Paul Horton: Health Insurance Law

Most employers are not required by law to offer health-related benefits to their employees, although the practice of providing health-related benefits is fairly common in many companies and businesses. It is viewed as a way to recruit and retain top talent, while also reducing absenteeism. However, once an employer offers or provides health benefits — including medical, disability, dental, and life insurance — federal anti-discrimination laws and health plan enforcement regulations act to protect an employee’s rights under those health plans. Since even employers with the best intentions may get tripped up by these laws, it’s important to do your research or consult with a lawyer before offering such benefits.

This article provides a general overview for employers who offer (or are considering offering) health insurance benefits to their employees.

Anti-Discrimination in Employment Health Benefits

As mentioned above, most employers are not required to provide their employees with medical, disability, dental, or life insurance. But once such benefits are offered, the law requires that the employer adhere to federal laws prohibiting discrimination in employment. As with other areas of employment such as hiring, promotion, and termination, distinctions in health benefits coverage cannot be made on the basis of an employee or dependent’s gender, race, age, national origin, religion, or disability. Many states and local municipalties also prohibit discrimination on the basis of sexual orientation or gender identity. As examples, an employer providing employees with health insurance may not, among other things:

Provide lesser coverage or cease offering coverage to older workers, or workers who may become pregnant
Treat pregnancy-related disabilities (including miscarriage, abortion, and post-childbirth recovery) different from other health conditions
Refuse to provide coverage based on an employee or dependent’s actual disability, a perceived disability, or his or her genetic information

COBRA Insurance Rights After Leaving a Job

Under federal law, employers are required to offer continuation of employer-sponsored health care plans for employees who are laid off or even fired for cause (unless it is considered “gross misconduct”). Employers do not have to subsidize the cost, however, so the premiums typically rise during this period of coverage. Under the provisions of the Consolidated Omnibus Budget Reconciliation Act (COBRA), employees may remain on the employer’s health care plan for up to 18 months (36 months for dependants). The law generally applies to employers with 20 or more employees.

ERISA and Enforcement of Health Insurance Rights

Once an employer decides to offer health-related benefits, its plan must be run in accordance with certain standards designed to protect the interests of employees and other plan beneficiaries (such as family members) under a federal law known as the Employee Retirement Income Security Act (ERISA). Under ERISA, employers are required to take certain steps in connection with employee health benefit plans, including:

Notifying employees (called “plan participants”) of plan eligibility standards, claim procedures, participant rights, and related changes to the plan; and
Managing and investing plan funds according to the best interests of plan participants.

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