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Washington Benefits
Robert S. Mori, CPA, President 7429 East Heather Way, Everett, WA 98203-5424
Tel. (425) 353-9763 Toll-free (877) 455-7591 Greater Seattle (206) 965-9609 Fax (425) 353-0899
Washington Benefits
Washington benefits, or benefits in Washington State have changed dramatically over the past 60 years. Major legislations were passed in 1942, 1958 and 1974 with a continous flow of legislation, regulation and rulings from then until the recent passages of HIPAA in 1996 and the Patient Safety and Quality Improvement Act of 2005 (PSQIA). The combined effect of these laws and rules has been to make the administration of Washington employee benefits plans including Employer group health - medical insurance plans increasingly complex.
Pension and Welfare Plans before ERISA
Before the enactment of ERISA on September 1974, only three principal statues governed private pension plans: the Internal Revenue Code m the Federal Welfare and Pension Plans Disclosure Act of 1958 (WPPDA) and the Taft-Hartley Act, more formally known as the Labor Management Relations Act of 1947. The latter regulated collectively bargained multiemployer pension plans.
Changes to the Internal Revenue Code enacted in 1942 established minimum requirements for the design and operation of pension plans. The principal purposes were to prevent plans from discriminating among employees or disproportionately benefiting one group of employees over another and to stop plans from taking elaborate and large tax deductions unjustifiably. Until 1974, the Internal Revenue Service was not concerned with the actuarial soundness of plans. There were many unfunded liabilities in pension plans. The Federal Welfare and Pension Plans Disclosure Act of 1958 was enacted to protect plan assets against fraudulent behavior by the plan administrator. The act mandated that upon request, participants concerned with plan malpractice would be provided with information concerning the plan. If misuse or fraud were suspected, it was up to the participant to bring charges against the administrator. A significant amendment to the WPPDA was enacted in 1962. That amendment authorized the Department of Justice to bring appropriate legal action to protect plan participants interests and authorized the Department of Labor to interpret and enforce the act. For the first time, the burden of plan asset protection was placed upon the government, rather than on the individual participant.
Employee Retirement Income Security Act of 1974 (ERISA)
The shift from individual to government protection of participants' rights mandated in 1962 would carry through to ERISA. It reflected a concern for workers, that they need protection from careless or criminal pension plan administrators which was confirmed by President John Kennedy in 1962 with appointment of the Committee on Corporate Pension Funds and Other Retirement and Welfare Programs. That committee issued its report in 1965, concluding that private pension plans should continue as a major element in the nations's total retirement security program. The report advocated many changes in the breadth of private plan regulation.
The report received widespread attention and led to the introduction of a number of legislative proposals. Congress concluded that most plans were operated for the benefit of participants on a sound basis, but some were not. To solve this problem, Congress enacted ERISA. ERISA governs every aspect of private pension and welfare plans including many Washington employer group health - medical insurance plans and requires employers who sponsor plans including Washington benefit plans to operate them in compliance with ERISA standards.
Employee benefits were impacted in a major way in 1974 by a major federal legislation entitled the Employee Retirement Income Security Act of 1974 (ERISA) Here are the major subsection of that legislation. they have major impact on how Washington State benefits are structured including Washington employer group health- medical insurance.
Title 1: Protection of Employee Benefit Rights
This section of ERISA placed the primary jurisdiction
over reporting disclosures, and fiduciary issues in the US
Department of Labor. The department of the Treasury is
given primary juisdiction over participation, vesting and funding.
During the first years of ERISA, this "dual-jurisdiction" led to a
number of problems, which were addressed in 1979 by Reorganization
Plan Number 4 . As a result of reorganizations and administrative
experience under ERISA, many mandates have been changed ,
resulting in a reduction of regulatory burdens.
