Group health plans are almost always subject to the Employee Retirement Income Security Act of 1974, also known as ERISA.
This means employers must follow certain rules, such as:
There are three instances when a group health plan would not be subject to ERISA:
It can be easy for a plan that seems like it’s voluntary to be viewed as nonvoluntary, so it’s hard to qualify for this exemption. The exemption may cease to apply if an employer negotiates terms of coverage, associates its name with a plan, recommends a plan, assists with claims or disputes, or allows premiums to be paid through a Cafeteria Plan.
The bottom line is that most group health plans are subject to ERISA. Other employer-sponsored plans such as dental, vision, life, disability, Health FSAs and HRAs are also subject to ERISA in most instances.
The easiest way for an employer to start complying with the requirements of ERISA is by preparing a written document, often referred to as a Wrap Document, which provides participants with the important plan information they’re supposed to receive in writing.