New York’s Attempt to Preempt ERISA

Jonathan A. Jablon, Esq.

Though New York’s legislature is trying to legislate away the rights of self-funded employee benefit plans, to the extent that ERISA explicitly preempts application of a conflicting state law such as this one, that state law is invalidated.

ERISA’s “savings clause” subjects all insurance plans or policies to state laws regulating insurance, thus “saving” the state law from preemption. However, ERISA’s “deemer clause” prohibits any state’s laws from considering – indeed, “deeming” – a private, self-funded benefit plan governed solely by ERISA to be insurance.

Bill A7828A/S5715A, by its own text, “is specifically directed toward entities engaged in providing health insurance.” Because ERISA exempts private, self-funded benefit plans governed solely by ERISA from being deemed insurance, this bill cannot apply to them. This bill is thus a prime example of the type of law that ERISA explicitly preempts.

However, plan sponsors must remember that while ERISA makes avoiding state insurance laws possible, ERISA is merely a tool with which plan sponsors can craft their respective plans. It is the terms of the plan document that ultimately determine what law will apply; ERISA simply allows a plan sponsor to include favorable terms within the plan.

Concerned about your plan’s rights?

New York’s subrogation climate is getting worse for plans governed by state law, but The Phia Group wants to remind you that private, self-funded benefit plans can avoid being affected by this law if they have the proper tools.

Contact Andrew Milesky at amilesky@phiagroup.com or (781) 535-1136 for all your subrogation, reimbursement, plan document, and general consulting needs. The Phia Group can help ensure the vitality of your plans no matter what state they may be domiciled in.