ERISA

ERISA — the Employee Retirement Income Security Act of 1974 — is the federal law that governs employer-sponsored benefit plans, including health, retirement, and disability plans. For health plans specifically, ERISA sets the rules for plan administration, claims and appeals rights, disclosure requirements (the Summary Plan Description), and fiduciary responsibilities. Its most consequential feature for employer health plans is ERISA preemption: self-funded employer plans are exempt from most state insurance regulations, which is why large employers can offer the same benefit structure to employees in all 50 states without having to comply with each state's insurance mandates.

ERISA preemption is both a feature and a complexity. The feature: self-funded employers can design plans that ignore state-mandated benefits (like certain fertility coverage mandates or mental health parity rules that apply only to fully-insured plans), giving them design flexibility. The complexity: ERISA creates its own regulatory framework — fiduciary duty standards, required plan documents, claims and appeals timelines, and prohibited transaction rules — that plan sponsors must navigate without the guardrails of state insurance law. ERISA also gives plan participants (employees) the right to sue for wrongful denial of benefits in federal court, but critically, ERISA limits remedies to the actual benefits owed plus attorney's fees — there are no punitive damages available under ERISA claims, which is a major departure from state insurance bad-faith law. The Consolidated Appropriations Act of 2021 added significant new ERISA fiduciary requirements specifically for health plans, including the gag clause prohibition, price transparency attestations, and mental health parity comparative analysis — turning what had been a primarily retirement-plan law into a much more demanding framework for health plan sponsors.

The takeaway: if you're a self-funded employer, ERISA is the primary law governing your health plan — not your state's insurance department. Understand your fiduciary obligations, maintain your plan documents, meet your disclosure requirements, and comply with the CAA's newer transparency mandates. Ignorance of ERISA duties is not a defense in a plan participant lawsuit.