Consumer Protections under ERISA and California Law Compared

Patricia A. Butler and Karl Polzer

These two reports map the variation in consumer protections under federal and California law for enrollees in private-sector employee health plans. They explore plan solvency, mandated benefits, care standards, appeals, and coverage between jobs.

June 2002

The Employee Retirement Income Security Act (ERISA) prevents states from directly regulating health insurance arrangements established by employers, but allows states to regulate the indemnity insurers and health plans with which employers contract. The interplay of ERISA and California law regulating health insurance means that consumer protections vary depending upon whether an employer decides to retain the risk of paying medical claims (that is, to "self-insure" the employee plan) or to purchase group insurance from a state-licensed insurer or managed care organization. Oversight of insured employee health plans may also vary, depending on the type of coverage purchased by plan sponsors, because in California two state agencies split responsibility for regulating health insurance and managed care products.

Two reports -- a summary (ERISA and Variation in California Health Plan Consumer Protections) and a detailed report (Regulation of ERISA Plans: The Interplay of ERISA and California Law) -- map the variation in consumer protections under federal and state law for Californians enrolled in private-sector employee benefit plans. They explore differences along a number of dimensions including plan solvency requirements, mandated benefits, standards for managing care, required information, processes for appealing denied claims and remedies for taking plans to court, and options available for maintaining coverage between jobs.

The summary emphasizes consumer protections and can be useful for consumer advocates, policymakers, and regulators. The full report provides further details and in-depth analysis. Both reports are available under Document Downloads below.