The Employee Retirement Income Security Act of 1974 protects the rights of private industry employees by setting standards for health and retirement plans. The U.S. Department of Labor reported ERISA covers plans for about 141 million workers.
By familiarizing themselves with these requirements, employers can ensure compliance. Employees should also be aware of their employers’ responsibilities to safeguard their rights.
Furnish plan information
One key obligation under ERISA is the provision to provide comprehensive plan information. Employers must furnish employees with clear details about the plan’s features, funding and how it operates. This transparency empowers employees to make informed decisions regarding their benefits.
Act as fiduciaries
Employers must be fiduciaries, which means they must act solely in the best interests of the plan participants and beneficiaries. This involves prudently managing plan assets and avoiding any potential conflicts of interest.
Maintain regular reporting
ERISA also demands regular reporting. Employers must submit annual reports to the Department of Labor. They must also provide employees with an annual summary describing the plan’s financial health, including any modifications or changes.
Set clear claims and appeals processes
Importantly, ERISA outlines the process for claims and appeals. Employers must establish a protocol for filing claims and ensure a fair procedure for appeals in case of denied claims.
Provide adequate funding
Employers must ensure that the plan has sufficient funds to pay the promised benefits. This guarantees the financial security of employees who rely on these benefits for their well-being.
Furthermore, ERISA establishes the Pension Benefit Guaranty Corporation to safeguard pension benefits in the event that a plan becomes insolvent. Employers must pay insurance premiums to the PBGC to secure the benefits of their employees.
ERISA does not apply to every employer. Government entities and churches do not usually have to follow the law’s requirements. For all other employers, adhering to these mandates fosters a secure and reliable benefits environment.