Oregon · Life, Accident & Health SampleInteractive Mind Map
ERISA and the Regulatory Framework for Group Plans
A visual breakdown of ERISA and the Regulatory Framework for Group Plans — one of the concepts you can count on seeing on the exam.
The TESTivity Interactive Mind Mapping Graphic we picked for the Oregon Life & Health sample is ERISA and the Regulatory Framework for Group Plans — and this is a concept you can count on seeing on your pre-licensing exam. Get the structure straight once and those questions turn into free points.
So explore it. Click through, see how the pieces relate, and let the layout do some of the remembering for you.
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ERISA (1974) governs private-sector employer benefit plans — and its most tested power is preemption of state law.
The big payoff question: a self-insured plan escapes state mandates; a fully insured one doesn’t.
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What ERISA Governs
Private-sector employer benefit plans (health, disability, retirement). Government and church plans are generally exempt — so state/local employee plans aren’t ERISA plans.
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Preemption + the Savings Clause
ERISA preempts state laws that relate to benefit plans — but a savings clause lets states still regulate insurance companies and products. So states reach the insurer, not the employer’s self-insured plan.
🏦 Fully Insured
🏭 Self-Insured (Self-Funded)
Who bears risk
The insurer — the employer buys a policy.
Who bears risk
The employer pays claims directly (often via a TPA).
State mandates
Apply — the state regulates the insurer.
State mandates
Generally do NOT apply — ERISA preempts; governed federally.
Typical user
Small and mid-size employers.
Typical user
Large employers; buy stop-loss for protection.
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Stop-Loss Insurance
Specific (individual) stop-loss caps claims from any one person above a threshold; aggregate stop-loss caps total plan claims above a threshold. Self-insured employers often buy both.
How they test thisState passes a new mandate (e.g., chiropractic coverage). It binds fully insured plans (via the insurer) but not the self-insured plan — ERISA preempts. That’s exactly why big multi-state employers self-insure: one uniform plan, no 50-state mandate patchwork.
ERISA forces plans to document themselves and holds plan insiders to strict duties.
The SPD is the must-know document; fiduciary loyalty is the must-know duty.
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Summary Plan Description (SPD)
A plain-language summary of benefits, exclusions, eligibility, claims, and ERISA rights — the participant’s key document. Provided within 90 days of enrollment (120 days of a new plan’s start).
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Plan Document & SMM
The plan document is the formal legal terms. A Summary of Material Modifications reports plan changes to participants.
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Form 5500
An annual report to the DOL filed by plans covering 100+ participants — financial and operational data.
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Fiduciary Duties
Anyone with discretion over plan management or assets
Loyalty: act solely in participants’ interest — not the employer’s or the fiduciary’s.
Prudence: act with the care a knowledgeable person would use.
Follow the plan document (so long as it complies with ERISA); diversify investments where applicable.
No prohibited transactions: no self-dealing, kickbacks, or using plan assets for personal/employer benefit.
How they test thisAn administrator spends plan funds on the company holiday party → a fiduciary breach. Plan assets must be used solely for participants and beneficiaries, never for the employer’s general benefit. And the SPD deadline is 90 days from enrollment.
ERISA gives participants a defined path to fight a denied claim — ending, if needed, in federal court.
The exam’s favorite step is the external review by an independent organization, whose decision binds the plan.
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1. Initial Claim Decision
Plans decide within set timeframes — typically 30 days for medical claims, 72 hours for urgent care.
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2. Internal Appeal
A denial must come with a clear written explanation and a full and fair chance to appeal inside the plan (at least one level).
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3. External Review (IRO)
For ACA-compliant plans, after internal appeals are exhausted, an independent review organization reviews the denial. The IRO’s decision is binding on the plan.
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4. Civil Lawsuit
After exhausting internal and external review, the participant may sue in federal court — ERISA provides the cause of action to recover benefits.
How they test thisInternal appeal exhausted on an ACA-compliant plan → the participant gets an independent external review (IRO), and the IRO’s decision binds the plan (not a second internal appeal, not a state-department complaint, not a cash settlement).
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Top Exam Tips — ERISA
1. ERISA governs private-sector employer plans; government and church plans are exempt. 2. Preemption: self-insured plans escape state mandates (federal ERISA governs); fully insured plans are subject to state mandates (the insurer is regulated). 3. Stop-loss: specific = per individual; aggregate = total plan claims. 4. SPD within 90 days of enrollment; Form 5500 for plans with 100+ participants. 5. Fiduciary loyalty: plan assets must be used solely for participants — never the employer’s general benefit. 6. Appeals path: internal appeal → external review (IRO, binding) → federal lawsuit.
Exam vocabulary
Key Terms to Know
ERISA
The Employee Retirement Income Security Act of 1974; the primary federal law governing private-sector employer benefit plans.
ERISA Preemption
Federal ERISA rules supersede conflicting state law for covered plans, limiting state regulation of employer plans.
Insurance Savings Clause
The preemption exception allowing states to regulate insurance companies and products — but not self-insured plans directly.
Self-Insured (Self-Funded) Plan
The employer pays claims directly; governed by ERISA; generally NOT subject to state insurance mandates.
Fully Insured Plan
The employer buys coverage from an insurer; the insurer is state-regulated, so state mandates apply.
Stop-Loss Insurance
Protects self-insured employers: specific stop-loss (per individual) and aggregate stop-loss (total plan claims).
Third-Party Administrator (TPA)
A company that administers claims and plan operations for self-insured employers.
Summary Plan Description (SPD)
An ERISA-required plain-language plan summary; must be provided within 90 days of enrollment.
Form 5500
An annual financial report filed with the DOL by ERISA plans covering 100+ participants.
ERISA Fiduciary
Anyone with discretionary control over plan management or assets; must act solely in participants’ interests.
External Review (IRO)
Independent review of a denied claim after internal appeals; required for ACA-compliant plans and binding on the plan.
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