What is ERISA?

ERISA stands for the Employee Retirement Income Security Act, a federal law passed by Congress in 1974. President Nixon signed ERISA into law after 10 years of study designed to reform the nation's pension system.

Congress ultimately included employer-provided insurance benefits as part of the law. That is why most Short Term Disability, Long Term Disability, and other insurance benefits that are offered by private employers are covered by ERISA. Keep in mind that ERISA applies only to employee benefits provided by private employers. If you work for a government entity or a church, ERISA will not apply to your claim. However, any private employer (even a small company with only one employee other than the owner) that provides employee benefits will be subject to ERISA.

With certain exceptions, ERISA creates one uniform system to administer these group benefit programs sponsored by employers. However, this “uniform system” is far from uniform. The law actually allows employers to establish nearly any type of benefit plan they wish, as long as they provide certain documents to employees and allow for an appeal when benefits are denied.

There are many differences between group benefit cases covered by ERISA and individual insurance claims regulated by state laws. If you or your lawyer do not know those differences and how to handle them, it can hurt your case. ERISA is much less consumer-friendly than state insurance laws, and the insurance companies that administer ERISA plans hide behind its protections to deny many group disability benefit claims that would not be denied if they were individual insurance claims.

Copyright (c) 2008 by John V. Tucker and Tucker & Ludin, P.A. All rights reserved. Any content borrowed or referenced from another source is referenced by citation to the original source as noted in the text above.

DISABILITY BENEFIT TIP OF THE WEEK: Offsets

Offsets for Long Term Disability Benefits
Depending on your Long Term Disability ("LTD") insurance plan, your LTD benefits may be adjusted to reflect other income benefits from various sources. These sources can include but are not limited to:

• Social Security Disability ("SSD") or retirement benefits
• Worker's Compensation
• Veterans Service-Connected Disability or Pension ("VA") benefits
• No-fault auto insurance settlements
• Other employer income
• Any payments from the Railroad Retirement Act
• Any state compulsory benefit act or law

For example, assume Bob is entitled to receive $1000 in LTD benefits and $800 in SSD benefits. Bob's LTD insurance carrier will deduct the $800 from his LTD benefit, leaving him with a $200 net LTD benefit.

In some instances, you may be entitled to a minimum benefit if your LTD is less than your other source of income. For example, if Bob was also entitled to a VA disability benefit of $300 a month, his net LTD benefits would be $0. However, some plans will still give him a minimum monthly payment. This amount will vary according to the plan.

If you are receiving an LTD benefit and have not been approved for SSD yet, your insurance company may estimate your SSD benefit and deduct it from your monthly payment. If they do not, be aware that if you are later approved for SSD and receive a lump sum payment, you will have to pay back the lump sum to the insurance carrier. Your insurance company will then begin deducting your monthly SSD benefit from their payment.

REMEMBER: If you are receiving LTD benefits, READ YOUR INSURANCE POLICY OR EMPLOYER'S BENEFIT PLAN. Know what sources of income the administrator or insurance company may use to offset your benefit. If you receive payments from any of these sources, make sure to tell your insurance carrier. If you do not, they will find out later, and you will have to pay them back!


Copyright (c) 2008 by John V. Tucker and Tucker & Ludin, P.A. All rights reserved. Any content borrowed or referenced from another source is referenced by citation to the original source as noted in the text above.