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Employee Retirement Income Security Act: The basics

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In 1974, the U.S. passed the Employee Retirement Income Security Act in an effort to regulate retirement plans that employers offer to their workers. In addition, it provides provisions regarding other benefits, including disability insurance plans offered to employees through the company. It does not apply to privately purchased disability insurance packages outside of a company's benefits package.

The act assures that employers provide specific information regarding the company's disability insurance plan. This includes outlining instructions on how to file a claim in the event of an illness or injury, what is specifically covered and what is not covered, and information regarding the appeals process if a submitted claim is denied.

The Employee Retirement Income Security Act also set a time limit of 45 days for insurance companies to make a determination on each claim. An extension of 30 days can be made if the employer is notified. The deadline for appeals is also set by ERISA. Employees also have the right to file a lawsuit followed a denied appeal. At this point, an administrative hearing is called, decided by a judge at the hearing.

The judge will look for an abuse of discretion, and will consider the file of the policy holder and the holder's plan, claim, denials and appeals. During this process, it is important for the policy holder to provide all necessary documentation including contact information between employee and employer, and necessary doctor reports. The process is precise, and failing to follow the exact protocol of ERISA may lead to a denial of the claim.

Source: findlaw.com, "ERISA and Disability Benefits," Jan. 12, 2017

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