By: TAHP | Wednesday, March 5, 2025

What’s New: A new push to expand state health care mandates to Texas employers is raising concerns. SB 1122 threatens to drive up health care costs for millions of Texas employers and their employers by imposing expensive, unnecessary state mandates on employer health plans that are protected under federal law.

Why It Matters: ERISA protects employers from state mandates, ensuring businesses can provide competitive, uniform benefits across state lines. Texas businesses rely on this flexibility to control costs, offer tailored benefits, and keep premiums affordable.

• SB 1122 undermines this protection—a move that lawmakers rejected last session due to the significant financial burden it would place on Texas employers and workers.
• Employers are already facing health care cost increases of 16% over the past three years. Texas now has the fifth highest health care spending in the nation.

The Numbers Don’t Lie:

• Over 14 million Texans receive health benefits through employer-sponsored insurance.
• More than half of those covered are in self-funded ERISA-regulated plans.
• SB 1122 would add $5 billion in new costs over the next 10 years, forcing higher premiums and cost-sharing for employees.

The Big Picture: Texas businesses are struggling with rising health care costs, and ERISA protection is one of the only safeguards keeping employer coverage affordable and sustainable.

• ERISA ensures uniformity, allowing employers with operations in multiple states to avoid a costly patchwork of state regulations.
• SB 1122 would eliminate that protection, requiring employers to comply with expensive Texas-specific mandates that even lawmakers exempted their personal coverage from due to the cost.
• Previous attempts to expand state control over ERISA plans have failed, and for good reason—businesses, employer coalitions, and labor groups overwhelmingly oppose these efforts.

Why Texas Must Reject SB 1122:

• Protect employer-sponsored coverage: Most Texans get their health insurance through their job, and these mandates will drive up costs and reduce choices – $5 billion over 10 years.
• Keep Texas competitive: Businesses rely on ERISA’s uniform protections to provide benefits across multiple states—SB 1122 would create compliance confusion and higher costs.
• Avoid massive cost increases: The Legislative Budget Board estimated this same mandate would cost Texas teachers alone $79 million over two years—private employers would face even greater financial strain.
• Follow past precedent: Lawmakers have repeatedly rejected expanding mandates to ERISA, recognizing that employers—not the government—should control their health benefit decisions.
• Legislature exempted ERS & TRS because of costs: Lawmakers chose to exempt their personal coverage and the coverage of state employees through ERS from these mandates, as well as the coverage for Texas teachers.

Broad opposition: A coalition of over 50 major Texas employers and industry groups is opposing SB 1122 and any effort to add mandates to their employee health benefit coverage.

The Bottom Line: SB 1122 takes away tools for employers to use to control the rapidly increasing cost of health care benefits. Texas businesses need flexibility to design benefits that work for their employees—not costly, state-imposed mandates that limit choice and raise costs. Lawmakers must stand firm against efforts to chip away at ERISA protections and reject SB 1122.