ERISA stands for The Employee Retirement Income Security Act of 1974, a federal law that establishes the minimum standards for most retirement and healthcare plans in the private sector. Enforced by the DOL, the law is designed to protect employees who enroll in these employer-sponsored benefits. 

Employers who administer ERISA-qualified plans are called “fiduciaries” and bear responsibility for compliance. Unlike Affordable Care Act (ACA) requirements, ERISA applies to employers of all sizes who offer qualified plans. Noncompliance can be costly.

ERISA covers any retirement plan that provides either retirement income in the future or the opportunity for employees to contribute current wages to retirement. Major plans covered under ERISA also include:

• Major medical plans
• Dental
• Vision
• Prescription benefits
• FSAs
• HSAs
• Specific EAPs
• Wellness programs
• Cancer policies

Plans that do not fall under ERISA primarily include pensions or other plans provided by the United States government, state or local governments, and churches.

Clearly, EBSA’s ERISA enforcement actions have a high success rate and can be very costly. As fiduciaries bearing responsibility for compliance, employers should seek to avoid such effective enforcement action.

National business law firm Kutak Rock recommends the following: 

• Implement or update a missing participant policy to align with recent DOL guidance regarding terminated vested participants, which was the major source of monetary recovery in 2021. You may also be interested in this DOL memorandum outlining how EBSA audits and investigates such cases through the Terminated Vested Participants Project.
• Implement and adhere to a compliance calendar. Use this ERISA compliance checklist as well as this 2022 HR Calendar.
• Respond fully, promptly, and fairly to plan participants’ questions and concerns, which can help you avoid informal complaints to EBSA’s hotline and website.
• Self-report and self-correct through the Voluntary Fiduciary Correction Program process to avoid EBSA enforcement action, maintaining some control over the correction process and minimizing the cost of corrective action.

Finally, small to midsize businesses in particular can simplify compliance and save on costs using an ERISA wrap document. To make the process even easier, use a qualified and experienced benefits administrator like Alpine TPA.

Related Terms: Affordable Care Act (ACA)