This year marks the 50th anniversary of the Employee Retirement Income Security Act (ERISA), which was enacted in 1974 and governs employer-sponsored benefits, including group health plans.[1]
In honor of this milestone anniversary, the House of Representatives Committee on Education And The Workforce (the “Committee”), which has jurisdiction over employer-sponsored health coverage, is requesting feedback and comments from the employee health benefits community “on ways to build upon and strengthen ERISA” by March 15, 2024.
Read on for more information.
ERISA Background
ERISA was enacted in 1974 to address threats to private pension plans, the Studebaker pension plan termination in 1964 being the most infamous at the time. ERISA became landmark legislation to address these concerns and protect plan participants’ interests not only in employer-sponsored retirement plans but also in employer-sponsored group health and welfare benefits.
ERISA generally requires that employer-sponsored employee benefit plans:
- provide plan participants and beneficiaries with sufficient plan information;
- disclose and report plan information to the government;
- adhere to certain fiduciary conduct standards for those who manage the plans, and
- protect plan funds and ensure qualifying participants receive their benefits through civil enforcement provisions.
On the group health plan front, approximately 153 million U.S. employees and their dependents are covered under employer-sponsored health benefits.[2]
Committee Input Topics
Below are highlights of the topics that the Committee is seeking input from stakeholders in the employee health benefits community (including employers):
- ERISA Preemption – seeking feedback on ways to strengthen and clarify ERISA preemption.
The scope of ERISA preemption continues to be challenged in federal court in light of the 2020 Supreme Court decision in Rutledge v. Pharmaceutical Care Management Association[3], ruling that a specific Arkansas state law regulating pharmacy benefit managers was not preempted by ERISA. According to the Court, the Arkansas law is merely a form of cost regulation, and the law did not explicitly refer to ERISA.
What is ERISA preemption?
ERISA preemption generally means self-funded plans are not subject to state/local laws that impact administration of ERISA benefits plans. ERISA preemption prevents multistate employers of self-funded group health plans from having to comply with a patchwork of state/local mandates that would render plan administration nearly impossible for these employers.
- Fiduciary Requirements — broadly requesting input to the definition of fiduciary in the group health plan space, along with which stakeholders are considered fiduciaries, and the impact of fiduciary responsibilities on small businesses providing health coverage.
- Reporting Requirements — seeking feedback on methods to streamline reporting and disclosure requirements, particularly electronic disclosures.
- Prohibited Transactions — requesting input on how changes in transparency impact how employer plan sponsors determine whether spending and costs are reasonable and necessary. Additionally, the Committee is requesting input to assess whether different payment and contracting models, such as direct contracting, concierge services, wellness centers, on-site clinics, and capitated payments, affect fiduciary duty and prohibited transactions requirements.
What is a prohibited transaction under ERISA?
Broadly speaking, ERISA rules are intended to ensure that ERISA plan participants receive their benefits as promised to them by their employers. As a result, ERISA contains rules prohibiting certain transactions between health and welfare plans (in addition to retirement plans) and individuals or entities having a financial interest in these plans. These individuals or entities are generally known as “parties-in-interest” in connection with ERISA plans. A “party-in-interest” is almost any individual or entity having a financial interest in, or fiduciary relationship to, the plan. The transactions that are not permitted between these “parties-in-interest” and ERISA plans are referred to as "prohibited transactions."*
*This is a very high-level explanation of ERISA prohibited transactions and for purposes of brevity, this article does not delve into a longer and more precise discussion of prohibited transactions. An important distinction to note here is that the vast majority of the reported prohibited transaction cases (and DOL enforcement actions) involve pension plans, and those that do pertain to health and welfare plans typically involve multiemployer plans.
- Data Sharing — seeking feedback on how to improve data sharing between employer plan sponsors and service providers as this is a hot topic, especially in the wake of the Consolidated Appropriations Act, 2021, prohibition on gag clauses.
- Cybersecurity — generally requesting feedback with respect to cybersecurity threats faced by group health plans and also seeking input on ways the Department of Labor can:
- strengthen HIPAA privacy regulations through ERISA,
- provide best practice recommendations to employer group health plan sponsors to combat cybersecurity threats, and
- coordinate with the other federal agencies[4] to align conflicting or overlapping cybersecurity rules.
- COBRA and Portability — seeking input specifically to improve affordability and usability of COBRA coverage.
- Specialty Drug Coverage — requesting feedback to address managing risks and costs associated with coverage of high-cost specialty drugs and gain insight into current innovative models for high-cost specialty drug coverage.
Employer Actions
As ERISA celebrates its 50th anniversary this year, employers have been provided the opportunity by Congress to have their voices and viewpoints heard through stakeholder input to the Committee.
If an employer wishes to provide feedback and comments regarding any of the items outlined above to the Committee, email EdandWorkforceRFI@mail.house.gov by March 15, 2024.
Risk Strategies is committed to keeping employers informed and up-to-date. We are closely following this development and will provide updates when available. Contact us directly at benefits@risk-strategies.com.
[1] In addition to the Internal Revenue Code, as well as the Public Health Service Act and state insurance laws, as applicable to fully insured group health plans.
[2] https://files.kff.org/attachment/Employer-Health-Benefits-Survey-2023-Annual-Survey.pdf
[3] 592 U.S. 80 (2020).
[4] Namely the Internal Revenue Service and the Department of Health and Human Services.
