ERISA is one of the many buzzwords that you hear about in the health insurance industry. ERISA applies to private (non-government) employers that offer employer-sponsored health insurance plans. ERISA does not apply to private plans or individual insurance policies.

ERISA – the Employee Retirement Income Security Act of 1974, sets the standard on how participants under pension and health plans must be protected. ERISA does not mandate that an employer provide health insurance to its employees; but, if offered, it regulates how the health plan must behave. 

 ERISA plans include some important protections:

  • The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 allows employees and beneficiaries the right to continue coverage under the Employer’s plan for a limited time after they lose employment.
  • The Health Insurance Portability and Accountability Act (HIPAA) of 1996, limits a health plan from denying claims for a pre-existing medical condition as well as any other health based discrimination.
  • Newborns’ and Mothers' Health Protection Act states that a plan that offers maternity coverage has to pay for at least a 48-hour hospital stay following childbirth (96-hour stay in the case of a caesarean section)
  • Mental Health Parity Act requires that annual or lifetime limits for mental health benefits can be no lower than any other medical or surgical benefit.
  • Women's Health and Cancer Rights Act protects patients who elect for breast reconstruction surgery in connection with a mastectomy.

In addition, ERISA... 

  • Regulates how a managed care plan must act.
  • Requires reporting and accountability to the Federal Government.
  • States that plan members must be given a Summary Plan Description that outlines the benefits and provisions of the plan.
  • Requires written processes on how a claim should be filed and how to appeal if denied.


ERISA has a huge importance to employees but why is ERISA important to providers and billers?

Many years ago when I first started out in the insurance industry, it was not uncommon for a me to spend a great amount of my time appealing for coverage for services that were denied by the health carrier for some reason or another. The first thing I would do is ask the patient for a copy of their Summary Plan Description (SPD). The SPD helped me to understand if I even had a basis for appeal.

ERISA requires that all plan members be provided with a Summary Plan Description. A Summary Plan Description is often referred to as a plan booklet and is provided to all plan members upon enrollment. It provides pages and pages of information on all aspects of the plan including:

  • What is covered
  • Available benefits
  • Plan Limits
  • How the plan operates.
  • When coverage starts.
  • When it ends.
  • Who is eligible for coverage.
  • Your rights when your terminate.
  • What is not covered.

Today, occasionally, I still refer to a patient’s SPD to help me appeal a complex denial.

Real Word Example

Recently, I had a carrier deny a service based on the age of the patient. After referring to ALL pages of their SPD, I could not find anywhere that stated that the service in question was age specific. The appeal was presented to the carrier along with a copy of the appropriate section in the SPD. The denial was overturned and the approval was granted.

Of course, this goes the other way as well. Had this plan clearly stated the age requirement, I would have known that it was a waste of time to appeal to the carrier and the patient would have been advised of their options before proceeding with the order.

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