Disability benefits are an important safety net that many people ignore until they need. Some people don’t have any disability coverage protecting them other than benefits possibly available through the Social Security Administration. Every worker in the country has to pay taxes toward Social Security that help to fund both retirement and disability benefits.
Many working adults with spouses, children or mortgages will choose to purchase a private disability insurance policy. Supplemental short-term and long-term disability benefits can protect families from the worst consequences of a disabling medical condition. These policies can replace wages or close the gap between workers’ compensation benefits and the actual household budget.
Some professionals will have short-term disability benefits offered by their employer as part of their benefits package. Some supplemental disability insurance coverage is subject to strict federal oversight through the Employee Retirement Income Security Act of 1974 (ERISA). Which kinds of disability policies are subject to ERISA rules?
ERISA rules only apply to employer-sponsored benefits
Businesses that offer benefits like retirement and disability coverage to their workers have a responsibility to those employees. Under ERISA, there is a fiduciary duty established that requires that the plan administrator managing benefits prioritize not financial gain but rather the needs of the plan beneficiaries.
When it comes to disability benefits, ERISA extends protection regarding how a company funds those benefits and also the rights of a worker denied benefits while making a claim against an ERISA policy. ERISA mandates transparency, which can help workers get information about how to apply for benefits and how the appeals process works if their initial claim gets rejected.
Neither the supplemental benefits you purchase on your own nor different disability benefits offered through Social Security are subject to ERISA.
You should be able to count on employer-sponsored benefits in your time of need
Companies that offer certain benefits to their employees must make good on the promises they extend to their staff. ERISA helps protect workers who receive company-sponsored benefits from mistreatment or denied benefits.
Understanding when federal law establishes special protections for your benefits can help you feel more comfortable with what might be a complex and intimidating claims process. Learning more about ERISA disability benefits can help you overcome any barriers between you and the benefits you need.