Some professionals receive comprehensive benefit packages from their employers. In addition to medical insurance and paid leave, they may also have employer-sponsored disability coverage. Long-term disability insurance can help replace lost income when people develop debilitating medical conditions that prevent them from working.
In theory, those diagnosed with serious illnesses or recovering from debilitating injuries might be eligible for long-term disability benefits. When those benefits are part of an employment compensation package, federal regulations apply. The Employee Retirement Income Security Act of 1974 (ERISA) applies to more than just pensions and employer-sponsored retirement benefits. ERISA also applies to disability benefits that workers may rely on for financial stability. ERISA creates special protections that help those in need of disability benefits.
A fiduciary duty for the insurance company
Insurance companies are typically for-profit organizations that put company finances first when making major decisions about claims. That is not true in cases involving ERISA-governed disability benefits. Insurance companies subject to the rules of ERISA have a fiduciary duty to policyholders. In other words, they have to put the best interests of the people with coverage ahead of the company’s profits. Employees in need of disability benefits have less reason than others making large insurance claims to worry about the company unfairly rejecting a claim because of that fiduciary duty.
The right to an appeal
Another way that ERISA protects those who need long-term disability benefits is by establishing the right to an appeal. Policyholders who do not receive approval during a claim have the right to file an internal appeal. That right may result in some workers getting benefits after an initial rejection.
The option to litigate
In cases where an appeal is not successful, frustrated policyholders may potentially be able to take legal action. An administrative law judge can review policy documents, medical records and other information available to the insurance company. They can then determine if the company may have violated ERISA and the rights of the policyholder. If the judge determines that the insurance company made the wrong determination, they can award the policyholder benefits.
Those hoping to use long-term disability coverage to support themselves and their families may need help with the claims and appeals process. Getting support during an ERISA-governed long-term disability claim can reduce the stress involved for a policyholder and may even increase their chances of success.