You might be surprised to find out what employer sponsored benefits are subject to ERISA. ERISA generally applies to the following benefit plans and fringe benefits, whether they are fully insured or self-insured:
- Medical, Surgical, Hospital, or HMO Group Insurance Plans
- Health Reimbursement Accounts (HRAs)
- Health FSAs (Flexible Spending Accounts)
- Group Dental Insurance Plans
- Group Vision Insurance Plans
- Prescription Drug Plans
- Group Sickness, Accident, and Disability Insurance Plans
- Group Life and AD&D Insurance Plans
- Group Long Term Care Insurance Plans
- Medical Reimbursement Plans
- Wellness Programs (if medical care is offered)
- Voluntary Insurance Plans*
- Retiree Medical Plans
- Employee Assistance Plans (EAPs) (if providing counseling, not just referrals)
- Help Lines and Tele-Health Services
- Dependency Counseling
- Severance Plans
- Group Business Travel Accident Insurance Plans
- Prepaid Legal Services
- Unemployment Benefit Plans
- Vacation Plans
- Business Travel Accident Benefits
- Employer Provided Daycare
- Apprenticeship or other Training Plans
- Scholarship Plans
- Holiday Plans
- Housing Assistance Plans
- 419A(f)(6) and 419(e) welfare benefit plans
- Split Dollar Life Insurance Plans
- Nonqualified Deferred Compensation Plans (if ongoing scheme to determine eligibility/benefits)
- One employee plans
Certain self-insured or uninsured plans, such as sick pay, short term disability, paid time off, overtime, jury duty, and vacation pay, may be exempt if benefits are paid:
- as a “normal payroll practice,”
- to currently employed individuals (i.e., not retirees, COBRA participants, or dependents),
- without prefunding or using insurance,
- entirely from the employer’s general assets, AND without employee contributions.
*Voluntary individual or group insurance plans, in which the employees pay all of the cost, and the employer’s role is limited to withholding premiums through payroll deduction and remitting them to an insurer, may be exempt from ERISA depending on the extent of employer involvement. However, even minimal “sponsorship or endorsement” (e.g., a company’s name on the brochures) by the employer may endanger this exemption. A voluntary individual or group insurance plan qualifies under the Voluntary Plan Safe Harbor if:
- it is funded by group or group-type insurance,
- it is completely voluntary,
- there are no employer contributions, AND the employer does not endorse the plan.
The following does NOT constitute endorsement:
- Permitting the insurer to publicize the plan
- Collecting premiums by payroll deduction
- Remitting premiums to the insurer
The following MAY result in loss of Voluntary Plan Safe Harbor status:
- Selecting the insurer
- Negotiating plan terms/linking coverage to employee status
- Using the employer’s name/associating the plan with other employee plans
- Recommending the plan to employees
- Saying ERISA applies
- Doing more than permitted payroll deductions
- Allowing use of the employer’s cafeteria plan
- Assisting employees with claims or disputes
ERISA generally does not apply to:
- Cafeteria plans, §125 Plans, POPs (Premium Only Plans), Premium Conversion Plans, Pre-tax Premium Plans (However, the benefits funded by them are often subject to ERISA. NOTE: These plans must be referenced in the plan document and SPD if they are funding an ERISA Plan)
- Dependent Care Assistance Plans (DCAPs, or Dependent Care FSAs)
- Health Savings Accounts (HSAs) (if employer involvement is limited)
- Paid Time Off Plans (PTO)
- Adoption Assistance Plans
- State mandated benefits, e.g., STD (if not enhanced beyond mandated benefits)
- Educational Assistance or Tuition Reimbursement Plans
- On-site Medical Clinics (if providing First Aid only—not treatment, e.g., flu shots)
Don’t be caught by surprise and subject yourself to DOL fines and potential audit… For a thorough explanation and examination of your benefits plan status, call or email the ERISA Experts at Benefits Compliance Consultants Inc. at 515-244-2424 or contact BC2 today through our email form!
