Nonsubscription Article

December 2, 2009

ERISA - What It Is and Why it's Important

The Employee Retirement Income Security Act of 1974 (ERISA) is federal law that sets minimum standards and provides protection for people enrolled in most voluntarily established pension and health plans in private industry.

Subsequent amendments and court cases have established important changes and clarifications. Of particular importance to Texas employers is that in 1991, federal and state courts recognized the ability of nonsubscribers to use ERISA to formalize nonsubscriber programs and use the Federal courts as a forum for benefit dispute resolution.

ERISA Plan Required by Law

Federal law requires any employer providing benefits to injured workers to implement an ERISA plan. The ERISA plan is a legal agreement between the employer and employees that must address several key areas. The plan must:

• Be a clear and concise description of occupational injury benefits
• Define the obligations and options of the employer and employees in event of injuries
• Describe case management and employer direction regarding medical providers
• Have a Summary Plan Description to provide employees a concise explanation of eligibility requirements and benefits

Arbitration May Be Specified in the Plan

The plan also may include an arbitration agreement. State and federal courts, including the United States Supreme Court, have unequivocally ruled that employers may unilaterally adopt binding arbitration programs.

This provides substantial risk-reduction benefits for employers, while still protecting employee rights. Arbitration may proceed faster than court trials, and tends to result in more realistic compensation decisions rendered by experts.

ERISA Plan Must Be Implemented

Having an ERISA plan is only half of the solution. Employers who fail to implement the ERISA plans they prepare are not fulfilling their legal responsibilities. Combined Group experts will help your clients follow the letter of the law.

Employers must provide each employee copies of the Summary Plan Description and the Arbitration Agreement. This can be accomplished at an ERISA "rollout" meeting. The Arbitration Agreement provisions are designed to be binding on employees through disclosure at the rollout meeting when employees sign the meeting sign-in sheet.

Combined Group plans and conducts ERISA plan rollout meetings with trained, experienced representative, along with the producing agent or a representative of the insured. To assist in the enrollment process we provide an English/Spanish DVD that explains the provisions, procedures and requirements of the Plan.

ERISA Plans Must Be Updated

ERISA plans should be reviewed and updated every year, or sooner, if changes in the law so require. Employers who continue to use an outdated plan risk costly coverage gaps between a current nonsubscription policy and the outdated plan.

A properly designed and executed ERISA plan is the cornerstone of any successful nonsubscription program. The Combined Group will ensure that your clients get it done right. Our full-service approach to nonsubscription, which begins with ERISA plan development and implementation, continues through underwriting, claims adjusting, loss prevention, safety plans and superior coverage forms.

For more information, call Roy Powell at 214-676-2377, or email him at RPowell@combinedgroup.com.