Nortel Networks, once a strong player in the telecommunications market with over 8000 employees, has announced that as part of its bankruptcy it will terminate Long Term Disability, retiree and other benefits to employees in the United States on August 31, 2010. The company also announced that it will terminate the employment of those employees receiving Long Term Disability benefits.
Unfortunately, ERISA - the Employee Retirement Income Security Act, the federal law that governs employee benefits - offers no protection for people who make Long Term Disability ('LTD') claims under an employer's self-funded LTD plan if the employer later goes bankrupt. Compared to an insured plan where an employer buys a group insurance policy to pay claims, self-funded ERISA plans are paid from a company's general funds. Although pensions have some limited protection under ERISA, other benefits like Long Term Disability plans typically do not survive bankruptcy.
If one can afford it, it is almost always better to supplement any company funded disability or life benefits with private insurance policies. Having a private policy gives piece of mind to an employee that they will still have disability or life insurance, even if their employer goes bankrupt.
Copyright (c) 2010 by John V. Tucker and Tucker & Ludin, P.A. All rights reserved. For assistance with your Long Term Disability claim, ERISA Disability benefit claim, Social Security Disability claim, or Veterans Disability compensation or pension claim, call Disability Lawyer John Tucker at (866) 282-5260.
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