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Is an Employee Assistance Plan Subject to the ERISA?

The Employee Retirement Income Security Act (ERISA) of 1974, as amended, regulates benefit plans for employees of the federal government. Not all employee benefit plans are ERISA plans, so it is important to be aware of the threshold at which a plan is considered subject to ERISA's extensive and complex rules and regulations. Employee assistance plans are subject to ERISA only in certain instances.

  1. What is ERISA?

    • ERISA, which regulates both pension plans and benefit plans for federal employees, was passed by Congress in 1974 as a means to protect federal employees by establishing minimum standards for these plans and developing a scheme of required participant disclosures. ERISA is jointly enforced by the Internal Revenue Service and the Department of Labor.

    What is an Employee Assistance Plan?

    • An employee assistance plan is generally considered to be a fringe benefit for employees. In general, these are not considered to be health plans as there is a third-party vendor that handles a variety of issues. Employers are free to structure these plans as they deem fit for their employees. Employers typically pay a monthly per capita charge to provide the benefits. These programs fall under the fringe benefit rules usually because they are considered a "de minimis" fringe; this means that many employees will not use the benefit and accordingly there is no value associated with the benefit for them. A de minimis fringe benefit is one that costs an employer only a nominal amount to provide to its employees.

    Is an Employee Assistance Plan Subject to ERISA?

    • Whether an employee assistance plan is subject to ERISA depends on the particular characteristics of the plan. In order for an employee assistance plan to be subject to ERISA, it must fit within one of the two types of ERISA plans: either a welfare benefit plan or a pension benefit plan. Since employee assistance plans do not provide retirement benefits, it must therefore meet the definition of a welfare benefit plan under ERISA. Those are defined under Section 3(1) of ERISA as plans, funds or programs that are established or maintained by an employer or employee organization and that provide the following types of benefits: "medical, surgical, or hospital care or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs or day care centers, scholarship funds, or prepaid legal services."

    ERISA-Covered Employee Assistance Plans

    • For an employee assistance plan to be covered by ERISA, it would need to fall squarely within the statutory definition of an ERISA welfare benefit plan. For example, if the assistance plan provided any type of medical care or psychological counseling to the participants, that would cause it to be covered by ERISA. If it is simply assistance that provides referrals to medical care, it would not constitute an ERISA welfare benefit plan.

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