Some professionals have better work benefits than others. Companies trying to hire the best and brightest often offer more robust benefits packages. In addition to paid leave and health insurance coverage, some employers may offer short-term and long-term disability benefits.
Workers typically never need that coverage, so they may only have a cursory awareness of their benefits. For example, they may not know that employer-provided disability policies are subject to the Employee Retirement Income Security Act of 1974 (ERISA).
ERISA protects workers who depend on employer retirement benefits or pensions. The law also governs other benefits that can influence the long-term financial stability of policyholders. One of the rules created by ERISA establishes a fiduciary duty for insurance companies. Ideally, that duty results in a less adversarial claims process.
What is a fiduciary duty?
Insurance companies are subject to federal and state regulations. They have a baseline legal requirement to uphold the policies that they offer the public in good faith. However, the company can take reasonable steps to limit expenses. Insurance professionals often focus more on the company than on the person making the claim.
Insurance companies often negotiate aggressively during the claims process as a means of limiting how much the organization pays any individual claimants. Professionals may try to trick people into making recorded statements or implicating themselves. They may try to coerce claimants into accepting mediocre settlements.
The approach is different in cases involving policies governed by ERISA. The insurance company has a fiduciary duty to the policyholder during the claims process. Fiduciary duty means having a legal obligation to act in the best interests of another party.
Instead of focusing on company profits, the professionals handling ERISA- related disability claims should act in the best interests of policyholders. That duty requires more careful consideration of settlement amounts and appropriate responses when policyholders require financial support. Denied claims and low settlement offers can both be indicative of a breach of fiduciary duty.
Those feeling overwhelmed by the ERISA claims process may need help. Having the right knowledge and advocacy available during a private disability insurance benefits claim can help people secure the coverage they deserve.