Employee Retirement Income Security Act (ERISA) Question and Answer

Published April 2011

Are there any exceptions from any health and welfare benefits being considered as an ERISA benefit?

Yes. There is a safe harbor under DOL Reg. § 2510.3-1(j) for certain voluntary employee-pay-all” benefits. To qualify for this exemption from ERISA, an employer allows an insurance company to sell voluntary policies to interested employees who pay the full cost of the coverage. The Employer must then permit employees to pay their premiums through payroll deductions and permits the employer to forward the deductions to the insurer   However, the employer may not make any contribution toward coverage and the insurer may not pay the employer for being allowed into the workplace. The employer may not “endorse” the program – This element is the key element in treating the program as an ERISA benefit.

What makes up an endorsement?

  • Selecting insurers
  • Negotiating terms or design
  • Linking plan coverage to employee status
  • Using employer’s name
  • Recommending plan to employees
  • Doing more than permitted payroll deduction

Health Insurance Portability and Accountability Act (HIPAA) Question and Answer

May employers charge an employee more on a premium if he or she uses their health plan more than other employees?


No.  A health plan is not allowed to establish eligibility rules that discriminate on the basis of a health factor as provided in  Treasury Regulations  Section  54.9802-1(b)(1)(i), Labor Regulations Section  2590.702(b)(1)(i)and  Health and Human Services Regulations Section  146.121(b)(1)(i).

Under Code Section 9802(a)(1), ERISA Section 702(a)(1), and PHSA Section 2702(a)(1), the following factors are considered health factors:

  • health status;
  • medical condition (including both physical and mental illnesses);
  • claims experience;
  • receipt of health care;
  • medical history;
  • genetic information;
  • evidence of insurability (EOI) (including conditions arising out of acts of domestic violence); and
  • disability.

For More Information

Click these links to view more FAQ questions on ERISA and HIPAAissues.

If you have any comments or questions regarding any of the above information, please do not hesitate to call (708) 717-9638 or e-mail larry@larrygrudzien.com

Thank you,

Larry Grudzien