It is a little known fact, and hardly discussed, that ERISA (Employee Retirement Income Security Act) regulates employer sponsored Healthcare plans. Seems odd given that ERISA is commonly thought to regulate pensions, and the law does not require companies to offer Healthcare plans. But because ERISA covers benefits generally, it governs health insurance as well.
PPACA (Patient Protection and Affordable Care Act, aka ‘Obamacare’)requires companies with 50 or more full-time employees to offer health insurance. The Obama Administration has maintained that the number of companies affected by this change in the law is small, as more than 90 percent of firms already offer health insurance to employees.
But Keith McMurdy of Fox Rothschild noted there will be challenges from ERISA. The law has its own rules about eligibility, discrimination as well as notice and documentation. Furthermore, ERISA requires summary plan descriptions, summaries of material modification and plan documents. In addition, there are rules about communications and notice requirements and if the Employee Benefits Security Administration (EBSA) conducts an audit of a benefit plan, it will ask to see all of this documentation. In fact, current EBSA audits include requests that plan sponsors (employers) produce copies of all of the PPACA notices that were required over the last couple of years.
Fair enough, but given the mandate for health insurance by PPACA, it’s a fair question to ask whether the ERISA requirements can be modified, possibly lightened or brought in gradually to alleviate the challenges to businesses. Businesses right around the 50 person threshold are probably not set up for any significant regulatory reporting increases.
According to the firm Benefits Partners, the requirements are going to get worse, not easier, “PPACA expands ERISA's disclosure requirements by adding the summary of benefits and coverage (SBC) requirement. Under the SBC requirement, plan sponsors must provide a four-page summary, called the SBC, which describes the benefits and coverage available under the plan. The SBC must be provided to applicants and enrollees before enrollment or re-enrollment.” The firm also noted that there are fines for improper reporting, especially if plans or benefits are changed and not reported properly.
While the Administration points out that a large majority of firms already offer health insurance and thus comply with ERISA, it is clear that the extra cost of PPACA includes increased reporting requirements.