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How does ERISA impact disability claims?

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We've talked about the Employee Retirement Income Security Act of 1974 previously here. However, many people may not realize that in addition to regulating retirement plans offered to employees by private businesses, it also regulates the disability insurance plans available through these businesses.

The ERISA regulations help ensure that workers get the disability benefits to which they are entitled as part of their employee benefits package when they file a claim. However, ERISA regulations begin before the claim stage is reached.

Under ERISA, employers must provide adequate information to their employees regarding disability benefits offered through the company. This includes what is and isn't covered. They must also explain how an employee can file a claim and what their recourse is if it is denied.

It should be noted that ERISA requirements don't just apply to insurers. Employees are required to take the appropriate steps and meet designated deadlines. If the deadlines are not met, their claims can be denied with no chance of appeal.

The act requires insurers to make a decision on a claim within 45 days of the claim filing date. That timeframe can be extended another 30 days, but only if the employee is notified. If the insurer denies a claim, it must provide a written explanation.

If an employee's claim is denied and he or she appeals the denial, ERISA requires the insurer to approve or deny that appeal within a specific period. If the appeal is denied, the employee may file a lawsuit alleging improper action by the insurance company. This is handled by a judge in an administrative hearing.

In these hearings, judges are only allowed to determine if there was "abuse of discretion" by the insurance company. The more documentation the employee presented to the insurance company with the claim, the more information the judge will have to make the determination. Therefore, it is essential to provide as much documentation from doctors and other medical professionals as possible.

An employee with disability insurance through his or her employer can benefit from legal guidance from an attorney experienced in dealing with these claims. He or she can work to ensure that the claim is not denied or that if it's already been denied, it can successfully be appealed. This can make the difference between an employee and his or her family getting the funds they need during a difficult time and falling into financial distress.

Source: FindLaw, "ERISA and Disability Benefits" Dec. 04, 2014

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