ERISA and the Regulation
of Group Health Plans
Craig Copeland and William L. Pierron
About 73 percent of nonelderly Americans with private health insurance are covered by plans under the aegis of the Employee Retirement Income Security Act of 1974 (ERISA). Still, much confusion and misconception surround the act. Because of ERISA's tremendous impact on Americans' health insurance coverage, policymakers and other concerned individuals need to understand how ERISA regulates group health plans. 1
The regulation of private-sector employee benefit plans became primarily the responsibility of the federal government with the passage of ERISA. Specifically, ERISA sets forth standards on reporting and information disclosure, claims and appeals procedures, remedies for wrongfully denied benefits, and fiduciary standards: the “backbone” of the act.
Prior to its enactment, employee benefit plans were regulated mainly by the states while receiving preferential tax treatment at the federal level. However, state oversight of employee benefits varied considerably, and because of the lack of consistent legal protections that state regulations afforded pension plans, retirees in some well-publicized cases received fewer benefits than anticipated. 2 Such incidents raised congressional concerns about the solvency and security of employment-based pension plans, which was