In a nation where welfare and pension benefits largely come from employers, the rules and laws governing how employers distribute those benefits hold outsized importance. According to a recent survey from Principal Financial Group, less than half of Americans are confident they will have enough saved to ensure a secure retirement. And a recent study from the Pew Research Center suggests that most Americans are unhappy with the employer-based healthcare system they currently have, with a clear majority (63 percent) favoring a single, national government program to provide healthcare coverage. With ever-evolving rules on pensions and various legal challenges to the most significant healthcare legislation, the Affordable Care Act (ACA), keeping up with where the law stands at any given time could be troublesome. A recent text on the subject could make it a lot simpler.
In Understanding Employee Benefits Law (2nd edition), author Kathryn L. Moore provides a comprehensive overview of what is a broad and complex area of law. She addresses employer pension and healthcare plans, detailing the unique features of the U.S. employer-based benefits system. The book provides indepth discussion of the impact of the ACA on employer-provided healthcare plans, as well as the effect of the Employee Retirement Income Security Act (ERISA) on employer-provided pension plans. What Moore offers is an end product that would satisfy students, practitioners, and the intellectually curious alike.
The book begins with an overview of pension plans, distinguishing between defined benefit (DB) and defined contribution (DC) plans. DB plans are what many would consider traditional pension plans, with beneficiaries receiving a fixed amount during retirement. DC plans, which are more prevalent today, are individual retirement accounts into which money is contributed, with benefits resulting from accumulated savings. The author offers detailed examples of how specific plan terms and varying benefit formulas would affect a participant’s total benefit for different types of DB and DC plans.
Next is an introduction to employment-based healthcare plans. The author puts forth a brief history of the U.S. employment-based healthcare system, reporting that this system is unique among advanced nations and attributing its rise to wage and price controls dating back to World War II, when employee benefits became an increasingly important recruitment tool. The book reveals several problems with the system—including its inability to insure people, its high cost, and its poorly functioning individual and small-group markets—and then moves on to discuss the ACA, the 2010 legislation designed to address these problems.
Moore’s discussion of the ACA is centered around the act’s three key components: market reforms, individual and employer mandates, and health insurance exchanges. Among the market reforms discussed are prohibiting health insurance companies from denying coverage on the basis of preexisting conditions, allowing young adults to retain their parents’ coverage until age 26, and prohibiting lifetime and annual caps on benefits. The author devotes considerable time to discussing the evolution of the individual mandate, which originally carried a monetary penalty for individuals who failed to purchase health insurance coverage. After the penalty was eliminated by Congress in 2017, the mandate survived legal challenges to its constitutionality and remains in effect today. With respect to the health insurance marketplaces established by the ACA, the book describes the individual and small business marketplaces, including covered benefits, cost-sharing limits, and actuarial-value requirements. The author is careful to point out what the legislation does not do—create a single coherent system; eliminate the employer-based system; or change the large-group, small-group, and individual-market segmentation of the current system.
The book next turns to the ERISA regulatory requirements that govern the day-to-day operation of employee benefit plans, including items such as the written plan documents describing the operation and provisions of those plans, reporting and disclosure requirements, and procedures for amending plans. In addition, Moore offers a detailed review of the four ERISA section 510 prohibitions (exercise clause, interference clause, whistleblower provision, and multiemployer plan provision) protecting employees from adverse employment action for exercising their rights in relation to the plan, and she also provides several practical examples of violations of those protections.
Later chapters discuss the intricacies of regulating pension plans, ERISA fiduciary standards, civil enforcement, ERISA preemption, nondiscrimination rules for qualified plans, the tax rules governing pension plans, and plan termination. In the hands of a less capable writer, this weighty material might have been presented in a way that is muddled and tedious to read. But here, the substantive information is well arranged and easy to comprehend.
A major strength of the book is its presentation style. Moore offers practical examples showing how the technical concepts she discusses might operate in the real world. The examples found in the chapter on tax rules, for instance, are particularly helpful in showing the tax implications that different Internal Revenue Service regulations would have on DB and DC plan participants of various incomes. The author also provides flow charts that illustrate how some of the more complex processes would work in practical terms. For example, the chapter on nondiscrimination rules for qualified plans, which contains some of the thorniest material in the text, effectively uses flow charts to break the information down and make it easy to follow.
Understanding Employee Benefits Law is a legal text that is broadly accessible and not restricted to the legal community. It uses clear examples and strong visual aids to make complicated material digestible. I would recommend this book as a reference for legal practitioners or an introduction for people looking to expand their knowledge of the legal aspects of employee benefit programs.
United States Department of Labor
