Connecticut Coverage Mandate Could Affect Employers with ERISA Plans

UPDATE, MARCH 14: The provision described below was subsequently withdrawn. For more on that development, click here.

The Connecticut Retirement Security Board has taken another step forward with its implementation plan by introducing legislation creating the Connecticut Retirement Security Program. The bill, in addition to creating a state-run retirement program for the private sector, includes a nasty provision that forces even employers that already have retirement plans in place to enroll workers in the state-run program who do not have to be covered under ERISA.

Under the Connecticut program, an employer would not need to enroll employees who are already participating in their ERISA-based plan in the state savings program. However, it would require that all employees who meet the following criteria either be enrolled in the Connecticut state savings program or be included in coverage of an existing ERISA-qualified plan — even employees who are not required to be covered under ERISA.

Those required to be included under the proposal include employees 19 years of age or older, employees employed for at least 120 days, and employees who either:

  • are reasonably expected to complete 1,000 hours of service in a calendar year; or
  • have completed at least 500 hours of service for the employer in the past two consecutive calendar years.

That’s right — even workers who are not required to be covered in an ERISA plan like a 401(k) would have to be enrolled in the state-run program. Confused yet? If you are, imagine how small business owners will feel after this bill becomes law, and they have to not only maintain their ERISA plan, but enroll workers in the state-run program as well.

Andrew Remo is the American Retirement Association’s Director of Congressional Affairs.

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