Employee ERISA Rights
The Employment Retirement Security Act of 1974 regulates employee retirement and benefit programs, including pension and 401(k) plans, health insurance, disability, time off and death benefits. It covers plans offered by private employers and employee groups, such as labor unions. It does not cover plans offered by government agencies or churches. ERISA sets minimum operating standards for these plans. The Employee Benefits Service Administration manages ERISA programs.
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Provisions
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ERISA requires that retirement and benefit plan administrators manage the programs carefully and that they avoid any conflicts of interest associated with the plans. In addition, the program administrator must comply with investment rules and must report on plan operations and financial status to the Employee Benefits Service Adminstration, plan participants, and the Internal Revenue Service within certain time frames.? ERISA sets rules for funding standards, employee participation and vesting as well as non-discrimination. In addition, the law allows plan administrators to make loans to participants and employee stock ownership plans under certain conditions and charge a reasonable fee for performing plan operation services.
Participation
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ERISA permits employers to determine which employee groups may be included in a retirement or benefit plan and to offer different plans to different groups of employees. In addition, employers may set specific requirements for plan participation. For example, an employer may require that employees work at least 20 hours per week or 1,000 hours per year to participate in the pension plan. Employees who meet the basic participation requirements listed in the benefit plan description have the right to join or not join the plan. Participation is voluntary.
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Vesting
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Some retirement plans include contributions from both the employee and the employer. Employees have immediate access to money they deposit in the retirement plan. However, they do not have immediate access to the employer's contributions. ERISA requires businesses to specify a number of years that employees must work before they can withdraw the employer's contribution to their retirement plan. For example, some businesses require that employees work five years first.
Health Insurance
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The Consolidated Omnibus Budget Reconciliation Act of 1985 and the Health Insurance Portability and Accountability Act amended ERISA. COBRA and HIPAA set standards on issues related to continuation of health insurance benefits, such as exclusion of pre-existing medical condition, special enrollment rights and denial of coverage based on health status. Health care insurance benefits offered through COBRA and HIPAA are subject to the same ERISA rules that govern benefits for current employees.
COBRA
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COBRA allows extended health insurance coverage in some cases when employees lose their jobs or experience other qualifying events, such as a reduction in work hours. In addition, the American Recovery and Reinvestment Act of 2009 makes it possible for some eligible workers to pay only 35 percent of the total COBRA premium. A tax credit reimburses the remaining 65 percent to the plan administrator.
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References
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