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What is ERISA?Long-Term Disability Frequently Asked Questions ERISA stands for the Employee Retirement Income Security Act. This is a federal law that was passed by Congress in 1974. Typically a group policy provided to you by your employer falls under the jurisdiction of the Employee Retirement Income Security Act of 1974, commonly referred to as ERISA. If you work for a government entity or a church, ERISA will not apply to your claim. While ERISA was enacted to protect workers, in practice it favors employers and insurance carriers who know how to manipulate the facts of the claim, the claims process and the laws. ERISA law “preempts” (takes precedence over) state laws that can provide a higher level of protection to employees in situations where an insurance company unjustly denies benefits. Under state law, an employee has a right to a jury trial, and could receive damage awards in addition to the benefits due under their policy. Damages could be compensatory and punitive. ERISA applies only to employee benefits provided by private employers. However, any private employer even a small company with only one employee other than the owner that provides employee benefits will be subject to ERISA. Unfortunately, the application of ERISA law to disability insurance plans has reduced rather than expanded the legal protections available to policyholders. It is not unusual for an ERISA plan administrator to deny disability benefits based on one opinion from a doctor, nurse, or peer review expert chosen by the insurance company. The expert reviewing your claim does not have to be a specialist or even qualified in the specialty of the claimant’s own treating physicians. Insurance carriers devote a large amount of time to building a case for denial of your disability claim which includes conducting surveillance, having you examined by one of the insurance company’s doctors, known as an independent medical exam (IME) or even schedule a functional capacity evaluation (FCE). The insurance company may schedule the IME to be conducted by someone other than a medical doctor. ERISA law permits the plan administrator to make the decision to deny or approve an insured’s claim. If you are denied, under ERISA law, claimants must exhaust the 180-day appeals process before they can file a lawsuit to obtain benefits. To make matters worse, the courts will usually assume that the plan administrator has made a reasonable decision unless it has acted in an arbitrary or capricious manner. You have an obligation to appeal the insurance carrier’s denial of your claim in a timely manner. Unfortunately ERISA law is not an even playing field. The law favors the employer and insurance carrier and as such, you must be aware of your rights and responsibilities under ERISA and under the terms of your long-term disability policy. ERISA law does not apply to private disability insurance policies purchased directly by an individual from an insurance agent. Long-Term Disability Frequently Asked Questions
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