What’s the Difference Between ERISA and Individual Disability Insurance?

The Employee Retirement Income Security Act of 1974 (ERISA) is the federal law governing employee benefits. ERISA details the requirements that insurance companies and employers must follow to protect employees enrolled in insurance plans. ERISA is applicable in every state, and it contains a detailed legal framework for resolving denial-related disputes. Under ERISA, a denied employee may file an appeal. Through the appeals process, the insurer must provide precise information and ensure that the denied employee receives a complete and fair review. If the parties can’t reach an agreement via this process, the employee may file an appeal in federal court.

In addition to receiving coverage through an employer, employees have the option of purchasing long-term disability insurance directly from an insurance company. When an employee purchases individual disability insurance, the policy isn’t governed by ERISA. However, this doesn’t mean that an employee with individual disability insurance has no recourse if his or her claim is wrongfully denied. An employee with individual disability insurance still has the option of filing an appeal following a denial. Unlike ERISA, though, an appeal of an individual disability insurance claim denial is governed by state law. One advantage of individual disability insurance is that, in some cases, individual policies give claimants more options to resolve a dispute than ERISA. Under ERISA, every dispute follows the same appeals process. An additional difference between individual disability insurance and ERISA is that appeals involving individual disability insurance tend to move faster than ERISA appeals. Finally, many states allow employees to seek punitive damages for denied individual disability insurance claims.

If you need assistance applying for long-term disability insurance or an insurer has denied your claim, Stansberry Kinsley is here to help. Stansberry Kinsley handles long-term disability claims and appeals. Once you begin receiving your long-term disability benefits, we will provide ongoing advice and counsel to ensure that your rights are protected. At Stansberry Kinsley, we understand the effect that a disabling physical or mental condition can have on your life, and we will seek benefits that assist you as you move forward. We handle each case on an individual basis, as we understand that everyone’s circumstances are different. Whether inside or outside of the courtroom, our experienced attorney is prepared to fight for you. Please contact our experienced attorney as soon as possible to set up a free consultation.

Related practice pages: Long-Term Disability · Short-Term Disability · Denied or Ended Benefits · Disability Insurance FAQs.