ERISA Overview

ERISA’s Definition of Welfare Benefit Plan

Many employee benefit arrangements that provide non-pension fringe benefits are “employee welfare benefit plans” covered by ERISA. However, there are important exemptions and safe harbors provided for certain categories of employee benefits. The definition of ERISA welfare benefit plan can be distilled into the following three basic elements:

• There must be a plan, fund or program
• that is established or maintained by an employer
• for the purpose of providing the following listed benefits to participants and beneficiaries:
  1. medical, surgical or hospital care or benefits
  2. benefits in the event of sickness, accident, disability, death or unemployment
  3. vacation benefits
  4. apprenticeship or other training benefits
  5. daycare centers
  6. scholarship funds
  7. legal services
  8. holiday and severance benefits
  9. housing assistance benefits

  It is easy to have a plan, fund or program – any ongoing administrative scheme will satisfy this condition (although numerous court cases apply some fine distinctions when determining whether very simple plans, especially simple severance plans, have the necessary ongoing scheme). Showing that an employer maintains a plan is also easy – any contribution by the employer toward payment of benefits or administration of the plan is enough (including a contribution toward insurance coverage).

QUICK List – Key ERISA Requirements
Here are the main compliance obligations for ERISA plans

• Plan document must exist for each plan
• Plan terms must be followed and strict fiduciary standards adhered to
• Fidelity bond must be purchased to cover every person who handles plan funds
• Summary plan description (SPD) must be furnished automatically to plan participants
• Summary of material modification (SMM) must be furnished automatically to plan participants when a plan is amended
• Copies of certain plan documents must be furnished to participants and beneficiaries on written request and be made available for inspection
• Form 5500 must be filed annually for each plan (subject to important exemptions, especially for small plans)
• Summary annual report (summarizing Form 5500 information) must be furnished automatically to plan participants for a plan that files a Form 5500 (except totally unfounded welfare plans)
• Claim procedures must be established and carefully followed when processing benefit claims and when reviewing appeals of denied claims
• Plan assets, including participant contributions, may be used only to pay plan benefits and reasonable administrative expenses
• For a few welfare plans, plan assets may have to be held in trust
• Group health plans must conform to applicable mandates like COBRA and HIPAA

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