The Employee Retirement Income Security Act of 1974 (ERISA) was a groundbreaking piece of legislation when federal lawmakers first enacted it. It helped protect workers who depended on resources provided by their employers for times of financial vulnerability, such as their retirement years.
There have been changes to the law over the years, as well as rulings by the courts, that have helped expand on the protections that ERISA offers employees who depend on benefits provided by an employer for certain key needs, including long-term disability coverage. Contrary to what the name implies, ERISA does not just govern employer-sponsored retirement benefits but can also apply to disability coverage.
One of the ways that ERISA protects those who rely on employer benefits is by imposing a fiduciary duty on employers and other parties involved with ERISA long-term disability benefits. What does a fiduciary duty mean for someone seeking disability benefits?
A fiduciary duty is a major obligation
When one party has a fiduciary duty to another, the fiduciary must put the best interests of the other party ahead of their own interests or the interests of any third party, such as an employer or business. Fiduciary duty plays a major role in trust administration and probate proceedings. Lawmakers used the legal standards established in probate law to create stronger protections for those who rely on employer benefits during times of personal hardship.
The fiduciary duty imposed under ERISA requires that employers and insurance organizations put the best interests of an employee ahead of a company’s profit incentive. Occasionally, workers denied benefits when they initially apply might be eligible to appeal because of a breach of fiduciary duty.
Enhanced transparency rules can help policyholders and claimants review records about decisions made by an insurance provider and could help them raise viable questions about whether there was a breach of fiduciary duty during the benefits claim. Such allegations could help someone secure the benefits they need to cover their cost-of-living expenses while dealing with a debilitating medical condition. Under ERISA, those in need of benefits generally have the right to a single appeal and could potentially also take legal action if they do not succeed during their initial appeal.
Learning more about the laws that govern workplace benefits, and seeking legal guidance whenever necessary, may help those in need of long-term disability coverage access the benefits their employers have sponsored.