The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that regulates the retirement plans of private employers. Although ERISA primarily focuses on retirement plans, it also has provisions affecting other employee benefits, including any disability insurance plans that a private employer offers to its employees. It is very important for employees covered by employer sponsored health and disability insurance plans to understand ERISA's protections, as well as its requirements, in order to protect their rights.
ERISA only affects disability insurance benefits that are offered by an employer as part of an employee benefits package. ERISA would not apply to private disability insurance plans that workers buy on their own.
When employees have an ERISA disability benefits plan, ERISA's often-complex regulations control nearly every aspect of the plan and how employees obtain the plan's benefits. First, ERISA requires the employer to provide employees with information about their disability benefits. This information must include:
Once an employee files a claim (following the directions provided to them), ERISA sets time limits for the insurance provider to decide the claim. An insurance provider must decide whether to accept or deny a disability claim within 45 days of filing, though this time limit can be extended by 30 days upon notifying the employee.
If a claim is denied, the insurance provider must explain why in writing. ERISA also controls the deadlines for employees to file an appeal and another deadline for the insurance company to decide on whether to approve or deny the appeal.
Finally, if an appeal is denied, the employee may file a lawsuit under ERISA. This is essentially an administrative hearing where a judge may decide the case based on the record established during the claim and appeal process.
If a worker's appeal is denied and they followed all of the strict guidelines imposed by ERISA, then the next step may be to file a lawsuit arguing that the insurance company acted improperly in denying benefits. In these lawsuits involving employer-provided insurance plans, ERISA allows judges to review for an "abuse of discretion" only. In short, this legal term simply indicates that the judge's ability to review and overturn or reject the decision being challenged is very limited.Â
In addition, the judge will only look at the policy holder's file with the insurance company in making his or her decision. This file is maintained by the insurance company and contains all of the documents related to the policy holder's insurance plan, claims, denials, and appeals. This is why providing s much supporting information as possible (doctor's reports, letters from employers, etc.) during the administrative appeal process is so important. Unless there is adequate documentation in the file, the judge may have to defer to the insurer or plan manager's reasoning for their denial letter.
Although ERISA was intended to protect employees' rights and benefits, sadly its many complicated requirements can sometimes doom an employee's claim. If a worker does not follow ERISA's requirements to the letter, particularly with deadlines and claim requirements, their claim may be denied with no opportunity to appeal. Additionally, if an employee skips a step in the ERISA disability benefits claim process (such as skipping an appeal), a future claim in court may not be allowed to proceed.
If you are considering filing a disability claim for an ERISA-regulated employee benefits plan, or just have general questions about disability insurance, it's important to get started right away. You may need to work with a disability attorney in addition to conducting your own research if your case is particularly complicated.Â
