Disability and Life Insurance: Common Myths about ERISA Dispelled

Misconceptions about the Employee Retirement Income Security Act (ERISA) of 1974 abound. While this federal law is certainly complicated and it may be common that covered employees are completely unfamiliar with how it functions, or that it even exists, understanding the facts behind some of the most common ERISA myths can be important to:

• Being aware of your rights and obligations in successfully pursuing a claim
• Knowing when to take action against the insurance companies that may have compromised these rights or your wrongfully denied disability, life or accidental death and dismemberment (AD&D) claim.

To help people become more familiar with how ERISA may impact them and their claim, we have debunked some of the most common myths about this law. If, however, you currently need answers about your best options for proceeding with an ERISA benefits claim or appeal, don’t hesitate to contact Denver Disability Lawyer Shawn E. McDermott.

Myth 1 – Every employer is required to have an ERISA plan and offer welfare benefits plans to employees.

Fact – Wrong. Welfare benefits regulated by ERISA are typically health, disability, life and similar employer-provided benefits. The ERISA laws do not mandate that employers offer such benefits to their employees. However, if they are offered, the ERISA laws govern. Also, ERISA is only applicable to private employers. This means that ERISA does not apply to benefits offered to government employees. Additional exceptions may apply for employees of churches (“church plans’) and those who belong to certain professional associations.

Myth 2 – My employer will help me obtain the benefit I am entitled to receive.

Fact – Not true most of the time. Most often, the benefit you seek, such as disability income replacement, was provided to you by your employer, but the benefit was insured by an insurance company that has issued a group policy to your employer. In other words, the employer-provided benefit is not paid by the employer, it is an insured benefit. Once the claim is commenced with the insurance company, the decision to honor the claim or deny it falls within the discretion of the inherently conflicted insurance company which profits from a denial of your claim. The employer does not make the decision in these circumstances and is often unwilling to help out in the process.

Myth 3 – I can immediately sue an insurance company that has denied my ERISA claim.

Fact – Not true. The ERISA law requires that a plan (or the insurance policy insuring the employer-provided benefit) provide the beneficiary whose claim has been denied with an opportunity to submit an internal review request to the designated administrator (usually this will be the insurance company). The denied claimant MUST complete this internal appeal process and receive a final decision first. The appeal decision will then inform the denied claimant if a lawsuit can then be filed. In other words, you must “exhaust” the administrative remedies mandated under the plan and insurance policy. These required steps will be described in the letter denying the claim.

For many reasons, the internal appeal process to be completed is considered by this author to be the most crucial stage of the entire process. Sections of our firm website address the important nature of the internal appeal stage. Be aware, however, that the details of a given situation can impact exactly how ERISA claims proceed and that an experienced ERISA disability or life insurance attorney can provide further insight regarding what you can expect (after reviewing your specific circumstances).

Myth 4 – I don’t need an attorney to help me with an ERISA claim or appeal.

Fact – Technically, this is correct, but, not really the case if you are serious about protecting your rights and interests as you move forward with your disability, life insurance of other ERISA-governed claim for benefits. In our experience, most people are shocked to hear about how the ERISA laws impact their claim for benefits. In fact, given the complexities of the ERISA – as well as the fact that insurance companies can be adversarial to deal with when it’s time to file an appeal of a denied claim for benefits, having the representation of an attorney can make a difference between success and a loss of benefit.

You Can Trust the ERISA Lawyers at McDermott Law, LLC

Do you need assistance filing an ERISA claim or appeal? If you need help with a claim for disability, life, health or AD&D benefits, considering turning to Colorado and Denver Disability Lawyer Shawn E. McDermott for experience in standing up to insurers and help in obtaining the benefits you likely deserve.

Call 303-964-1800 or email us using the contact form on this screen to set up a complimentary consult with us and find out more about how McDermott Law, LLC can help you.

From our offices in Denver, we provide the highest quality legal services to disabled people throughout the state of Colorado, the surrounding states and nationwide.