The Employee Retirement Income Security Act (ERISA) establishes minimum standards for retirement, health, and other benefit plans, including life and disability insurance. The law was initially signed into law by President Gerald Ford in 1974 to address issues related to corporate pension plans.

This law was put in place because Studebaker Motor Company declared bankruptcy and left the company’s employees without any severance pay.

ERISA was created to protect the retirement assets of Americans. It is regulated by the Employee Benefits Security Administration (EBSA), the U.S. Department of Labor (DOL), the Department of the Treasury, and the Pension Benefit Guaranty Corporation.

This law addresses the effects of transactions associated with employee benefit plans. It also establishes rules that qualified plans must follow to ensure that plan fiduciaries do not misuse plan assets. In recent years, ERISA has been amended numerous times to accommodate pension changes.

What Do I Need to Know About Erisa?

These are the responsibilities of ERISA:

  • Conduct: ERISA regulates the conduct of managed care (such as HMOs) and other fiduciaries (i.e., individuals that are financially responsible for the plan’s administration).
  • Reporting and Accountability: ERISA requires detailed reporting and accountability to the federal government.
  • Disclosures: Certain disclosures must be available to plan participants in the form of a plan summary. The summary outlines what benefits are offered. The rules are for getting those benefits, the plan’s limitations, and other guidelines.
  • Safeguards and Procedures: ERISA requires that a written policy be established that details how claims should be filed and a written appeal process for denied claims. ERISA also requires that claims appeals are handled promptly, which is in the employees’ best interests.
  • Financial Protection: ERISA is enacted to ensure that plan funds are protected and delivered in the best financial interest of the plan members. ERISA also prohibits discriminatory practices in obtaining and collecting the plan benefits for qualified individuals.
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