How ERISA Applies to Long Term Disability

How ERISA applies to long term disability depends on several different factors. ERISA is an acronym for a federal law called the Employee Retirement Income Security Act of 1974. Originally, the purpose of ERISA was to set minimum standards for pension and health plans to protect employees in private industry. After 1986, ERISA also became applied to long term disability benefits.

It is important to understand how ERISA applies to long term disability benefits first in terms of where it does not apply. If you purchased your own long term disability insurance (not through your employer, but directly purchased from an insurance company), or if you work for a government agency that provides its employees with long term disability insurance ERISA does not apply. ERISA also does not apply if your employer is a church institution or even a hospital owned or operated by a church.

ERISA is a federal law and therefore it supercedes state laws that pertain to long term disability insurance. Although ERISA was originally enacted to protect employee rights, the reality of having a claims appeals process at the federal level instead of at the individual state level is often more difficult for the disabled person and favors the insurance company.

If you have long term disability insurance that is covered under ERISA, you may discover that your insurance company may be more likely to deny your claim for what appears to be an arbitrary reason because they know your appeal will be going before federal judges and that the rules that apply to ERISA claims are more limited than reviews you might have in a state court. Also, in a state court you are much more likely to have a claim heard by a jury of your peers rather than a judge.

Before a disability occurs, can you do protect your future likelihood to be able to collect benefits from a legitimate claim? Yes: purchase your own disability insurance policy and opt out of your employer's offered policy. If you purchase your own policy privately, the long term disability claims process will be governed by your state's laws and not by ERISA.

If a disabling incident has already occurred, protect yourself by reading the fine print on your disability policy, keep excellent records of all doctor visits, and consult with an attorney who specializes in long term disability and ERISA if you have reason to believe your claim was improperly denied.