What is ERISA?
ERISA stands for the Employee Retirement Income Security Act of 1974. ERISA is a federal law that regulates the handling of Employee Benefit Plans and the remedies of the beneficiaries of these Plans. ERISA applies to all employees benefit plans established or maintained by an employer engaged in commerce or by an employee organization representing employees engaged in commerce. Practically all long term disability plans offered by a private employer are governed by ERISA. A claimant challenging a disability denial under an ERISA governed plan or policy must bring the claim pursuant to ERISA regulations and procedures. All state law remedies are preempted, meaning they do not apply to an ERISA claim.
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ERISA Does Not Apply to Privately Purchased Insurance
If you purchase your own private individual or family disability policy, then ERISA does not apply. To be clear, it must not be a policy obtained through your employer sponsored group benefits plan. If you do purchase your own private policy, you are entitled to all procedural rights and remedies available to you in your state just like you would under your privately purchased homeowners or life policies. Good for you if you have a private disability plan. You will be treated much better by your insurance company. See section 12 below for your remedies if benefits are denied under your private plan.
Possible Exceptions to ERISA
1. Government employees: Government plans are excluded from ERISA coverage. This generally includes federal, state and local governments including school districts and public universities.
2. Church Plans: Employees of qualifying religious institutions such as a church, synagogue or mosque are generally exempt from ERISA.
3. Self Employed Individuals: Self employed individuals are not governed by ERISA if only the individual and their family are covered.
4. Some Partnerships: Similarly, partners in a partnership with a plan that only covers partners but no employees is not an ERISA governed plan.
5. Pass Through Plans: Voluntary Plans where the employer contributed nothing to the plan and merely acted as a “pass-through” are exempted from ERISA if all requirements are met. These are extremely rare as the LTD carriers generally require employer contributions to set up the plan for the express purpose of receiving ERISA protection.
If you have questions, ask disability attorney, Marc Whitehead by visiting disabilitydenials.com or you can download Marc Whitehead’s free E-book, Disability Insurance Policies-How to Unravel the Mystery and Prove Your Claim.
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