What is ERISA and How Does It Affect Your Rights?
If you have health plan or similar insurance through your employer, you may encounter the term “ERISA” in the context of your benefits. ERISA gives you important rights that help you ensure your benefits plan acts fairly. This is a short overview of some of those rights.
What is ERISA? Does ERISA Apply to My Benefits or Insurance?ERISA is short for the Employee Retirement Income Security Act. ERISA is a federal law passed in 1974 that establishes minimum standards for employee benefit plans. ERISA was the result of the pension reform movement that gained momentum after the infamous 1963 Studebaker corporation shut-down in which nearly ten thousand workers suddenly lost their pension benefits.
Congress enacted ERISA to protect employees participating in employer-provided benefit plans. ERISA requires benefit plans to disclose important information to participants, establishes minimum standards for benefit plans, and allows participants to bring suit in federal court if their rights are violated.
There are some important exceptions, but the general rule is ERISA applies to most employer-provided benefit plans. That means if you receive benefits such as health, disability or life insurance through your employer, ERISA likely applies. ERISA can apply even if your employer contracts with a separate insurance company or other entity to provide benefits, so even if your plan documents identify an insurer other than your employer, ERISA may still apply.
What Are My Rights Under ERISA?Among other things, ERISA provides participants two important rights. First, ERISA plan participants have the right to receive information about the benefits plan. For instance, ERISA requires that the administrator of a benefits plan provide employees with the documents describing the plan's terms, such as a Summary Plan Description, insurance policies and similar documents, upon the participant's written request. ERISA also requires plans to provide participants with information the plan relies on in deciding claims for benefits (e.g., deciding whether a health plan will pay for certain treatment). This is important if a participant disputes an ERISA plan's benefits decision and wants to challenge it; for instance, a plan denying coverage for medical treatment because the plan's doctor concludes the treatment is unnecessary would have to provide a copy of that doctor's report.
Second, ERISA gives plan participants the right to sue in federal court. Plan participants can bring a lawsuit to either establish their right to benefits under an ERISA plan (e.g., to establish that their health plan covers certain treatment or that they are covered under a disability plan). Participants can also bring suit alleging that the people administering the plan breached their fiduciary duties or breached federal regulations requiring fair claims handling for ERISA plans. Importantly, plan participants who are successful in an ERISA lawsuit can recover attorneys' fees, because Congress wanted to give plan participants easy access to lawyers to help vindicate their rights.
How Does ERISA Limit My Rights?ERISA imposes important deadlines and other requirements with which participants must comply in order to protect their rights. One important rule is that participants must notify benefit plans of claims within certain deadlines, and must challenge to adverse benefit decisions (e.g., a benefit plan's refusal to cover treatment or pay disability benefits) within certain deadlines. Failing to meet these deadlines can mean losing your right to challenge a plan's incorrect decision to deny coverage.
ERISA also requires participants who dispute a benefits plan's decision to use the plan's appeal process before filing suit in court. An important rule is that, generally, only information submitted as part of the appeal can be used as evidence in any later lawsuit. That means that participants who want to challenge their benefit plan's decisions must be certain they follow the plan's appeal procedures in order to protect their rights.