What is ERISA?
ERISA is The Employee Retirement Income Security Act of 1974, a federal legislation that controls an employee’s medical, disability, life insurance, and pension benefits. Under ERISA, Congress intended to protect pension benefits. Sounds good, doesn’t it? Unfortunately, this legislation is very complex and claims are limited to the amount of the benefit being claimed.
Despite its name and the purpose behind it, to protect employees, the effect has been just the opposite. It has had the devastating effect on people who receive their insurance through their employment to have their claims unfairly evaluated and denied. The effect is most pronounced in the area of health, life, and disability claims since this insurance is frequently obtained through employers. The insurance company or the employer has little incentive to pay benefits. If the employer or insurance company decides not to pay, the worst consequence is that a court might later disagree in which case all the employer will have to do is pay the claimed amount. From the employer’s or insurance company’s perspective, denying benefits is all potential economic gain with little downside risk.
If it is an ERISA plan and benefits are denied, the insurance company assumes you will not take the time, cost, and effort to exhaust your administrative appeals to the employer or the insurance company with proof that will be successful. Even then, if you take the case to court, the denial will be judged on whether it is “arbitrary and capricious.” The result is that the insurer or employer will have to pay only what it would have owed. This process is not “protective of plan participants.” But, this is the hurdle you face in ERISA. We can help you. Call us for a free telephone consultation at (513) 891-8777.