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Employee Retirement Income Security Act (ERISA)

Why Employers Care

The Employee Retirement Income Security Act (ERISA), a 1974 law, created uniform federal standards for employer-sponsored benefit plans, including health benefit plans. It generally prevents states from applying state laws to employer-sponsored plans. ERISA enables these plans to be governed by one set of national rules, determined by the federal Department of Labor, regardless of where employees work or live.

ERISA provides the basic framework of administrative rules for employer-sponsored benefit plans and defines how disputes are handled.

In March of 2009, the U.S. Supreme Court denied a request for an emergency stay to keep the city from collecting any more funds from employers for its "pay or play" health reform ordinance. In June of 2010, the Supreme Court denied a review of San Francisco's employer Health Coverage Ordinance. Although, the Supreme Court did not give a reason for denying the review, the Obama Administration had argued that the Supreme Court should not take the case because the health care law, the Patient Protection and Affordable Care Act (Affordable Care Act), would significantly reduce the likelihood that states or local governments would implement similar programs.

The Business Group partnered with The ERISA Industry Committee in July of 2009 to send a joint "friend of the court" brief requesting that the Supreme Court rule on the legality of the San Francisco health reform ordinance. Congress may also consider waiving ERISA for state health reform laws.

If successful, this approach would remove a key element of ERISA for employer-sponsored benefits: the ability to apply national, uniform rules across the country for employer-sponsored health benefits. No one has challenged Massachusetts' health reform, though some have voiced concerns that the employer provisions violate ERISA.

Michigan passed a law requiring both insured and self-insured plans to pay a quarterly 1% tax on paid claims for health care services. The law is being challenged in federal court, under ERISA preemption.

The Affordable Care Act recognized the importance of ERISA and did not make major changes to the law, but did place some additional requirements on plan sponsors such as the 4-page Summary of Benefits and Coverage requirement.

What Can Employers Do?

As members of the National Business Group on Health, employers can contact the Business Group's public policy team with concerns by responding to public policy opportunities to comment on proposed regulations, contact Congress and/or the Administration, testify, or participate in related activities to ERISA.

Page last updated: January 29, 2014

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