The main purpose
of the Employee Retirement Income Security Act of 1974 (“ERISA”)
was to protect employees’ rights under an employer’s pension or
profit sharing plan and offering tax incentives for maintaining
or establishing such plans if they met certain statutory
requirements. Employees who participated in an employer’s
welfare benefit plans, such as a health care plan, had fewer
protections. For example, an employee who had been employed a
number of years must have a vested right to future payments
under an employer’s pension or profit sharing plan. However, an
employee had no vested rights to future coverage under an
employer’s health care plan if the employer decided to terminate
the plan (and the employer did not incur a penalty for doing
so). However, both pension benefits plans and welfare benefits
plans had to establish and follow reasonable internal claims
procedures under ERISA.
The enactment of
the
Patient Protection and Affordable Care Act ("PPACA")
on March 23, 2010 dramatically shifted the emphasis of federal
law from
protecting employees’ rights under an employer’s
pension or profit sharing plan to insuring and protecting
employees’ rights to health care coverage.
Unlike ERISA, PPACA is attempting (by 2014) to encourage all
employers to establish and maintain health care plans that meet
minimum cost and coverage requirements or face stiff monetary
penalties. Now an employer with a health care plan who
terminates this Plan after 2013 could be subject to a penalty
tax unless a new plan is established that meet minimum standards
established by PPACA. In addition, effective on September 23,
2010, all health care plans (and individual health insurance
policies) whether or not covered by ERISA will have to establish
and follow both an (i) internal claims and appeals
process and (ii) external review process. Failure to strictly
adhere to these new claims and review requirements could have
severe consequences for employers who maintain health care plans
that are covered under ERISA. Finally, effective January 1,
2011, the nondiscrimination rules that only applied to
self-insured health care plans will be extended to insured
health care plans with potentially severe excise taxes imposed
on these plans for violating these rules.
