Could your short-term disability plan be exempt from ERISA? 

On Behalf of | Oct 6, 2021 | ERISA Disability Benefits

Most people don’t think about whether the benefits offered by their employer are governed by the Employee Retirement Income Security Act (ERISA) until they need them. This is particularly true for disability insurance. 

Short-term disability (STD) insurance falls under what are considered “welfare benefit plans” by ERISA. It’s an income replacement plan that will pay an employee’s salary for up to six months if they’re not able to work because of an injury or illness.

Nearly all private, non-church-affiliated employers, including non-profit organizations, have ERISA-covered plans regardless of the number of employees they have or how small they are. If a plan is covered by ERISA, it must comply with the requirements of the law. This includes specific procedures for filing a claim.

Payroll practice exemptions

Not all employers’ benefit plans are covered by ERISA. Even those that typically are may have a “payroll practice” exemption. A self-funded STD plan is exempt if it pays claimants either partial or full compensation from its general assets.

Before you file a claim, it’s essential to know whether your plan is exempt from ERISA. How you file the claim, and how you may dispute any denial, will depend on whether your STD benefits are subject to ERISA. Your employer should be able to tell you that. They should also provide you with a copy of the policy and all other related documents if you don’t already have access to them.

If your claim is denied, it’s crucial to find out why. Sometimes it’s simply a matter of not completing the claim correctly or providing the necessary information. ERISA claims have different requirements than non-ERISA claims. If you’re having difficulty getting your claim approved, you can always benefit from legal guidance.