There are many federal laws that protect workers in vulnerable positions. The Employee Retirement Income Security Act of 1974 (ERISA) helps ensure that workers can count on certain types of benefits provided by their employers.
Under ERISA, companies have a responsibility to fulfill pension promises. Despite what people might assume from the name, ERISA applies to certain other benefits beyond just retirement funds and pensions. ERISA also imposes rules on long-term and short-term disability benefits provided by an employer. In the unusual scenario where a worker actually needs to use their disability benefits, ERISA protects them in several important ways.
An insurance company has a fiduciary duty to a policyholder
Insurance companies have a requirement under federal law to uphold their policies in good faith. Those that issue policies governed by ERISA have additional obligations. The law imposes a fiduciary duty on the insurance company. That means the insurance company should act in the best interest of policyholders. The needs of those seeking disability benefits should supersede the company’s desire to generate profit.
Policyholders have the right to an appeal
Another way that ERISA protects those who may eventually require disability benefits is through the establishment of the right to pursue an internal appeal. Policies governed by ERISA generally have to offer the option of appealing an unfavorable decision. While claimants may only have the option of a single appeal in most cases, the evidence that they submit during that appeal could significantly increase their chances of getting the benefits they need.
Denied claims can lead to lawsuits
While only one appeal is guaranteed under ERISA, policyholders may also have the right to take legal action. When they believe that the insurance company wrongfully denied their claim and an appeal was unsuccessful, they can potentially initiate a civil lawsuit. Litigation often involves the courts reviewing policy documents and the evidence submitted to the insurance provider. Provided it is clear that someone meets the necessary standard for benefits and had active coverage, they may be able to take the matter to court.
A successful lawsuit can result in benefits even when an appeal is unsuccessful. Learning more about ERISA can be important for those who need to file a claim for ERISA disability benefits through an employer-sponsored insurance policy. ERISA helps enhance the basic protections already provided for those with private insurance coverage.