ERISA Reporting and Disclosure
Under the Employee Retirement Income Security Act (ERISA), employers must follow several health plan regulations and compliance rules. These regulations require employers to offer health plans that meet comprehensive and compliant standards.
For example, small businesses and independent contractors in Association Health Plans (AHPs) must follow ERISA rules as well. AHPs allow multiple small employers to join together and provide affordable, ERISA-compliant health coverage.
In this article, we will outline ERISA compliance criteria for Employer Group Health Plans. Additionally, we will explore how these rules apply to both AHPs and traditional Employer Group Health Plans.
Finally, we will compare how ERISA treats AHPs versus standard group health plans.
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 let small employers pool resources to offer affordable coverage, yet they still follow ERISA regulations. In 2018, the Department of Labor expanded AHP rules to simplify forming or joining an AHP. However, as of December 2023, this ruling faces possible rescission. Still, under current rules, AHPs must meet the same ERISA compliance criteria as traditional Employer Group Health Plans.
Under ERISA, both AHPs and traditional plans follow the same fiduciary responsibilities.
Moreover, AHP sponsors serve as fiduciaries and must act in participants’ best interests.
Additionally, AHPs must meet reporting, disclosure, non-discrimination, and mental health parity requirements like traditional group health plans.
Conclusion:
ERISA regulations ensure Employer Group Health Plans deliver comprehensive, compliant coverage to all employees. These regulations include fiduciary duties, disclosure rules, non-discrimination policies, and mental health parity standards.
Together, they protect the rights and well-being of plan participants and beneficiaries.
Meanwhile, Association Health Plans (AHPs) follow the same ERISA rules as traditional plans.
AHPs allow small employers to use collective bargaining power to offer more affordable health coverage.
However, AHP sponsors must understand and follow all ERISA compliance requirements like traditional health plans.
Therefore, employers in any plan type must learn key ERISA regulations and seek expert compliance guidance. Enrollment First, Inc. helps brokers, employers, and associations deliver compliant healthcare solutions with confidence.
Sources:
- Department of Labor: ERISA