Employee Income

ERISA requires that fiduciaries of the plan be accountable by requiring them to provide detailed reports on the progress of the plan. A fiduciary in this case can represent anyone who controls the management of the plan and its assets or one who gives investment advice to the managers of the plan. There is a rule that the fiduciaries must not invest more than 10% of the plan’s assets in securities due to the risk that may be involved. Accountability requirement ensures that there is no misuse in the plan’s funds and assets or mismanagement.

Accountability of the fiduciaries may require them to hold the responsibility of repaying any losses they may cause to the plan (Schneider and Pinheiro, 18-26). Beneficiary rights ERISA gives members of the plan guidelines on when to sue the plan in case of denial in benefits. ERISA requires the management to provide a process for grievances and appeals to the participants in case they may need them to claim their benefits (DOL, 1). It is however notable that ERISA is more concerned with protecting the plan but rarely gives direct help to the consumers.

Further there are those complaints that ERISA does not cover. According to Wolfe (1), damages that come as a result of injury and death are not covered by ERISA. She further adds that one has a right to demand for coverage on tests and procedures but any damages resulting from delay in getting care cannot be claimed. Plan Termination The Pension Benefit Guaranty Corporation (PBGC) gives the procedures that employers should follow in case they want to terminate a plan.

Termination can be allowed if the management reports either that the plan’s liabilities exceed the assets or that assets are equivalent to the liabilities. This is known as a standard termination and it requires that where liabilities exceed the assets, the employer must contribute any amount required to fund the plan fully (Schneider and Pinheiro, 31-32). The company then has a choice to pay out the benefits to members either as a lump sum or as annuity until they are all paid up.

Any extra assets may be taken by the employer although in certain circumstances the assets may be used to increase the benefits to be received by the employees. The second type of termination is known as the distress termination and employers must prove to PBGC either of the following: that the business is facing liquidation; that continuing with the plan will lead to the downfall of the business or a decline in the workforce in the company has led to unreasonable costs in maintaining the plan (Schneider and Pinheiro, 33-34). Finally, a plan may be terminated by PBGC.

This can happen when: PBGC finds that the employer has not been able to meet the required minimum contributions to the plan; the employer may not afford to pay the benefits when they fall due or if PBGC predicts that failure to terminate the plan may result in unreasonably high costs in the long-run. ERISA Amendments Various amendments have been made on ERISA during its lifetime. ERISA has been amended to include the Health Insurance Portability and Accountability Act (HIPAA) and Consolidated Omnibus Budget Reconciliation (COBRA) (Wolfe, 2009: 1).

COBRA provides for the possibility of employees to continue with their coverage for a limited period in the employer’s health plan in case of an unexpected occurrence such as loss of employment. HIPAA on the other hand covers employee rights such protecting the member from refusal by a health plan to cover a pre-existing condition. It also protects members from discrimination resulting from disability or health status. More recently, the Mental Health Parity Act; The Newborns’ and Mothers’ Health Protection Act; and The Women’s Health and Cancer Rights Act have been added into the jurisdiction of ERISA.

The Mental Health Parity Act of 2008 was passed following a public outcry for mental illness to be given the same attention as any other physical illness (Pear, 12-13). This act will ensure that employees can get non-discriminatory coverage for mental health. Out of the 113 million beneficiaries to benefit from the fund are 82 million in private funded plans that are regulated by ERISA. The Newborns’ and Mothers’ Health protection act seeks to protect the mother’s and the child’s health during the duration in which they stay in the hospital after childbirth.

Employee plans and insurance companies cannot restrict benefits to a mother to less than 48 hours after childbirth or 96 hours in case of delivery through cesarean section (EBSA, 2). The Women’s Health and Cancer Rights Act (WHCRA) caters for women who choose to have breast reconstruction after mastectomy. This means company plans that cover for mastectomy must also cover for reconstructive surgery. The WHCRA is covered by ERISA and PHS Act (Public Health Service Act). Conclusion

ERISA has been active in maintaining the standards by which employers operate their plans. This has ensured that the employees benefiting from the funds can be assured of their benefits and that there is a set of procedures that they can follow to claim their benefits in case their employers fail to honor their promises. This is opposed to situations in the past where employers in the private sector could misuse employees’ plans funds leaving the employees with nothing to retrieve when their benefits were due.

ERISA’s involvement in setting standards for private plans has been constantly amended to include more covers so that employees enjoy a wider range of benefits. (Word Count: 1402)

Works Cited

Employee Benefits Security Administration (EBSA). , FAQs About Newborns’ and Mothers’ Health Protection. Retrieved on April 21, 2009 from http://www. dol. gov/ebsa/faqs/faq_consumer_newborns. html Lieff Cabraser Heinmann and Bernstain, LLP. , ERISA FAQ. Retrieved on April 21, 2009 from http://www. lieffcabraser. com/practice-employment-erisa. htm?

gclid=CKfYzs- Ut5kCFRKLxwodgDw-6w Pear, Robert, House Approves Bill on Mental Health Parity. The New York Times, March 6, 2008. Schneider, Paul, J. & Pinheiro, Brian, M. , ERISA: A Comprehensive Guide. United States: Aspen Publishers Online, 2007. U. S Department of Labor (DOL), Employee Income Security Act – ERISA. Retrieved on April 21, 2009 from http://www. dol. gov/dol/topic/health-plans/erisa. htm Wolfe, Lahle, What is ERISA and What Does ERISA Law Cover? Retrieved on April 21, 2009 from http://womeninbusiness. about. com/od/erisalaw/a/erisa-basics. htm