The Employee Retirement Income Security Act (ERISA) is a federal law that was passed in 1974 to provide protection and regulation of pension funds and health benefit programs for workers. The Labor Department summarizes the role of the federal government for these plans as: “A group health plan is an employee welfare benefit plan established or maintained by an employer or by an employee organization (such as a union), or both, that provides medical care for participants or their dependents directly or through insurance, reimbursement, or otherwise.” The key is that the plans are operated by the employer, which brings them under the regulatory authority of the federal government. This pre-empts the states, which traditionally have the regulatory power over insurance companies. The federal mandate covers plans that are self-insured. The insurance companies handle the claims, but the corporation provides the funds and takes the management risks. In the state-regulated plans, by contrast, the insurance companies are taking the risks.
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