Most people don’t know that they have an insurance policy that’s covered under ERISA law until they experience a problem with their insurer and decide to try to fight a denied claim. Instead of being allowed to sue for bad faith and get damages above and beyond what their policy is supposed to cover like someone with a non-ERISA plan, their case will be “preempted” and forced into courts that handle ERISA matters.
This means that that the actions available to you will become far more limited – as will the amount that you can expect to get if you win your case. ERISA regulations only call for claimants to get the original benefits that they were entitled to under their policy and possibly have the insurer cover the cost of their long term disability lawyer. But what about your pain and suffering? What if the insurer deliberately denied benefits they should have paid? Shouldn’t they be punished for their actions above and beyond what the policy calls for – and you rewarded for taking them to task? Not under ERISA.
Ways You Can Be Excepted from Preemption
What it boils down to is that you really want to avoid having your case preempted by an ERISA court if at all possible. Sadly, most employer-based insurance plans can’t avoid this fate, but there are some exceptions to the rule.
If you work for the government. Any policies “issued or obtained through a governmental agency” don’t fall under the ERISA umbrella.
If you are employed by a church. Religious organizations are not covered under ERISA.
If you have a Multiple Employer Trust. This type of policy is not considered an ERISA plan.
If the insurance industry set up your plan. ERISA won’t cover these policies; if you’re not sure whether or not your plan falls into this category, an ERISA lawyer should be able to tell you by looking at it.
If the policy is only maintained for compliance. Some employers keep insurance policies just to make sure that they comply with laws on disability, unemployment, and workers’ compensation. If your plan falls under this category and you can prove it, ERISA won’t touch it.
Additionally, some specific types of businesses are also sometimes exempt from ERISA laws. These can include: family businesses, partnerships, closely held corporations, and sole proprietorships.
For a free legal consultation, call 800-562-9830
Next time we’ll continue with five more ways to avoid ERISA preemption. If you’re ever unsure about the type of policy you have, set up a free consultation with a disability attorney. Check out our free e-book for more details about ERISA disability and be sure to stay up to date on new long term disability information through our weekly blogs!
Call or text 800-562-9830 or complete a Free Case Evaluation form
