Frequently Asked Questions
What are the basic types of group life insurance?
The life insurance coverage provided by most group plans is one-year term. The plan comes up for renewal each year, and both the insurance company and the employer have the opportunity to consider whether to continue it. For the insurance company, it is also an opportunity to revise the rates. The employer is the policyholder and each covered individual is issued a certificate showing his or her certificate number.
Some group plans include cash value insurance as an option. For example, some employers offer group universal life, which the employee can purchase by salary deduction.
Some companies offer individual (non-group) insurance policies purchased at the place of employment. A representative of the company that provides the group insurance coverage is often available at the worksite to answer questions about the group coverage as well as review other family coverage. Additional personal insurance to fill gaps in insurance protection can be purchased at the employee’s option.
Other types of insurance include business-related plans such as split dollar insurance where individual policies are purchased. Typically, the employer pays the premiums, with the benefits to be split between the employee and the employer.
Which employee benefit plans are Erisa-covered?
ERISA covers only those plans that constitute an "employee welfare benefit plan". An employee welfare benefit plan is any plan established or maintained by an employer that provides any of the following through the purchase of insurance or otherwise:
- Medical, surgical or hospital care benefits
- Benefits in the event of sickness, accident, disability, death or unemployment
- Vacation benefits, apprenticeship or other training programs, daycare centers, scholarship funds, or prepaid legal services; and
- Any benefit described in Section 302(c) of the Labor Management Relations Act (other than pensions on retirement or death and insurance to provide such pensions.)
Where there is an employer providing one or more of the described benefits, the U.S. Department of Labor has generally held that there is a "plan" regardless of whether the program of benefits is written or informal, funded or unfunded, or offered on a routine or ad hoc basis.
The following plans are excluded from ERISA:
- Government Plans
- Church Plans
- Plans maintained solely to comply with workers compensation, unemployment compensation or disability insurance laws.
- Plans maintained outside the United States.
- Certain "payroll practices" listed below.
- Certain group or group-type insurance programs under which employer involvement is minimal (see below "Are voluntary benefits ERISA-covered?")
The following "payroll practices" are excluded from ERISA:
- Payments of compensation for work performed by an employee, including compensation at a rate in excess of the normal rate of compensation, such as:
- Overtime pay
- Shift premiums
- Holiday premiums
- Weekend premiums
2. Payments of normal compensation to employees out of the employer's general asset during periods of sickness, vacation, holidays, active military duty, serving as a juror, training, sabbatical leave or while the employee is pursuing further education.
The information above should be used for general reference purposes only. The determination of whether a particular program may be excluded from ERISA is very complex, and therefore it is necessary to consult with qualified legal counsel for an analysis of the relevant regulations and case law.