The Employer Retirement Income Security Act of 1974 (ERISA) is an important statute for those with certain job benefits. Obviously, ERISA applies to pension and retirement benefits as the name implies. However, ERISA also governs certain other worker benefits provided by an employer, including long-term disability benefits.
Although most people can purchase long-term disability insurance through an agent on their own, having such coverage provided by an employer can be an excellent job benefit. Not only can a worker avoid expensive monthly premiums for their long-term disability coverage, but they also have special protection under ERISA if they ever need to make a claim.
Long-term disability claims are often subject to scrutiny from insurance providers because they can be so expensive. People who have valid claims may end up having them denied and could need to appeal. How does ERISA help those who must appeal an unfavorable benefits decision?
ERISA ensures transparency about a denial
Insurance companies often use very confusing language and minimize how much they communicate with policyholders about denied claims. ERISA requires that the insurance company send written notice to the claimant explaining why they did not get the benefits they requested.
This notice can help someone determine why the company rejected their claim and therefore what information they need to gather in order to challenge that decision. Typically, insurance companies also have to provide information to the policyholder about their right to a review of their claim. The company should provide an internal review process to help ensure that those with valid claims do get benefits.
ERISA guarantees the right to an appeal
When the company offering long-term disability coverage denies a claim, it will need to maintain clear internal records and comply with the rules created by ERISA. Every company offering ERISA-governed long-term disability benefits will need to have specific practices in place to allow for claim review during an appeal.
In cases wherein a company deviates from ERISA standards, a policyholder could potentially take legal action to get the review or benefits that they deserve. Making use of the right to appeal that ERISA created for those with employer-sponsored disability benefits can make filing a claim an effort that is more likely to succeed.