What ERISA Covers
The Employee Retirement Income Security Act of 1974 (ERISA) is the federal law that governs most private-sector employee benefit plans, including health plans, retirement plans, and disability plans. ERISA sets minimum standards for plan administration, fiduciary conduct, reporting and disclosure, and claims procedures.
| Plan Type | ERISA Applies? | Notes |
|---|---|---|
| Private-sector employer health plan | Yes | Most common scenario |
| Government employer health plan | No | Federal, state, and local government plans are exempt |
| Church plan | No | Plans maintained by churches are exempt (unless they elect ERISA coverage) |
| Individual health insurance | No | Individual policies are not ERISA plans |
| Fully insured small group plan | Yes | ERISA applies; state insurance law also applies through savings clause |
ERISA Preemption: The Self-Funded Advantage
ERISA's preemption clause (Section 514) preempts state laws that "relate to" employee benefit plans. For self-funded employers, this means the plan is governed by federal ERISA law — not by the insurance laws of each state where employees are located. This is the primary reason large employers self-fund: ERISA preemption allows them to offer a uniform benefit package to employees in all states without complying with each state's insurance mandates.
IQ Insight
ERISA preemption is not absolute. The savings clause preserves state laws that regulate insurance — but the deemer clause prevents states from treating self-funded plans as insurance companies. The result: self-funded plans are exempt from state insurance mandates; fully insured plans are not. This distinction is fundamental to understanding why self-funding is so attractive to multi-state employers.
ERISA's Core Requirements
- Plan document: Every ERISA plan must be in writing and must describe the plan's benefits, eligibility, and administration
- Summary Plan Description (SPD): A plain-language summary of the plan that must be provided to participants
- Fiduciary duties: Plan fiduciaries must act in the interest of participants and beneficiaries
- Claims procedures: Plans must have a formal process for filing and appealing claims
- Reporting and disclosure: Plans must file Form 5500 annually and provide required notices to participants
- ERISA preemption: State laws that relate to the plan are preempted (with the savings/deemer clause exceptions)