Whether they realize it or not, millions of employees are participants in benefit plans governed by a sweeping federal law called ERISA. ERISA gives employees certain rights regarding employee benefit plans provided by their employers. Examples of employee benefit plans are medical, disability, accident, and life insurance plans, as well as pension plans and 401(k) plans. ERISA is a complicated federal law, but its basic purpose is very simple: to protect the interests of employees who participate in employee benefit plans. It accomplishes this goal in part by requiring employers to be forthcoming with information. This blog post explains the basic rights to information granted by ERISA that every employee should know about.
ERISA requires an employer that offers insurance or retirement plans to explain those plans to its employees who participate. The employer does this by distributing to each employee a document called a Summary Plan Description, or SPD. An SPD is a short, concise, easy-to-understand explanation of the plan. SPDs must include, among other things, the requirements for eligibility under the plan, the plan’s exclusions to coverage, and the steps to make a claim for benefits from the plan.
Employers also have to send employees summaries of amendments to the plan, and annual reports about the plan.
Not every summary of benefits an employer gives out is an SPD. For instance, a certificate of coverage from an insurance company is not an SPD. Employees should be cautious and insist on receiving an SPD instead of some other document. Anything the employer gives out instead of an SPD must tell the employee how to get an SPD.
Employees must receive an SPD no later than 90 days after he or she enrolls in the plan. Also, an employee can request an SPD from the plan’s administrator (typically the employer) at any time. But, the employee must make his or her request in writing. If the employer fails to respond promptly to the employee’s request, a court may force the employer to pay the employee up to $110 per day—giving employers a reason to follow ERISA, and employees a reason to make sure that they do.
Employees’ rights to employer-provided health insurance plans are further protected by another federal law called COBRA. COBRA allows employees and their families to continue their medical insurance plans after the employee’s death, termination, divorce, entitlement to Medicare, or the employer’s bankruptcy or merger—events that otherwise would cause their medical coverage to end. COBRA typically lasts for 18 months after one of the listed events.
Like ERISA, COBRA requires employers to inform employees’ about their rights under COBRA. To do so, employers must notify an employee of his or her COBRA rights in three circumstances: 1) within 90 days of joining the plan; 2) whenever one of the events listed above occurs; and, 3) if the employee’s medical coverage ends before the 18-month continuation period. Courts can force employers to pay an employee up to $110 per day for violation of COBRA’s notice requirements.
Basically, under COBRA and ERISA, employers are not allowed to step on employees’ rights to information about their insurance and retirement plans. If you’re concerned that your rights have been stepped on, you should contact competent ERISA law counsel.