The Employee Retirement Income Security Act is a federal law to protect employees participating in employer-sponsored benefit plans. However, several misconceptions surround ERISA, which can make it difficult to understand your rights and responsibilities.
Understanding the truth behind these myths is essential for employees.
Myth: ERISA only covers pensions
You may have heard that ERISA only protects your pension. However, ERISA actually covers many benefits in addition to pension plans. It protects your employer-sponsored health, life and disability insurance.
However, ERISA provides varying levels of protection for different employee benefits. You should review the full scope of the law so you can seek assistance if necessary.
Myth: ERISA guarantees benefit payments
While ERISA establishes guidelines for the administration of benefits, it does not guarantee payments. Employers have the discretion to design and manage benefit plans.
Your plan documents outline the terms and conditions for benefit eligibility and payments. Review your plan materials to understand the specifics of your benefits.
Myth: ERISA immediately addresses benefit denials
Some believe that employees can immediately file a lawsuit in federal court after a denial of benefit claims. In reality, ERISA mandates the exhaustion of administrative remedies before pursuing legal action. You must go through the internal appeal process outlined in the plan documents first.
Myth: ERISA lawsuits are simple
Many people underestimate the difficulty of an ERISA lawsuit, which can be complex and time-consuming. Exhausting administrative remedies can extend the legal process. Employees should prepare for a thorough legal journey if pursuing an ERISA claim.
If you receive a benefit denial, you have possible protection under ERISA. In 2022, 6,928 vested plan participants collected $542 million after seeking ERISA remedies for denied benefits. Separating the facts from the misconceptions provides you with a clear path forward in this challenging situation.
