Document: ERIC Fights to Preserve ERISA Preemption: ERIC

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	ERIC Updates

ERIC Fights to Preserve ERISA Preemption

ERIC continues to fight attempts to weaken or circumvent ERISA preemption. ERIC strongly believes that ERISA preemption and employer's autonomy to voluntarily sponsor benefit plans faces a serious challenge, particularly from states that are seeking their own way. ERIC has successfully fought state waivers of ERISA preemption in the past and it remains a leadership issue.

Preservation of National Uniformity

The core of these efforts is the preservation of the national uniformity framework established by the Employee Retirement Income Security Act of 1974 (ERISA). There continues to be a desire of states to step in and take control of health care reform. Many states are pushing for the erosion of ERISA preemption by soliciting the federal government for "ERISA waivers." Currently over one hundred million Americans have health and/or retirement benefits voluntarily provided by their employer within this stable and coherent national system.

Without the ability to offer the same plan to employees living and working in different jurisdictions, large multi-state employers would face nearly insurmountable challenges in offering health coverage to their employees and other beneficiaries.

As a result, ERIC takes any threat to national uniformity very seriously. Ensuring that the recently passed health care reform legislation did not negatively affect ERISA preemption was our number one priority, and we seem to have been successful in keeping preemption intact in that legislation.

Recently, however, another threat has emerged that has the potential for seriously undermining preemption and national uniformity. The Department of Labor, in its regulatory agenda issued December 2009, stated that it would be proposing a regulation to amend the definition of a welfare plan under ERISA. (The regulation is now at OMB for a 90-day review.) Their description of this action in the agenda reads as follows:

Department of Labor regulation 29 C.F.R. 2510.3-1 clarifies the definition of the terms "employee welfare benefit plan" and "welfare plan" for purposes of title I of the Employee Retirement Income Security Act of 1974 (ERISA) by identifying certain practices which do not constitute employee welfare benefit plans. This rulemaking would amend that regulation to clarify the circumstances under which health care arrangements established or maintained by state or local governments for the benefit of non-governmental employees do not constitute an employee welfare benefit plan for purposes of section 3(1) of ERISA and 29 CFR 2510.3-1.

Statement of Need:

Questions have been raised regarding the extent to which health care reform efforts on the part of state and local governments result in the creation of ERISA-covered employee welfare benefit plans or otherwise implicate ERISA. This regulation is needed to provide certainty to both governmental bodies and employers concerning the application of ERISA to such efforts.

Summary of Legal Basis:

Section 505 of ERISA provides that the Secretary may prescribe such regulations as she finds necessary and appropriate to carry out the provisions of title I of the Act. Regulation 29 CFR 2510.3-1 clarifies definitions of the terms "employee welfare benefit plan" and "welfare plan" for purposes of title I of ERISA.

National Coalition on Benefits

ERIC is a key member in the National Coalition on Benefits, a group of major employers and trade associations that are working to preserve ERISA preemption and the ability of employers to offer uniform health and retirement benefits. NCB is an extension of an earlier coalition formed in May 2007 by ERIC. The Coalition is committed to ERISA preemption as the crown jewel of the employer-based health care system, and efforts to erode preemption will disrupt the ability of employers to offer effective benefits for their employees.

Additional Information and How to Get Involved

A series of issue briefs and other materials on ERISA preemption can be found below. Also refer to our ERISA Preemption Briefing Book for regular updates.

For additional information on the NCB and how to get involved, contact Gretchen Young, gyoung@eric.org.

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