Health Insurance Articles
Understanding ERISA
2009-10-13
With something as unpredictable as health, you want to be covered by a dependable insurance plan that you understand. Through the Employee Retirement Income Security Act (ERISA) regulates coverage that employees receive in company-provided health insurance plans, making sure they are properly covered in the event of an emergency.
Health insurance plans that fall under the jurisdiction of ERISA are required to meet certain minimums meant to protect employees. These rules include clear, understandable information about the plan and its benefits. Through an ongoing process of amendment, ERISA attempts to maintain the quality and security of health insurance to meet changing needs in society, always focusing on the rights of the consumer.
Under ERISA, participants are entitled to full information about their health insurance. As such, a summary plan description (SPD) is automatically provided to the insurance holder, free of charge, upon signing up for a health plan. The SPD contains important information on eligibility, the calculation of benefits and how these benefits are paid.
Participants must also be notified of any changes in the health insurance plan. ERISA rules require insurance providers, their administrators and trustees to execute the plans in a responsible fashion. Plans must place the interests of the participants above all other questions. They must also be transparent in the explanation of the benefits and how the expenses are paid. Users must be provided with a clear and understandable grievance process. This includes the right to appeal any decisions made by administrators and the right to sue for benefits that participants feel they are due.
The different protections afforded to participants are constantly being extended through amendments to ERISA. For example, the Consolidated Omnibus Budget Reconciliation Act (COBRA) allows participants to continue their insurance coverage beyond the loss of a job, forced or voluntary temporary lay-off or reduction of working hours. Employees and their families who are in the process of changing jobs or have experienced a divorce, death or other significant event in their lives are offered the possibility of extending their coverage in cases where this coverage would otherwise have ended. Eligible users who apply for COBRA might be required to make payments of up to 102 percent of the premium for a limited period of time after the event.
The protection offered through ERISA is invaluable to employees and their families. By regulating and controlling the health insurance industry, this act protects the rights of participants who might otherwise find themselves uncovered in moments of need. These moments may include unexpected death, hospitalization, unemployment, lay-off or other circumstances that affect insurance coverage. ERISA attempts to ensure that insurance coverage is fair and well administrated, as well as extendible under personal, selected circumstances.
