The Employee Retirement Income Security Act of 1974 (ERISA) governs various employer-sponsored benefit plans in the U.S. to protect employees’ rights to their benefits. ERISA covers several types of employer benefit plans, which can be broadly categorized into two main types: employee welfare benefit plans and employee pension benefit plans.
1. Employee Welfare Benefit Plans
These plans are designed to provide employees with benefits other than retirement income. They include:
- Health Insurance: Medical, dental, and vision coverage.
- Disability Insurance: Short term and long term disability benefits.
- Life Insurance: Group life insurance coverage.
- Severance Benefits: Payments or continuation of benefits upon termination or layoff.
- Vacation and Holiday Pay: Plans providing paid time off.
- Employee Assistance Programs (EAPs): Counseling and support services for personal problems, such as addiction or mental health issues.
- Accidental Death & Dismemberment Insurance (AD&D): Insurance for accidents leading to death or severe injury.
- Other Benefit Programs: Benefits that assist employees in managing unforeseen life events, such as sick leave or adoption assistance.
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2. Employee Pension Benefit Plans
These plans are designed to provide employees with income after retirement. There are two primary types:
- Defined Benefit Plans: Traditional pension plans where the employer guarantees a specific retirement benefit (e.g., a monthly payment) based on a formula involving factors like salary and years of service. The employer bears the investment risk.
- Defined Contribution Plans: These plans, such as 401(k) plans, allow employees (and sometimes employers) to contribute a certain amount to the employee’s account. The retirement benefit depends on the contributions made and the investment performance. The employee bears the investment risk.
Types of Defined Contribution Plans:
- 401(k) Plans: A common retirement savings plan where employees contribute pre-tax income, and employers may match contributions.
- 403(b) Plans: Similar to 401(k) plans but offered by public schools, tax-exempt organizations, and certain religious organizations.
- 457 Plans: Deferred compensation plans for government employees.
- Profit-sharing Plans: Employers contribute to employees’ retirement accounts based on the company’s profits.
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ERISA’s Coverage and Protection
ERISA sets standards for plan administration, including:
- Fiduciary Responsibility: Plan administrators must act in the best interest of plan participants and beneficiaries.
- Reporting and Disclosure: Employers must provide participants with important information about plan features, funding, and management.
- Claims and Appeals Process: ERISA ensures that participants can appeal decisions if they are denied benefits under a plan.
- Participant Rights: ERISA guarantees participants’ rights to receive benefits they have earned and sets rules for plan vesting (how long an employee must work to earn benefits).
- PBGC (Pension Benefit Guaranty Corporation): ERISA created the PBGC, which provides insurance for certain defined benefit pension plans in case the employer defaults.
However, ERISA does not cover all employee benefit plans. For example, government plans, church plans, and certain self-insured plans may be exempt from ERISA requirements.
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Contact an ERISA Lawyer Today
Wherever you are in the process of applying for Long Term Disability or appealing a denial, the experienced ERISA lawyers at Marc Whitehead & Associates can help you.
Our lawyers have more than 120 years of combined experience with Disability claims. We’re based in Texas, but we help people all around the United States to get the LTD benefits they’ve paid for. Schedule a free consultation today to find out how we can help you get the benefits you earned, even if your original ERISA claim was denied.
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