From the Hotline: Health and Welfare Benefits

Question: What are health and welfare benefits?

Answer: A group health plan is an employee welfare benefit plan established or maintained by an employer or by an employee organization (such as a union), or both, that provides medical care for participants or their dependents directly or through insurance, reimbursement, or otherwise.

Examples of health and welfare benefits include:

  • Medical, dental, visual, psychiatric, or long-term health care; severance benefits; life insurance; and accidental death or dismemberment benefits.
  • Unemployment, disability, vacations, or holiday benefits.
  • Apprenticeships, tuition assistance, day care, housing subsidies, or legal services benefits.
  • Post-employment benefits such as salary continuation, supplemental unemployment benefits, disability-related job training, and counseling.

Defined benefits specify a determinable benefit, which may be in the form of reimbursement to the covered plan participant or a direct payment to providers or third party insurers for the cost of specified services. Such plans may also include benefits that are payable as a lump sum, such as death benefits.

Defined contribution health and welfare plans maintain an individual account for each plan participant. Such plans have provisions that specify the means of determining the contributions to participants’ accounts, rather than the amount of benefits the participants are to receive. Benefits a plan participant will receive are limited to the amount contributed to the participant’s account, investment experience, expenses, and any forfeitures allocated to the participant’s account. These plans also include flexible spending arrangements.

Health and welfare benefit plans generally are subject to certain fiduciary, reporting, and other requirements of the Employee Retirement Income Security Act of 1974 (ERISA).