9.2 ERISA
The Employee Retirement Income Security Act of 1974 (ERISA) was created to protect employees from possible loopholes in retirement plans and to allow them to receive their own contributions and company contributions for retirement. ERISA gave the U.S. Department of Labor (DOL) responsibility for the enforcement of this body of statutory law. The Pension and Welfare Benefits Administration (within the DOL) has direct involvement. ERISA is concerned with employee health and welfare benefit plans, dealing with matters relating to employer-sponsored health insurance type plans and retirement plans.
A key factor behind ERISA's development was also to encourage employers to establish employee health plans allowing them to self-insure. ERISA sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans. The ERISA law gave the DOL the major role in protecting and improving private retirement systems.
The rationale for regulatory concern with unauthorized insurance in the health insurance industry includes ongoing, not isolated, instances of such activity as:
- the potential for criminal activity within the business of insurance;
- adverse economic impact upon authorized insurers and other insurance licensees;
- the potential for large quantity of unpaid claims due to dishonesty and actuarial unsoundness;
- the absence of state or federal guaranty fund to cover unpaid claims;
- adverse impact on future insurability of participants under statutes mandating guaranteed-issue health coverage;
- adverse economic impact upon health care providers from unpaid claims;
- lack of comprehensive federal oversight, including licensure and regulation similar to that of state insurance codes; and
- the public's perception that it is the role of state insurance regulators to protect them from illicit insurance schemes, to ensure that benefits are paid as contracted, and that legitimate insurance is available and affordable.
For more information on ERISA:
http://www.dol.gov/dol/topic/health-plans/erisa.htm
