First in a series on ERISA at 50
Thanks to the Employee Retirement Income Security Act of 1974 (ERISA), millions of American workers and their families have enjoyed high-quality,
The reason: ERISA preemption. Upheld for years by federal courts, ERISA preempts state and local laws that conflict with ERISA's single set of national employee benefits standards to govern large, multistate employer plans.
Recently however, a growing wave of state and local laws have attempted to chip away at ERISA's critical protections by imposing reporting, recordkeeping, administrative and direct benefit mandates on employer-sponsored benefit plans established under ERISA.
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These continued assaults on ERISA preemption have already had adverse impacts on labor markets, and disadvantaged employees based on where they live or work. They also have caused employers to
For many decades, federal courts, including the U.S. Supreme Court, upheld ERISA preemption, prohibiting states and localities from forcing employers to create or amend an employee benefit plan. Those actions also kept them from enacting statutes or ordinances that control or conflict with the design or administration of an employer benefit plan established under ERISA.
Over the past few years, state and local bodies have advanced laws that previously would have been seen as clearly violating ERISA preemption — and have cited various recent court cases as justification.
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The ERISA Industry Committee (ERIC) has led the charge to uphold ERISA preemption on behalf of our large, multistate employer members since 1977. ERIC has played an essential role in opposing expansive state policies as they are introduced as legislation, shaping them as they are developed into regulations and challenging them in court when their impact on or conflict with self-insured plan sponsors cannot be prevented.
Together with a host of local, state and national allies representing employer plan interests, ERIC continues to push back on state and local policies that threaten ERISA preemption. The same goes for preserving national uniformity for employee benefits and the
The range of state and local policies creating conflicts with ERISA is wide and continues to grow. They include such measures as "play-or-pay" health care ordinances in Seattle and San Francisco and an overreaching all-payer claims database (APCD) mandate in Indiana.
But perhaps no state and local policymaking epitomizes the threat to ERISA preemption as does the recent attempt to regulate the administration of self-insured employer pharmacy and prescription drug benefit plans by states. Noteworthy efforts have unfolded in Oklahoma, Tennessee, New York, New Jersey — and especially Florida.
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Florida's Prescription Drug Reform Act, enacted last year, regulates pharmaceutical benefit managers (PBMs) and pharmaceutical manufacturers operating in the state. In doing so, however, it egregiously violates ERISA preemption by placing network practice restrictions on PBMs managing self-insured ERISA plans, therefore controlling the design and administration of the employer plans themselves. Because ERISA expressly prohibits state and local laws from overstepping in this way, many of the Florida law's provisions likely violate federal law, including:
- Subjection of self-insured employers to potential mandates and requirements by including them in "insurance provider" and "pharmacy benefits plan" definitions.
- Broad notice and disclosure requirements for self-insured ERISA plans.
- Network adequacy requirements on PBMs and the plans they administer, for which self-insured ERISA plans are generally exempt under federal law.
- Requiring that curated provider networks adopt federal and state minimum standards via an any-willing-pharmacy provision.
- Prohibition of promotional items or incentives other than a reduced cost-sharing amount or enhanced quantity limit for a covered drug.
- Conditions placed on a network's use of mail-order prescription services.
Just as ERIC collaborated with allies to highlight the ERISA preemption issues raised by these provisions for Florida legislators, we will continue working throughout the law's implementation process and urge state regulators to develop rules
Unless defeated in the state legislatures and courtrooms, laws such as Florida's Prescription Drug Reform Act could unravel many of the invaluable protections ERISA has provided.
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ERIC will continue to fight the good fight on behalf of our large, multistate member companies to defeat state and local policies that overstep ERISA preemption and override the ability of ERISA plans to provide uniform, consistent health and retirement benefits.
Employee benefit brokers, corporate HR staff, employer groups and specialists at the organizational level are welcome allies in this ongoing battle. ERIC's recommendation is to be aware of what your municipal and state lawmakers are doing in terms of employee benefits regulation. Also, coordinate with local and state organizations representing the interests of employers and ERISA plans. And lastly, please reach out to stay informed of what is happening both inside and outside of the Washington, D.C. Beltway.
ERISA has been essential to employers' ability to design and maintain high-quality, uniform benefits for the past 50 years. As long as state and local policies threaten that ability, the employee benefits community must work together, and individually, to safeguard ERISA's protections for the next 50 and beyond.
