Attention benefits managers – ever heard of ERISA or CAA? Do you think these federal laws apply to you? If not – think again. This is about to get interesting. Take a look at this recent article, where an ERISA lawsuit has been filed against an employer based on their company plan’s medication costs that are viewed as exorbitant compared to available retail prices when purchased without insurance.
This is concerning. Read more … click here.
ERISA. CAA. Acronyms for federal laws that are generally viewed to apply to specific requirements for fiduciary responsibilities of businesses.
ERISA stands for the Employee Retirement Security Act, enacted in 1974. As the name suggests, this federal law sets minimum standards for most retirement and health plans to provide protection for individuals in these plans. Seems straightforward. What is not well-known – but covered – is that the employer must “make an effort to find the lowest costs for healthcare services, compare alternative providers and continuously monitor healthcare expenses to ensure they are reasonable.” Remember this point.
CAA stands for the Consolidated Appropriations Act, which as the name suggests, is an overarching federal law enacted in 2020 that includes a variety of allocations supporting domestic and foreign policy, humanitarian relief, defense spending, and many other areas. Specifically, CAA requires that “plan sponsors demonstrate that their purchased health care services are cost effective, high quality …” Maybe a little broader than ERISA, but in summary, CAA requires employers to certify that they have visibility into the costs of their healthcare plan from third-party providers and are good stewards in selecting the best plan that is cost-effective and delivers high-quality benefits. Remember this point too.
Now – the curtain is being pulled back a little – and measured against the tenets of federal laws – ERISA and CAA. This picture doesn’t look great for this employer. Or for those third-party “trusted carriers”.
Do you know the details of your healthcare plan? Can you certify that your business is compliant with these federal laws? Most importantly – are you at risk? If it’s not 100% “no, we’re not at risk”, then it’s a “yes, we are at risk” and even moreso, your answer could be “I’m not sure what we should do about it.”
We can help. Contact us for a brief no-obligation call.
