ERISA: A Case Study

Another type of managed care program that was introduced is the Preferred Provider Organization (PPO). A PPO is comprised of a group of physicians, hospitals and other medical service providers who contract with employers, insurance companies or other plan sponsors. The PPO offers discounted pricing to these contracted organizations due to the high volume of business received. PPO’s typically have up-front cost sharing in the form of deductibles and/or co-insurance, which vary depending upon the actual plan chosen.

Planning for my retirement will improve my quality of life. I will be able to travel and maintain my standard of living. I will be able to enjoy my retirement years without having to work or stress about finances since I did proper planning, saving, and investing.

For instance the coverage of the Federal State unemployment insurance system has been extended to now incorporate 80% of employed workers. Benefits for unemployed workers have reached an all-time high of 200 million dollars a month (Altmeyer, 2000). The public assistance outline of the Social Security act has been upgrade to incorporate Federal grants to disabled people in need who are ineligible for social insurance benefits or whose insurance benefits are not acceptable. The railroad Retirement Act and the Old Age Survivors and Disability Insurance system are organized to make available protection for workers moving into or out of the railroad

The third way is for employers to utilize the reporting/disclosure guide for employee benefit plans. This is a reference tool that employers can utilize for reporting and disclosure provisions under ERISA. The fourth way is for employers to utilize the understanding your fiduciary responsibilities under a group health plan which provides a summary of the rudimentary fiduciary responsibilities pertaining to health plans that fall under the ERISA mandates.

An organization can offer several different types of retirement plans to their employees. There are two types of plans that are most often used such as the Defined Contribution Plan and the Hybrid Plans. The Define Contribution plans are beneficial not only to employees retirement needs but also beneficial to the company at the same time. Section 401(k) plans, Employee Stock Ownership Plans (ESOPs), Profit Sharing Plans, and Stock Bonus Plans. On the other broad of the spectrum we have the Hybrid Plan or the Cash Balance Plans, which may also be

a. i. An employer with a defined-contribution plan pays into the plan either an annual lump-sum per employee or calculates payments based on the employees‟ current wages and or time of service with the firm. Under such a plan, the employer does not guarantee the future amounts employees will receive when they retire. The employees covered by a defined-contribution plan assume the risk for the pension plan‟s financial performance. Under a defined-benefit plan, the employer specifies the size and timing of the payments that the employees will receive when they retire. Typically, these retirement benefits are commensurate with the wages earned by the employee in his or her last few years of employment

What is ERISA? ERISA stands for Employee Retirement Income Security Act. ERISA regulates the establishment and implementation of discretionary benefits practices. Since its enactment in 1974, ERISA has been amended to meet the changing retirement and health care needs

Prior to the ERISA the WPPDA required employers to make plan descriptions and annual financial reports available to the government and plan participants. Although this was meant to give employees a chance to keep an eye out on any abuse or mismanagement of their funds. The WPPDA was limited in scope and was one of the reasons ERISA was formed. ERISA provisions applied starting after January 1st, 1975. The act increased the information that was available to employees and beneficiaries. ERISA implemented a type of healthcare plan enforcement that requires employers to manage funds exclusively for plan participants and their best interests.

The PPO gives discounts, with its doctors and hospitals that participation, and then pays a fee for services given. Patients have a list that they can pick from for a primary physician. The patient pays a set fee per office visit and the insurance provider pays the rest. It’s basically a co-payment which depends on what type of plan they have. However, like an HMO, the PPO has to choose a physician in that network, if they don’t they may be charged a penalty.

The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans per the U. S. Department of Labor website. ERISA makes it mandatory that if a person participates in a plan, the plan provider must make known to the participant important details. This is the law that ensures that the plan provider is abiding by the fiduciary laws. Plan providers must have a process in place for complaints or if participants would like to appeal decisions made regarding their plan. Participants have the right to sue if there is a breach or if they did not get their full benefits.

The United States being referred for specialties depends on the insurance plan (Mossialos, Wenzel, Osborn, Sarnak, 2016, pp. 171-177). Health Maintenance Organization (HMO) plans give access to certain healthcare organizations and physician within their network that have agreed to lower rates for their services. The individual must agree to these services to have services covered. All services will be coordinated by the primary care physician PCP. Medicaid coverage is also based on these principles. Preferred Provider Organization (PPO) plan have higher premiums but give more flexibility. PPO allows the individual to see any physician they choose but cost is less if the individual stays within the network. PPO does not require that the individual have a PCP. No referrals for specialist are needed.

For example, “…other public and private sector retirement plans typically do not begin providing an annuity until age 55, 60, or 65…” The next problem with the current retirement plan is that it is an ‘all or nothing’ system. Either a military member serves 20 years and qualifies for benefits or they do not. This is vastly different from many civilian programs currently offered and something that the Department of Defense (DOD) has attempted to remedy with the newly implemented program. Many civilian-based retirement programs offer vesting programs that enable employees to secure retirement benefits after a certain number of years, usually anywhere from five to 15 years. Another issue with the current military retirement plan is its comparability to the private-sector. As stated by FAS, “…private-sector employers who have reduced or eliminated their reliance on defined benefit programs and have focused almost exclusively on 401(K)-type programs…” Additionally, many private-sector companies offer contribution matching up to a certain percentage, assisting employees in saving for retirement. This is not offered in the current military retirement plan. Having discussed the current retirement program the next topic will be the newly implemented retirement program.

The issue that I found most compelling while researching ERISA procedure was the administrative appeal process, and the standard of review to which the U.S. District Court must adhere. The U.S. District Court was required to review a case on appeal, after the exhaustion of administrative remedies, only for an abuse of discretion, so long as discretion had been granted to a plan administrator within the plan. In our suit, the health insurance policy did contain a clause that gave the administrator discretion to interpret and review, therefore our burden of proof was to convince the U.S. District Court judge that the administrator had abused his discretion and denied coverage beyond what the administer believed were the policy

Employers assume responsibility for providing retirement funds in a defined benefits plan. In the plan, a specified amount is set aside for future payments to employees, for life, during retirement. The amount is determine in advance is based on factors such as age, salary, and length of employment. In 2009, the maximum amount to be allotted under the plan was $195,000.

Unlike the old days where a retiree could rest assured that they could live out the rest of their life on their pension and social security checks, the retirees of today receive their pensions paid out in a lump sum that takes the place of the pension check, but encompasses the total amount a retiree has to live on until they pass away. This creates uncertainty in the amount a retiree can spend per month, and if the total amount is sufficient to last them until they pass away. Immediate annuities help to create certainty in the financial situation of retirees. While retirees can be certain that they will receive a social security check each month, the amount of income they