Most people who file a disability insurance claim are unfamiliar with Employee Retirement Income Security Act (ERISA) — but it can have a big impact on your claims process and taxes on your benefits. ERISA is a federal law that is designed to give affordable employee benefits that protect workers. Unfortunately, ERISA regulations have generally been interpreted by courts in a way that favors insurance companies. An important goal for any disability attorney is proving that a claim is not governed by ERISA to improve the odds of collecting benefits.
Group vs Individual Long-Term Disability Insurance
There are two main types of long-term disability insurance policies: group policies provided by an employer and individual policies which are purchased independently through an insurance agent. Group policies are usually subject to ERISA regulations whereas most individual policies are not. Over 80% of people with disability insurance have a group policy through their employer.
Is Your Policy Subject to ERISA?
There are five key requirements for a policy to fall under ERISA regulations:0
- A “plan, fund, or program”
- That is established or maintained
- By an employee organization or employer
- To provide surgical, medical, hospital care, accident, sickness, disability, death, vacation, or unemployment benefits
- To plan participants or their beneficiaries.
ERISA-governed disability policies are usually part of an employee benefits package and it may require that some amount of the premium be paid by the employee.
Even if you have a group insurance policy, it may not be subject to ERISA if:
- No contributions are paid by the employee organization or employer,
- Participation is voluntary for members or employees,
- The primary functions of the employer in terms of the program are to allow the insurer to publicize the program to employees, collect premiums through payroll deductions, and remit them to the insurer, and
- The employer receives no financial benefit from the program other than reasonable compensation (not profit) for administrative services.
There are several differences between ERISA and individual disability policies, including premium costs, portability of coverage (whether it moves with you regardless of employer), benefits taxation, and the appeals process. Not sure if your disability policy is governed by ERISA? An experienced LTD attorney in Philadelphia can help you understand your policy and your rights. Contact Edelstein, Martin & Nelson today for a free consultation with a long-term disability lawyer to discuss your case.
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