Does ERISA cover your disability insurance plan?

If you have developed an injury or illness that will keep you out of work, you may be wondering whether you qualify for long term or short term disability in California. You may also wonder if the Employee Retirement Income Security Act (ERISA) applies to your disability insurance.


Why does it matter?

It matters because ERISA requires an employer to follow certain steps, such as providing employees with a Summary Plan Description, but also benefits the company by requiring disputes to be heard in federal court and limits relief to the benefits at issue.

When does ERISA apply?

ERISA covers nearly 2.3 million health, accident and disability benefit plans offered through private employers. About 143 million Americans take part in plans covered by ERISA. These plans include most short term and long term disability insurance plans.

When does ERISA NOT apply?

ERISA does not cover certain government plans and plans implemented by churches for employees. In addition, some short term disability plans are not subject to ERISA if they meet certain conditions regarding payroll practices. These payroll exceptions include:

  • The people who receive benefits. For example, if former employees may still receive payments, the payroll exception cannot apply.
  • The source of payments. In order to be an exception, the company must make the payments from its own assets, rather than through insurance.
  • The amount of payments. The payments cannot be more than the employee’s normal compensation.
  • Reason for payments. Generally, the employee must receive the benefits for standard short term disability, whether for physical or mental impairment.

How do you file a claim?

Your Summary Plan Description will give you the information you need to file a claim. It should also describe your benefits and what limitations your plan may have. Read the directions carefully for filing a claim to determine if you meet the claim requirements.

If you are facing a disability that will keep you away from work, either short term or long term, now is the time to find out more about your employer’s disability plan.

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