Life & Health Insurance Exam (National Portion)Federal RegulationsMedium
A self-funded employee health benefit plan is being established by a private sector employer. The employer wants to ensure that the plan adheres to federal standards regarding reporting and disclosure, as well as fiduciary responsibilities. Which federal act primarily provides these guidelines?
- AEmployee Retirement Income Security Act (ERISA)
- BConsolidated Omnibus Budget Reconciliation Act (COBRA)
- CGramm-Leach-Bliley Act (GLBA)
- DHealth Insurance Portability and Accountability Act (HIPAA)
Show answer & explanationAnswer & explanation
Correct answer: A. Employee Retirement Income Security Act (ERISA)
ERISA sets minimum standards for most voluntarily established retirement and health plans in private industry to protect plan participants. It includes provisions for reporting and disclosure, participant rights, and fiduciary responsibilities.
Why the other options are wrong
- B. COBRA focuses on continuation of health coverage, not the establishment and administration standards of the plan itself.
- C. GLBA pertains to the privacy of consumer financial information, not employee benefit plan administration.
- D. HIPAA primarily addresses health insurance portability and privacy, not the overall regulatory framework for employee benefit plans.
ERISA Scope & Standards
The Employee Retirement Income Security Act (ERISA) sets minimum standards for most voluntarily established retirement and health plans in private industry.
- Protects participants in employee benefit plans.
- Establishes fiduciary responsibilities for plan administrators.
- Requires reporting and disclosure of plan information.
Memory trick: ERISA plans are sound, with fiduciaries all around.