ERISA; that stands for the Employee Retirement Income Security Act of 1974, is a federal law that helps in establishing the minimum standards for pension plans in private industry as well as it provides extensive rules on The Federal Income Tax that effects the transactions that are associated with employee benefit plan. Interpretation and enforcement of ERISA is divided among three bodies, namely: Department of Labour, Department of Treasury and The Pension Benefit Guaranty Corporation. You could learn more about ERISA from a legal blog written by an ERISA Attorney or just visit: erisaattorney.org/erisa-health-insurance
ERISA is like a blessing for the employees employed at private sector. It affects the employees in a positive manner. Under ERISA, an employer does not require to establish any pension plan because it regulates the operation of a pension plan once it has been established
It covers 2 types of pension plan:
- Defined Benefit Plan: Under this the respective retirees are provided with certain level of benefits depending upon their years of service, salary and other factors.
- Defined Contribution Plan: It covers the benefits based on the amount and investment performance of contribution made by the retiree over a certain period of time.
Last but not the least; ERISA also covers the health benefits plans. Some of the health benefits plans under ERISA are;
- The COBRA or the Consolidated Omnibus Budget Reconciliation Act of 1985, which provide some employees and beneficiaries with the right to continue their coverage under the employer-sponsored group health benefits even after the occurrence of the event, which otherwise would have been terminated of such coverage, such as the loss of employment by someone.
- The Health Insurance Portability And Accountability Act of 1996. Also known as HIPPA, this act takes care that a health benefit plan does not refuse to cover an employee’s pre-existing medical condition under certain situations. It also prohibits such plans to create any type of bias on the basis of health status, genetic information or disability.
This would conclude that an employee enforced with ERISA can be relaxed about his/her retirement as well as health related issues.