Why US Companies Should Know About ERISA

The Supreme Court’s decision to overturn Roe v. Wade has urged companies to adopt certain policies, such as reimbursing travel expenses for staffers seeking abortion care. Amazon, Lyft, Apple and Microsoft are among the companies that announced plans to cover travel costs for employees. Yet these companies may have to navigate a patchwork of statewide laws, potentially setting off a wave of legal disputes. The potential for these disputes has gotten stakeholders talking about The Employee Retirement Income Security Act of 1974 (ERISA). Here's a breakdown to help explain the legal jargon. What is ERISA? A myriad of lawsuits that could potentially be brought by anti-abortion campaigners claiming that abortion-related payments from companies violate state bans on abortion, healthcare law experts told Reuters. How Agency Employees Want Their Leaders to Support Abortion Care Right Now However, companies, through self-insured plans—which are benefit plans funded directly by employers—have some leverage over these potential lawsuits, legal experts told Adweek. Companies sued over abortion travel reimbursement might call upon ERISA, an act that oversees self-insured plans. ERISA prevents states from adopting requirements that “relate to” employer-funded health plans. Simply put, for years the courts have interpreted this act as preventing state laws from dictating what company health plans can and cannot cover. “ERISA preemption will be a very important thing for [companies] to consider," said Alan Hahn, co-chair of the benefits and compensation practice group at law firm Davis+Gilbert. Any company sued over an abortion travel reimbursement requirement will likely cite ERISA as a defense, according to Katy Johnson, senior counsel for health policy at the American Benefits Council trade group, per Reuters. Self-insured v. fully-insured and limitations Self-insured plans generally preempt state laws, which means companies with self-insured plans stand a chance in court if they cite ERISA, whereas companies with fully-insured plans may foresee some struggles. Fully-insured health plans are purchased by employers through a commercial insurer, rather than funded by the company, and cover only one-third of the company's workers with insurance. These are regulated by state law and not ERISA. This may impact small and medium-sized businesses that have fully-insured plans through commercial insurers, and could not use ERISA as an argument for abortion coverage. At the same time, ERISA cannot prevent states from enforcing criminal laws. Several states have initiated the aid and abetting of abortion a crime. This makes employers who adopt reimbursement policies vulnerable to criminal charges from state and local prosecutors. “Different plans have different legal issues," said Hahn. “But this is not a hypothetical risk. It's one that every company is considering."

Programmatic

Why US Companies Should Know About ERISA in Light of Roe v. Wade

Liable to potential lawsuits, companies can call on The Employee Retirement Income Security Act as a defense in court

Trishla Ostwal

About

Subscriptions

Events

Publications

WORK SMARTER - LEARN, GROW AND BE INSPIRED.

Subscribe today!

Trishla Ostwal