Happy 50th Birthday, ERISA!

The Employee Retirement Income Security Act of 1974 (ERISA) marked its 50th anniversary on September 2, 2024. Over the past five decades, ERISA has served as the primary federal law governing employee benefit programs. Major federal legislation affecting group health insurance plans, including the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), the Health Insurance Portability and Accountability Act (HIPAA), the Patient Protection and Affordable Care Act (ACA), and the Consolidated Appropriations Act of 2021 (CAA), were all enacted under or in relation to ERISA.

ERISA applies to nearly all employer-sponsored health plans, whether the employer provides fully insured coverage through a health insurance carrier or self-funds the health benefit arrangement. The only exceptions are plans sponsored by state or local governments or religious organizations. A key feature of ERISA is assigning fiduciary responsibility to those who offer and administer group health insurance coverage. While certain business decisions, such as whether to offer a health insurance plan, determining the benefits and plan designs, and deciding to amend or terminate a plan, are not subject to fiduciary standards, employers must act in the best interest of the plan’s participants when administering the plan. Fiduciaries are also responsible for managing their duties prudently, adhering to plan documents, handling plan assets (if applicable) in trust, monitoring the actions of plan service providers (e.g., carriers, PBMs, COBRA administrators, TPAs), and ensuring that only reasonable plan expenses are paid.

As health plan administration becomes increasingly costly and complex, a thorough understanding of fiduciary duties is more crucial than ever. While the Johnson & Johnson ERISA fiduciary duty lawsuit is among the most notable ERISA class action cases, more than 40 employer-sponsored group health plan lawsuits were settled in 2023 alone, with allegations that employers failed to monitor their service providers adequately and paid excessive fees for plan services.

Although brokers typically do not have fiduciary duties over the group health plans they service, employer clients do bear this responsibility and might not fully grasp its implications. In celebration of ERISA’s anniversary, consider discussing fiduciary responsibilities with your group clients to ensure they meet their obligations and offer assistance if needed. The Department of Labor’s guide, Understanding Your Fiduciary Responsibilities Under a Group Health Plan, is a valuable resource for reviewing these responsibilities.