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Many state lawmakers and regulators want to set new rules for the pharmacy benefit managers, health plan provider networks, dental plans and even vision plans that serve self-insured employer health plans.
A provision in the Employee Retirement Income Security Act that "preempts," or pushes aside, state efforts to regulate employee benefit plans blocks those state regulatory efforts.
Now, a team of state regulators has drafted a guide to help colleagues understand the latest developments in the interaction between the ERISA preemption provision and state efforts to regulate PBMs and other benefits sector players.
The National Association of Insurance Commissioners' Employee Retirement Income Security Act and Alternative Health Coverage Working Group has posted an ERISA preemption paper draft in a meeting packet posted on the working group's section of the NAIC's website.
"At a high level, when a state contemplates applying a particular regulatory measure to PBMs contracted with self-insured employers, the question policymakers must consider is whether that measure is a permissible exercise of the state's general powers to regulate the pharmaceutical industry, or whether it encroaches on the exclusive federal power to regulate the employer's health benefit plan," according to the draft paper.
Because court cases about the matter have been complicated, and many cases are still in progress, "it is not a simple task to decide whether a particular provision of state law 'relates,' within the meaning of ERISA, to a state-regulated PBM or to its self-insured, federally-protected client," officials add in the draft paper.
The NAIC already has an ERISA Handbook reference work, but Andria Seip, an Iowa regulator who chairs the working group, said during a working group conference call meeting held March 16 that the ERISA Handbook covers settled law.
"The guidance document is focused on an issue that is in flux," and, "at present, these issues are not suitable for inclusion in the ERISA Handbook," according to draft meeting minutes in the same meeting packet that includes the ERISA preemption paper draft.
What it means: Employers and benefits advisors who want to know what state insurance regulators think about ERISA preemption can get insights by reading the draft ERISA preemption paper.
The backdrop: The Supreme Court ruled in 2020, in connection with Rutledge v. the Pharmaceutical Care Management Association, that states may be able to regulate health care organizations if the regulations simply affect the organizations' general operations, make no mention of employer health plans and have no direct connection with employer health plans.
Other, newer cases have appeared to limit the impact of the Rutledge ruling, or even to contradict that ruling.
In June 2025, for example, the Supreme Court declined to hear an appeal on a ruling issued by the 10th U.S. Circuit Court of Appeals on Glen Mulready et al. v. the PCMA.
The 10th Circuit blocked an effort by Oklahoma regulators to apply a state pharmacy benefit manager law to PBMs that were working with ERISA plans, even though the Oklahoma law appeared to be compatible with the Rutledge ruling.
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