The Employee Retirement Income Security Act, or ERISA, is a federal law that sets minimum standards for retirement and health plans in private industry to provide protection to individuals. As a business owner, it is important to ensure that your company is ERISA compliant, and understands the steps that need to be taken to maintain this compliance. Here, the specialized insurance experts at Unity Insurance discuss the process of becoming ERISA compliant, as well as proactive steps to alleviate stress and confusion in years to come.
How Does ERISA Protect Employees?
The primary role of ERISA is to protect the retirement investments of employees and ensure proper health benefits are being offered. In addition to retirement planning, benefits under ERISA also include medical, dental and vision plans, health reimbursement, disability insurance, housing assistance, welfare benefits, and unemployment benefits. Since around 54% of workers earn retirement benefits on the job, and 59% earn health benefits, making sure you are compliant as a business is vital in protecting your company and financial standing. Not only does ERISA compliance ensure your safety as a company, prioritizing compliance and growth also shows care for your employees. Prior to the enactment of ERISA, certain employers would frame health and retirement benefits as an asset to their company, not a requirement for it.
What Are the Rules Regarding ERISA?
When it comes to properly caring for your employees, ERISA compliance can be one of the most difficult areas to maneuver. There are a variety of rules and regulations that must be followed throughout each year, and business owners and managers must continuously monitor any changes that may occur. Some standards for ERISA compliance include providing materials and facts to employees about their health and retirement plans, document filing and record-keeping of any information related to ERISA, depositing contributions to employee plans in a timely manner and establishing processes for appeals and grievances. ERISA also requires that a fiduciary be named to oversee plans and funding needs.
Moreover, it is also important to note the difference between qualified and non-qualified plans when it comes to ERISA. Qualified plans come from a 401(k), and employers prefer this plan because they are able to get tax breaks from the contributions they make to their employees. Qualified plans must be heavily detailed in employee documents that discuss benefits and coverage. On the contrary, non-qualified plans are primarily used for high-income employees who are looking to save more for retirement in a shorter time period. These plans do not have as many rules and regulations and do not have a maximum contribution amount.
What Can Happen If Your Business Is Not ERISA Compliant?
Because of the complexity of ERISA, it can be easy to fall into violations that can ultimately cause severe financial damage. Common violations of ERISA include failing to operate the designated employee benefit plan, using plan assets to benefit only certain individuals in the company or taking action against employees such as being fired, fined or discriminated against when trying to enact these plans. Furthermore, falsifying records or backdating information regarding an employee’s plan can cost an exorbitant amount of money and time, and possibly result in criminal charges.
How Unity Insurance Can Ensure Your Business Is ERISA Compliant
Insurance and benefits can be complex, and as a business owner, it is easy to overlook items that may cause serious consequences. That is why the qualified employee benefits insurance agents at Unity Insurance work diligently to ensure that your business is properly taken care of, and that your employees are given adequate benefits on the job. To learn more about how the qualified insurance professionals at Unity Insurance can help you navigate these complex regulations, contact our office today.