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When Does ERISA Not Apply to Employer-Sponsored Long-Term Disability Insurance?

The Employee Retirement Income Security Act of 1974 (ERISA) is a collection of federal legislation that sets out rules and standards for a range of employer-provided benefits. The Act usually governs short- and long-term disability insurance policies companies provide to their workers.

However, this isn’t always the case. Policies sponsored by certain types of organizations do not fall under the federal jurisdiction of ERISA.

In this article, we’ll explore the exceptions to ERISA, as well as the effects the legislation has on you as a policyholder and claimant.

Is My Employer-Sponsored Long-Term Disability Insurance Policy Governed by ERISA?

ERISA governs the majority of employer- and group-provided long-term disability insurance policies, as well as other healthcare plans. In other words, if you receive your disability coverage from your employer as a benefit, chances are it falls under ERISA’s jurisdiction.

There are a few notable exceptions, however. If you work for a state or federal government agency, the legislation most likely does not cover any employer-sponsored disability insurance you have. The same is true of some insurance policies provided by religious organizations. ERISA also may not apply if your employer’s participation in the provision of the plan is minimal; for instance, if they do not actively administer or pay for the plan, and if your involvement as an employee is entirely voluntary.

Overall, a large majority of short- and long-term disability insurance policies in the United States are ERISA-governed plans.

There are exceptions to the general guidelines discussed here. To find out for certain whether your disability insurance coverage falls under ERISA, you should carefully research your policy document, ideally with the help of an award-winning long-term disability insurance attorney.

The Differences ERISA Makes to Policyholders

There are a number of crucial differences between ERISA policies and plans that are not governed by the legislation, whether individually purchased or employer-sponsored. One of the biggest issues ERISA throws up is its mandatory administrative appeal process.

Following an initial ERISA disability claim denial, you cannot simply bring your insurance company to court. Instead, you must complete a timely appeal that includes the compilation of all the medical, financial, and occupational records and reports that support your claim. During this time, your insurance carrier’s legal team will compile all the equivalent evidence that backs its case. There is generally a six-month deadline for the completion and timely filing of your administrative appeal.

If your insurer rejects your claim again after this step, you may file a federal lawsuit against the company. However, the court procedure for ERISA disability cases is notably different from ordinary litigation.

There is no jury trial, no witnesses, and no cross-examination. Instead, the trial judge considers all the records, reports, and supporting documentation from your initial claim filing and appeal, before rendering judgment. Generally, you cannot introduce any new evidence after you file an ERISA disability lawsuit; the judge will only consider the documents submitted before the initial denial and all documentation in the administrative appeal. This is why it’s so important to fully brief your appeal, as failure to do so can lead you to omit a crucial piece of evidence and fatally damage your case. The best way to ensure you don’t make a mistake like this is to enlist the help of a long-term disability insurance attorney prior to beginning the mandatory appeals process.

Another important point to note here is that, because ERISA is a body of federal legislation, you may only file lawsuits related to it in federal court, rather than at the state level. This increases the administrative costs and practical challenges associated with filing. If your long-term disability insurance policy does not fall under ERISA, you may be able to sue your insurer in the courts of the state in which you live. Generally, when it comes to individual policies purchased through an agent or insurance broker, you can simply file a state lawsuit as soon as you receive an adverse benefit determination.

Are You Struggling to Make Sense of Your Claim or Appeal? Contact a Top-Class ERISA Lawyer Today

There’s no doubt that ERISA can make matters a lot more challenging for disability insurance claimants. The rules are demanding and can be very hard to follow, and failure to meet deadlines can spell disaster for claims, even perfectly valid ones.

To make sure you don’t fall victim to a wrongful denial or delay of benefits by your insurer, you need to get in touch with an award-winning Chicago ERISA lawyer. Contact DarrasLaw today to schedule a free initial consultation, including an initial policy, claim, or appeal analysis free of charge. Remember, if you’ve already received a claim denial on an ERISA policy, it’s imperative that you start the mandatory administrative appeal process as soon as you can to ensure you submit a timely, comprehensive appeal.

DarrasLaw is Americas' most honored and decorated disability litigation firm in the country. Mr. Darras has seen more, evaluated more, litigated more, and resolved more individual and group long term disability and long-term care cases than any other lawyer in the United States.

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