Which Health Plans Are Covered by ERISA? Your Compliance Checklist

Understanding which health plans are covered by the Employee Retirement Income Security Act (ERISA) is essential for benefits brokers, HR leaders, and company executives. ERISA sets the federal standards for most private-sector employee benefits, including health plans, and compliance is not optional—it’s a must for protecting both your business and your employees. This article breaks down what you need to know about ERISA, which health plans it covers, and how to stay compliant, all in simple, clear language.

What Is ERISA and Why Does It Matter?

ERISA is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry. Its main goal is to protect employees who participate in these plans by ensuring transparency, accountability, and fair treatment. For employers, ERISA compliance means following specific rules about plan documentation, reporting, and participant communication.

Which Health Plans Are Covered by ERISA?

Most employer-sponsored group health plans in the private sector are covered by ERISA. This includes both fully insured and self-insured plans. If your company offers health benefits to employees, chances are high that ERISA applies to you.

Common ERISA-Covered Health Plans

• Major Medical Plans: Traditional group health insurance, including Preferred Provider Organization (PPO) and Health Maintenance Organization (HMO) plans.
• Dental and Vision Plans: If offered as group benefits, these are generally covered.
• Prescription Drug Plans: Standalone or as part of a medical plan.
• Health Reimbursement Arrangements (HRAs): Including Individual Coverage Health Reimbursement Arrangements (ICHRAs).
• Health Flexible Spending Accounts (FSAs): When offered by the employer.
• Wellness Programs: If they provide medical care or health risk assessments.
• Employee Assistance Programs (EAPs): When they offer medical or mental health services.
• Disability and Life Insurance: Short-term and long-term disability, accidental death and dismemberment (AD&D), and group life insurance, if employer-sponsored.

Which Health Plans Are Not Covered by ERISA?

Not every health plan falls under ERISA. Some plans are specifically exempt, and understanding these exemptions is key to compliance.

Exemptions from ERISA

• Government Plans: Health plans sponsored by federal, state, or local governments (such as public schools and police departments).
• Church Plans: Plans established and maintained by churches or certain religious organizations.
• Voluntary Plans: If the employer does not contribute, does not endorse, and has minimal involvement, the plan may be exempt (safe harbor rules apply).
• Plans for Non-Resident Aliens: If maintained outside the U.S. for non-resident employees.
• Workers’ Compensation, Unemployment, and State-Mandated Disability: These are not subject to ERISA.

What About Excepted Benefits?

Some benefits, like limited-scope dental and vision, certain Health FSAs, and supplemental health policies, may be “excepted benefits.” However, if these plans provide medical care and are employer-sponsored, they often still fall under ERISA’s requirements, even if they are exempt from some Affordable Care Act (ACA) rules.

ERISA Compliance Checklist for Health Plans

Staying compliant with ERISA is not just about having a plan—it’s about following a set of ongoing requirements. Here’s a practical checklist to help you stay on track:

1. Written Plan Documents

Every ERISA-covered health plan must have a formal written plan document. This document outlines the plan’s terms, eligibility, benefits, and funding.

2. Summary Plan Description (SPD)

You must provide a Summary Plan Description to all plan participants. The SPD should be clear, easy to understand, and distributed within 90 days of enrollment or when a new plan is adopted.

3. Annual Reporting (Form 5500)

Most plans with 100 or more participants must file Form 5500 annually with the Department of Labor. This form reports the plan’s financial condition, operations, and compliance.

4. Participant Notices

You are required to provide various notices to participants, including:

• Summary of Material Modifications (SMM) when the plan changes.
• Summary Annual Report (SAR) for plans required to file Form 5500.
• Notices about COBRA, HIPAA, Women’s Health and Cancer Rights, and other federal requirements.

5. Fiduciary Responsibilities

Appoint fiduciaries who are responsible for managing the plan in the best interest of participants. This includes prudent selection of service providers and ongoing monitoring.

6. Claims and Appeals Procedures

Plans must have a clear process for participants to file claims and appeal denials, as required by ERISA Section 503.

7. Record Retention

Keep all plan documents, SPDs, and related records for at least six years.

8. Non-Discrimination Testing

If your plan is self-funded, complete annual IRS non-discrimination testing to ensure benefits are not favoring highly compensated employees.

Special Considerations for ICHRA and Modern Health Plans

Individual Coverage Health Reimbursement Arrangements (ICHRAs) are subject to ERISA if they are employer-sponsored. Venteur’s platform is designed to help companies administer ICHRA benefits in full compliance with ERISA and other federal laws, making it easier for employers to offer flexible, personalized health benefits without the compliance headaches.

Penalties for Non-Compliance

Failing to comply with ERISA can result in significant penalties:

• Up to $110 per day for failing to provide required documents to participants.
• Up to $2,586 per day for late Form 5500 filings, with annual maximums.

How Venteur Simplifies ERISA Compliance

Venteur’s platform is built to help employers and brokers manage all aspects of ERISA compliance, from plan documentation to annual reporting. With expert support, seamless integration, and a user-friendly interface, Venteur takes the stress out of benefits administration so you can focus on your business and your people.

Final Thoughts

ERISA compliance is a critical part of offering employee benefits in the United States. By understanding which health plans are covered, following the compliance checklist, and using a platform like Venteur, you can protect your business, support your employees, and stay ahead of regulatory changes. If you have questions or need help, Venteur’s expert team is always here to guide you.