Providing health benefits to your employees is a highly regulated undertaking, and it’s a good idea to get the lay of the legal landscape. The following is an overview of a few of the major laws affecting health insurance plans offered by employers.
Federal benefits laws include:
ERISA. The main purpose of the Employee Retirement Income Security Act (ERISA) is to protect employees from losing their pensions due to harsh vesting rules or poor management, but the law also covers health benefits and has extensive reporting and disclosure requirements for all employee benefit plans.
ACA. The enactment of the Affordable Care Act (ACA) in 2010 began an extended period during which far-reaching changes to the American healthcare system take effect. Important provisions bar preexisting condition restrictions, require coverage of dependents to age 26, bar cost sharing for preventive care, encourage wellness programs, require individuals to obtain qualifying health coverage or pay a yearly financial penalty, and require employers with 50 or more employees to offer health insurance coverage or be assessed fees.
COBRA. The Consolidated Omnibus Budget Reconciliation Act (COBRA) was designed to protect employees and their families from losing health benefits if the employees lost their jobs.
HIPAA. The Health Insurance Portability and Accountability Act (HIPAA) was passed in part to address another area of employee concern about their health benefits -- whether they could obtain coverage for health conditions they or their families had before they obtained benefits under a new health plan.
FMLA. The Family and Medical Leave Act (FMLA) gives eligible employees the right to take up to 12 workweeks of unpaid leave during any 12-month period for certain reasons.
Cafeteria Plans (Section 125 Plans). Cafeteria Plans are tax-advantaged accounts called cafeteria plans because employees can pick and choose from a number of different benefits they can fund with pretax dollars. They’re also called flexible spending accounts (or FSAs), and health FSAs if they offer a choice of health benefits.
Other Laws and Regulations
Other federal laws and regulations dealing with more specific aspects of employer health care plans include the Mental Health Parity and Addiction Equity Act (MHPAEA), the Medicare Modernization Act (MMA), and the Uniformed Services Employment and Reemployment Rights (USERRA).
Several federal laws prohibiting employment discrimination also prohibit discrimination in employee benefits, one of the most important terms and conditions of employment. Those include the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), Title VII of the Civil Rights Act of 1964, and the Equal Pay Act.
Same-Sex Marriages, Civil Unions, and Domestic Partner Benefits
This area of the law is rapidly evolving in our nation’s courts and legislatures. Some states (and even some cities) have legalized same-sex marriages and/or civil unions, while others have amended their constitutions to forbid them. Some companies, moreover, have chosen to offer benefits to their employees’ same-sex partners, and others cover both same-sex and opposite-sex but unmarried unions.
Additionally, following the U.S. Supreme Court's ruling that Section 3 of the Defense of Marriage Act (DOMA) is unconstitutional, generally, federal laws that apply to spouses and married couples now apply equally to same-sex and opposite-sex couples who are legally married under state law.
State Laws on Benefits
States have continued to weigh in on employment and benefits issues. There’s been a steady trend for states to require that employers or insurance companies cover certain medical conditions, with coverage mandates increasing over the years.
States also have a history of regulating workers’ compensation insurance, a parallel health insurance system for work-related injuries and illnesses. Check with competent benefits counsel to learn which state regulations you may need to follow as you implement a benefits program.