ERISA Implications for Employer Pay or Play Coverage Laws

Patricia Butler


This is archived content, for historical reference only.

Most insured Californians receive health coverage through the workplace, but 22% of the state’s workers are uninsured, primarily because one-third of California firms do not offer health insurance.

In 2003 the California legislature enacted SB 2, which would have required large- and medium-sized employers to pay a fee to fund a public health coverage program or to cover their workers with specified health benefits. However this law was repealed by the voters in November 2004.

To inform public discussion of future “pay or play” proposals, this issue brief discusses potential problems for these laws posed by ERISA, a federal employee benefits law that preempts certain types of state laws affecting employer-sponsored health benefits.