. This requires them to prudently select and monitor service providers, manage plan finances responsibly, and provide accurate disclosures of plan information[1].
- Reporting and Disclosure Requirements: ERISA mandates that employers provide various plan documents and disclosures to employees. These include Summary Plan Descriptions (SPDs) which explain the plan’s benefits, eligibility criteria, and participant rights. Employers must also furnish Summary of Material Modifications (SMMs) to inform participants of any significant changes made to the plan[2].
- Non-Discrimination Rules: ERISA prohibits Employer Group Health Plans from unfairly discriminating against employees based on their health status or other factors. These rules ensure that employers cannot selectively offer better benefits to higher-paid or healthier employees[3].
- Mental Health Parity: ERISA includes rules that demand Group Health Plans to provide mental health and substance abuse benefits on par with medical and surgical benefits. This ensures equity and equal access to necessary mental health services for all plan participants[4].
Association Health Plans (AHPs) and ERISA
AHPs, which allow small employers to pool resources and offer affordable health coverage, are also subject to ERISA regulations. In 2018, the Department of Labor expanded AHP rules, allowing small employers to more easily form or join AHPs. Although pending rescission as of December 2023, the current rule still requires AHPs to meet all ERISA compliance criteria. Therefore, small employers must understand that AHPs follow the same standards as traditional Employer Group Health Plans.
Under ERISA, regardless of whether a health plan is an AHP or a traditional group health plan, the same fiduciary responsibilities apply. The sponsor of an AHP is considered a fiduciary and must uphold their obligations and act in the best interests of plan participants. Similarly, reporting and disclosure requirements, non-discrimination rules, and mental health parity mandates apply to AHPs as well.
Conclusion
ERISA regulations play a vital role in ensuring that Employer Group Health Plans provide comprehensive and compliant coverage to employees. ERISA outlines compliance criteria, including fiduciary duties, reporting, non-discrimination, and mental health parity, to protect plan participants’ rights. These rules also promote transparency and support the overall well-being of employees and beneficiaries enrolled in group health plans.
Association Health Plans follow ERISA rules but let small employers use collective power to offer more affordable health coverage. However, AHP sponsors must understand their ERISA responsibilities and meet the same compliance criteria as traditional group health plans.
Employers offering Group Health Plans or participating in an AHP should learn ERISA rules and seek expert guidance for compliance. Additionally, staying informed helps ensure employees receive comprehensive, legally compliant health coverage. Enrollment First, Inc. is well-versed in compliance regulations and can support brokers, employers and associations in providing compliant healthcare solutions.
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