Retirement and benefit plan options are among some of the most desired benefits employees seek when searching for a job. In today's tight labor market, it is imperative for a business to offer some benefit plan to retain current employees and attract new ones.

However, compliance with state and federal regulations regarding these particular benefits can prove to be daunting for many business owners throughout the country. The Employee Retirement Income Security Act of 1974 (ERISA) is a federal regulation that almost all businesses that offer benefits has to comply with.

ERISA overview.

ERISA is the comprehensive federal law that regulates pension, health & welfare, and other employee benefits. In a nutshell, ERISA protects the interests of participants and beneficiaries by requiring the disclosure and reporting of financial and other information, establishes standards of conduct and responsibility for fiduciaries and provides access to federal courts. Failing to comply with these standards can result in sanctions and penalties.

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ERISA doesn’t cover all plans, just those such as pension, retirement savings, or health insurance coverage.

Let’s break it down even further.

General benefits subject to ERISA.

Medical, Surgical, or Hospital Care Benefits

These benefits include:

  • Major Medical
  • Dental
  • Vision
  • Prescription Drug Benefits 
  • Health Flexible Spending Accounts (Health FSAs)
  • Health Reimbursement Arrangements (HRAs)
  • Certain Employee Assistance Programs (EAPs)
  • Wellness Programs 
  • Disease Management Programs
  • Cancer Policies

Benefits in the event of sickness, accident, disability, death or unemployment, insured disability income plans, insured sick pay plans, accidental death and dismemberment plans and life insurance plans

Funded Vacation Benefits

You've heard of paid time off, but have you heard of companies giving employees travel credit? Many companies are starting to pay for flights or giving a yearly travel stipend to employees to encourage them to travel and disconnect. 

Funded Apprenticeship Benefits

Employers are viewed as sponsors for an apprenticeship program make an investment to execute the program, provide training development, and provide hands-on learning. Due to this, the federal government offers tax credits and resources to the business. 

Dependent Care Assistance Program

A dependent care assistance program (DCAP) is a plan allowing an employer to provide dependent care assistance benefits for their employees on a tax-free basis. We discussed how the DCAP works in a recent blog

Higher Education Benefits

Providing higher education assistance is a great way to invest in your employees. Many employers are beginning to offer scholarship programs and tuition assistance programs. 

Holiday Benefits

So what are the rules for granting employees time off to observe religious holidays?  Are employers required to pay employees for this time off?  The answers to these questions have been provided in a recent blog.

Please note that this is just a general list of benefits that are subject to ERISA and is not meant to be all encompassing. 

Plans that do not fall under the protections of ERISA.

Pension or health plans provided by:

  • Federal Government 
  • State or Local Governments
  • Indian Tribal Entities 
  • Churches

ERISA compliance checklist. 

If you need more help understanding the law, here’s a quick checklist (put together by PrimePay’s Broker Concierge) that plan administrators can use to evaluate a plan’s compliance with important ERISA laws.

Note: If you answer NO to any of the questions, you may be subject to ERISA violations. (Skip any that do not apply).

  1. Do you currently have an ERISA compliant plan document and is it readily available to distribute to plan participants upon request?
  2. Did you provide participants and beneficiaries with a Summary Plan Description (SPD) within 90 days after coverage for new participants?
  3. Have your benefit eligibility requirements been updated in your plan documents to reflect the latest requirements under health care reform (full-time, variable, etc.)?
  4. Have you filed a Form 5500? If not, do you fall under an exemption?
  5. Did you provide participants and beneficiaries with a summary annual report (SAR) within nine months of the end of the plan year or two months after the Form 5500 was due?
  6. Has the plan sponsor maintained sufficient records on information provided on the Form 5500 for at least six years?
  7. If you, as the plan sponsor, handle plan assets (ex. employee contributions), is the plan protected by an ERISA fidelity bond to cover losses due to fraud?
  8. Does the plan clearly define an internal filing and appeals process to handle urgent care, pre-service, and post-service claims?
  9. Are any of the plans self-insured? If so, was nondiscrimination testing conducted for the plan or Section 125?
  10. If you have more than one ERISA plan (medical, flexible spending account, life insurance, etc.), do you have separate plan documents, SPDs, & ERISA plan numbers for each?
  11. If you deduct contributions pre-tax from employees’ pay for benefits, do you have a valid Section 125 document (premium only plan) in place?

ERISA's reporting and disclosure requirements carry a fine of $152 per day, per person, per violation. Other fines and/or penalties may apply.

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  • Satisfying ERISA requirements.
  • Simplifying the amendment process and reducing filing risks.
  • Removing unnecessary filing fees and streamlining documentation (based on your needs).
  • Form 5500 filing.
  • Form 5500 remediation.

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Disclaimer: Please note that this is not all inclusive. Our guidance is designed only to give general information on the issues actually covered. It is not intended to be a comprehensive summary of all laws which may be applicable to your situation, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Consult your own legal advisor regarding specific application of the information to your own plan.

Editor's Note: This post was originally published in June 2015 and has been updated for freshness, accuracy, and comprehensiveness.