Can my disability insurance policy be exempt from ERISA?

One of the first things our disability insurance attorneys will do with every disability claim is to determine whether or not the disability insurance policy is governed by ERISA. Check out our video to learn why ERISA is an unfair law for disability insurance claimants. The analysis to determine if a disability plan is exempt from ERISA is complicated when a disability claimant received their policy through their employer. If you purchased your disability policy from an insurance agent or through an organization that is not your employer, then your disability policy is Exempt. If you are a government or church employee, then your disability plan is exempt from ERISA.

Most disability plans offered through employers are governed by ERISA unless the disability plan meets all four elements of the federal Safe Harbor Regulations. The safe harbor regulation provides that:

The terms ’employee welfare benefit plan’ and ‘welfare plan’ shall not include a group or group-type insurance program offered by an insurer to employees or members of an employee organization, under which:

  1. No contributions are made by an employer or employee organization;
  2. Participation in the program is completely voluntary for employees or members;
  3. The sole functions of the employer or employee organization with respect to the program are, without endorsing the program, to permit the insurer to publicize the program to employees or members, to collect premiums through payroll deductions or dues checkoffs and to remit them to the insurer; and
  4. The employer or employee organization receives no consideration in the form of cash or otherwise in connection with the program, other than reasonable compensation, excluding any profit, for administrative services actually rendered in connection with payroll deductions or dues checkoffs.

In most cases the employer will be involved in the design and implementation of the disability insurance plan. The employer’s actions will often cause the plan to fail the 3rd prong of the Safe Harbor regulation, which will then make the disability plan subject to ERISA. The investigation into determining ERISA exemption is very specific and detailed, but in some cases it could turn out that your plan may be exempt from ERISA. Our law firm was successful in taking FEDERAL EXPRESS to court and proving that their short term disability insurance plan was exempt from ERISA.

There are some other factors that may cause a claim to be exempt from ERISA, but this summary should provide a basic understanding of the complicated issues involved in determining ERISA exemption. Contact us for a free consultation if you have specific questions about your disability insurance policy.

Comments (2)

  • Jazmin, self-funded policies typically fall under the umbrella of ERISA, unless it is not a disability policy so much as a payroll practice of the employer- which requires in depth examination to determine. Please feel free to contact our office to discuss how we may be able to assist you.

    Stephen Jessup Feb 5, 2016  #2

  • I was told by the Insurance department (in Colorado) that my short term disability policy is not governed by any state regulatory agency because it is “self-funded”- my employer holds and pays the funds for claims while the third-party administrator, Cigna, merely handles the paperwork and claim decisions. I was told that there is absolutely no oversight or recourse for employees because this type of policy operates outside of insurance regulations, including ERISA, but according to the criteria listed here it seems to be wrong.
    The short-term disability (and LTD) plan is provided by my employer with no premiums (no paycheck deductions or enrollment). Also, the ‘policy’ provided to me has extremely simplistic language and states that an employee is considered ‘disabled’ if the person is unable to complete their job duties due to a medical condition. Of particular concern to me is that Cigna stated they need approval of my employer to (1) provide me a copy of the actual policy, and (2) allow me to appeal a decision (regardless of how much time has passed since denial). My employer and Cigna are unable to give me any criteria or basis on which they make these decisions. (This is not the actual claim decision (approval/denial), but the decision whether a claimant can even submit an appeal). My employer says the approval or denial is completely decided by Cigna based on Cigna’s standard criteria for disability; however Cigna states that my employer sets the criteria and Cigna is only responsible for forms (employer may not handle medical records for HIPAA reasons). This seems outrageous and unbelievable to me.
    What is the relationship between ‘self-funded’ disability policies and ERISA? Can a disability insurance plan really be virtually immune from any laws or regulations?

    Jazmin Feb 4, 2016  #1

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What are your fees?

Since we represent disability insurance claimants at different stages of a disability insurance claim we offer a variety of different fee options. We understand that claimants living on disability insurance benefits have a limited source of income; therefore we always try to work with the claimant to make our attorney fees as affordable as possible.

The three available fee options are a contingency fee agreement (no attorney fee or cost unless we make a recovery), hourly fee or fixed flat rate.

In every case we provide each client with a written fee agreement detailing the terms and conditions. We always offer a free initial phone consultation and we appreciate the opportunity to work with you in obtaining payment of your disability insurance benefits.

Do I have to come to your office to work with your law firm?

No. For purposes of efficiency and to reduce expenses for our clients we have found that 99% of our clients prefer to communicate via telephone, e-mail, fax, sessions, or Skype. If you prefer an initial in-person meeting please let us know. A disability company will never require you to come to their office and similarly we are set up so that we handle your entire claim without the need for you to come to our office.

How can I contact you?

When you call us during normal business hours you will immediately speak with a disability attorney. We can be reached at 800-682-8331 or by email. Lawyer and staff must return all client calls same day. Client emails are usually replied to within the same business day and seem to be the preferred and most efficient method of communication for most clients.

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Dearborn National/Dearborn Group stopped my disability claiming that I could be working in some capacity after a few years. During those years they consistently mentally abused me. Upon hiring Dell & Schaefer to represent me in appealing Dearborn’s decision to cut off my disability Attorneys Dell & Schaefer immediately stopped any contact from Dearborn to me. Because Dearborn had one particular employee that had psychologically been abusing me over several years this alone was worth every penny of Attorneys Dell & Schaefer’s (D&S) fee. Dearborn tried every dirty trick in the book but ended up giving in before my case went to court because even though they hired four doctors to try to get one who would testify against my doctors they failed.

Attorneys Dell & Schaefer had done their job and had all the evidence needed to back up my assertions of physical disability. I hate being disabled, there’s no way I’d voluntarily give up my career. I thank Dell & Schaefer though for setting this wrong by Dearborn National/Dearborn Group to a right. If I could have given up the money in advance to not go through the psychological abuse by the person at Dearborn and hired an attorney straight away I would have. My sanity is worth it. These insurance companies only care about money. All though D&S can’t operate without collecting payment I always felt listened to and cared about. Every questioned was answered during all phases of my lawsuit quickly and completely. I’ve had payment questions afterward and those are also.

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