Helping You Navigate ERISA
Based in Denver, Colorado, the ERISA lawyers at McDermott Law, LLC, have prepared this overview of ERISA (the Employee Retirement Income Security Act), which governs employee benefits in Colorado, including health insurance and long-term disability claims. Though this page is designed to give consumers a thorough overview of ERISA and its limitations, nothing can replace the advice of an experienced ERISA lawyer.
What Is ERISA?
The Employee Retirement Income Security Act (ERISA) was passed by the U.S. Congress in 1974 to regulate employee benefits such as health benefits, disability benefits, vacation benefits and more. Most people who participate in a pension or group insurance plan through a private employer or employee organization are covered by ERISA. Unfortunately, many employers ignore the laws that govern employee benefits. They may violate their workers’ rights or take advantage of employees, who don’t know all of their rights.
What Does ERISA Regulate?
ERISA regulates employee benefit plans. These plans exist in two forms: (1) “employee pension benefit plans;” and (2) “employee welfare benefit plans,” which are established and maintained to provide health benefits, disability benefits, death or unemployment benefits, prepaid legal services, vacation benefits, day care centers, scholarship funds, apprenticeship and training benefits and other similar benefits.
When ERISA was first adopted, the legislation was hailed as a major success in advancing employee interests, at least in relation to overhauling the private pension industry. However, in the 30 years, ERISA has been in effect, many would argue that it has become better known as a shield against consumer interests in the administration of nonpension employee benefit plans, such as long-term disability benefits. ERISA is frequently used by the plan or insurer to prevent employees from having the legal redress they would have had under pre-ERISA state laws.
To complicate matters, a review of the ERISA statutes rarely provides a complete answer to a specific question. Further, the circuit courts are divided on the interpretation of important issues, including the standard of review, the scope of discovery and the admissibility of evidence.
To learn more about what ERISA regulates and the process of recovering ERISA benefits, please contact Denver, Colorado, ERISA lawyer Shawn E. McDermott.
Key ERISA Terms
It is essential to have a working knowledge of technical definitions of important ERISA terms. Some commonly used terms are:
Group policy: If long-term disability (LTD) benefits provided by the employee benefit plan are insured by the plan sponsor, the insurer issues a group insurance policy.
Pension benefits: These benefits consist of payments to retirees, based in part on years of service.
Plan administrator: According to most courts, this is the company or person responsible for making the decision to deny or pay benefits. Typically, the plan administrator is the insurance company issuing the LTD group policy if the plan is insured.
Plan document: All of the plan’s rules and terms are spelled out in the complete employee benefit plan document. Often, the “plan” is the insurance policy itself. (See also the definition of “summary plan description” below.)
Plan participant: Typically, this refers to the employee enrolled in the plan. The plan participant also may be referred to as the claimant or the insured.
Plan sponsor: The employer or a union providing the plan
Summary plan description: Explains the available benefits, claim procedures, permissible benefit offsets, how and when benefits are payable, and how to appeal should the benefits are denied. The information often is provided in an employee benefits booklet.
Welfare benefits: These benefits include any benefit that is not a pension benefit, such as disability, health or life insurance, prepaid legal services, or nonmonetary benefits, such as daycare services.
If you have a question about an ERISA term not included on this list, or another aspect of ERISA health or disability insurance law, please contact Denver, Colorado, ERISA lawyers at McDermott Law.
Elements Of Plans Governed By ERISA
Most private-sector employee benefit plans are governed by ERISA. Nonetheless, it is incumbent on an employee to verify that this is truly the case. The purchase of an insurance policy by an employer does not automatically establish the existence of an ERISA plan. If the plan benefit is insured and the claimant questions the applicability of ERISA, the insurer has the obligation of establishing that federal law under ERISA governs the insurance policy.
The threshold issue in determining whether the court has jurisdiction pursuant to ERISA is whether the employee’s claim relates to insurance coverage he or she obtained it through an “employee welfare benefit plan.” By statute, there are five elements that must be met to constitute an employee welfare benefit plan. The plan must be (1) a plan, fund or program (2) established or maintained (3) by an employer, employee-organization, or both (4) for the purpose of providing medical, surgical, hospital care, sickness, accident and other benefits (5) to participants or beneficiaries. If all elements are satisfied, the plan is governed by ERISA rather than state common law.
Plans Not Covered By ERISA
Several kinds of plans are not governed by ERISA. These include: (1) group plans established or maintained by governmental entities or churches for their employees; (2) plans that are maintained solely to comply with applicable unemployment, or disability laws; (3) plans maintained outside the United States primarily for the benefit of nonresident aliens; and (4) unfunded excess benefit plans.
“Safe Harbor” Regulations
In addition, there is a “safe harbor” that may exempt an established plan from ERISA. U.S. Department of Labor regulations provide that ERISA does not apply to group or group-type insurance programs where:
- No contributions are made by an employer or employee organization.
- Participation in the program is voluntary.
- The sole function of the employer is to permit the insurer to advertise the program to employees, and the employer only collects premiums through payroll deductions for the insurer.
- The employer does not profit from the administration of the plan.
If the insurance program meets the criteria set forth in the safe harbor regulations, or the benefit plan is otherwise not deemed an employee benefits plan, ERISA does not apply and state law governs.
Learn More About ERISA
Learning a bit about the laws governing ERISA can help you plan your course of action. Denver, Colorado, ERISA lawyer Shawn E. McDermott has prepared the following pages to help Colorado residents familiarize themselves with a few important aspects of ERISA claims, litigation and appeals:
- ERISA disability claims and health insurance claims
- Litigation in ERISA long-term disability claims
- Appealing ERISA decisions
Contact The ERISA Claim Lawyers At McDermott Law, LLC
McDermott Law is one of the very few law firms in Colorado equipped to handle all aspects of an ERISA claim, the appeal and any necessary litigation. We can familiarize you with the law that applies to your case and give you an honest case evaluation. If you have questions about ERISA or have a dispute relating to ERISA benefits, please call 303-964-1800 or complete our contact form to arrange a free consultation. Our Colorado ERISA attorneys are ready to help you get the benefits you need and deserve.