What Is ERISA?
ERISA is the Employee Retirement Income Security Act, the federal law enacted in 1974 that applies to employers’ group insurance plans. ERISA provides standards that insurers are required to meet in managing and operating group employee benefit plans. ERISA covers several types of group benefit plans, such as disability, life, and health plans, pensions, and 401(k)s. ERISA’s primary purpose is to protect the interests of employees and their beneficiaries by ensuring that employee benefit plan assets are appropriately managed and that plans are financially sound.
When an employer or plan administrator fails to abide by ERISA requirements, an employee may have grounds to bring ERISA claims in court. If you think your employer or plan administrator has failed in supporting your rights under an ERISA plan or failed in providing you plan benefits to which you are entitled, a highly experienced ERISA attorney can help you understand your options.
What Are Employers’ Main Obligations Under ERISA?
ERISA requires employers and plan administrators to manage plans responsibly and to protect the assets in the plans for the benefit of employees.
To that end, they have three primary obligations.
- They must act as fiduciaries or select and choose proper fiduciaries. A fiduciary is someone who is legally obligated to protect the financial interests of another. The agencies or people who administer ERISA plans, including retirement plans and pensions, must act in the best interests of the plan participants and beneficiaries. They also must make the best possible decisions to protect plan assets. For example, an employer may not use an ERISA plan’s assets to fund business growth initiatives, as it would not be in the plan beneficiaries’ best interests. They must also choose fiduciaries who will act in the best interests of ERISA plan participants and their beneficiaries.
- They must adequately inform plan participants. Employers must provide education and information to employees to help them understand the plan and make the best decision about whether to participate in the plan. For example, an employer must disclose the material terms of the ERISA plan by distributing a Summary Plan Description.
- They must provide a method for handling disputes by ERISA plan participants and their beneficiaries. Employers must institute a process through which employees can file complaints when they have issues or grievances with a plan, the management of a plan, or their access to benefits. Employers must also provide an appeals process that allows employees to have a fresh set of eyes review initial benefits denials if they are not satisfied with the initial decision.
Required Reporting and Forms for ERISA
ERISA includes several notice requirements about plans and how they will be administered. This helps ensure that ERISA plans are well organized, thought out, and transparent. These requirements include:
- A plan document. This written plan must name the plan administrator, describe how benefits are paid, describe claims processes, and must include language that protects participants’ privacy, for example with regard to medical information.
- A Summary Plan Description. This is a shorter version of the plan document that provides highlights most relevant to plan participants. It is meant to provide plan information and transparency in a more user-friendly way.
- Annual filings. Employers and ERISA plan administrators may need to file annual reports with the U.S. Department of Labor or other governing bodies.
What Are Some Common ERISA Violations?
If employers are found violate ERISA, they can face civil action or criminal charges. However, violations still occur. Some common ways employers fail to meet ERISA requirements are:
- Not providing benefits owed under a plan
- Not meeting time deadlines provided by ERISA to make decisions on claims for benefits
- Not placing the correct information in letters denying benefits under a plan
- Not appropriately funding a plan or otherwise breaching a fiduciary duty
- Reducing promised benefits after they have been earned
- Retaliating against employees who take action to enforce their rights by withholding or otherwise altering benefits or access to benefits.
- Imposing costs or limitations on mental health coverage and treatment benefits that are not imposed on other parts of a plan
- Failing to meet notice, reporting, or documentation requirements
What Can You Do to Enforce Your Rights Under ERISA?
If you believe your benefits are not being administered properly or that you are not getting what you are entitled to, you should immediately consult with an experienced ERISA claims attorney who can guide you through the process and handle the appeal of a claim denial or who can institute litigation on your behalf. ERISA provides tight time frames to appeal claim denials so you must act quickly. For example, a plan participant or beneficiary has only 60 days from the receipt of a life insurance or accidental death insurance claim denial to file an appeal. If you miss the appeal deadline, you may have missed your opportunity to litigate the claim denial.
ERISA litigation is a complex process that primarily takes place in the federal court system. As such, it is important to have an experienced ERISA lawyer on your side to file such a case or to handle an appeal. For more information about how an ERISA lawyer can help you assert and fight for your rights under ERISA, reach out to the McKennon Law Group, PC, for a free consultation.