Frequently Asked Questions
1. What is ERISA?
2. How does ERISA protect me?
3. How do I know if my benefits are covered by ERISA?
4. I work for the state. Am I protected by ERISA?
5. What are the plan documents?
6. What is the Statute of Limitations to bring a claim under ERISA?
7. Can I file a lawsuit right away if my claim is denied?
8. Should I handle the case myself during internal appeals and just hire an ERISA lawyer when I need to sue in court?
9. Do I need a lawyer who focuses on ERISA?
10. How come the Social Security Administration awarded me disability benefits but my long term disability plan insurer denied my claim?
11. If I am receiving long term disability benefits, do I have to continue seeing a doctor?
12. What if my doctor said I am disabled?
13. Should I answer the telephone when the disability insurance company calls me?
14. Should I put everything in writing with the Disability Plan Insurer of Administrator?
15. Should I allow an Insurance Case Manager to come to my home?
16. What should I do if the Insurer or Administrator ordered me to see an IME or an FCE?
17. What if the Insurer or Administrator's description of my job duties is not accurate?
18. Why do the Disability Insurance Claims Forms leave so little room for responses?
19. How do I describe a "Typical Day" on a Disability Claims Form or Update?
20. How should I describe my limitations?
21. Do insurance companies really put people under surveillance?
22. What if the Insurance Representative tells me how to appeal?
23. How do I pay for doctor visits after I go on Disability?
24. Do I need to apply for benefits from the Social Security Administration?
25. Why does my Disability Insurance Plan claim I owe them my Social Security Disability Award?
26. What is an ESOP?
27. What is the Difference Between a Defined Benefit and Defined Contribution Plan?
28. What is a Cash Balance Plan?
29. What is a Profit Sharing Plan?
30. What is a 401(k) Plan?
31. What is a Whipsaw?
32. What is Wear Away?
33. What is My Contribution or Benefit Limit for My Retirement Plan?
34. What if My Employer Does Not Deposit My 401(k) Deferrals in to My Account?
35. Are My Pension Benefits Guaranteed?
36. Why are State Pension Plans so Underfunded?
37. How long can My Retirement Plan make Me wait until I am Vested?
1. What is ERISA?
The Employee Retirement Income Security Act of 1974 is commonly referred to as ERISA. It is a federal law concerning employer provided benefits to employees. Generally, any retirement, health insurance, life insurance, accidental death & dismemberment, or disability insurance plan will be an employee benefit plan covered by ERISA, so long as it is established or maintained by your employer.
2. How Does ERISA Protect Me?
ERISA includes employee protections by mandating plans have minimum participation, vesting, accrual, and funding standards. It includes protections from employers discriminating in favor of highly compensated employees. ERISA § 502(a) permits participants and beneficiaries to bring civil actions against the plan to collect benefits due under the plan, for breaches of fiduciary responsibility for losses caused to the plan or your account within the plan, or for “other appropriate equitable relief.” ERISA § 510 also prohibits any person from taking any adverse employment action against you for exercising any of your rights under ERISA, and from interfering with your right to the attainment of benefits (for example, by firing you just before your benefits vest).
3. How Do I Know If My Benefits Are Covered by ERISA?
Many plan documents will explicitly tell you that the plan was established to comply with ERISA, leaving little doubt. In other cases, whether the benefits amount to an employee benefit plan covered by ERISA will hinge on all the facts and circumstances. Generally, any plan, fund, or program established or maintained by an employer for the purpose of providing benefits to employees is an ERISA covered plan. ERISA exempts certain things, though, such as wages, vacation time, sick days, and other payroll practices.
4. I Work for the State. Am I protected by ERISA?
No. ERISA expressly exempts from its coverage employee benefit plans established or maintained by state, municipal, or other local governments or units or agencies therein. So public school teachers, police officers, firefighters, etc. have employee benefit plans not covered by ERISA. ERISA similarly exempts any church plans, but church plans can elect to be covered by ERISA.
5. What Are the Plan Documents?
ERISA requires any employee benefit plan be in writing. The plan documents literally are any documents or instruments under which the plan is established or maintained. Typically, there will be a master plan or trust document. The plan administrator also is required to distribute a summary plan description, which is a summary of the plan document commonly spanning 20–80 pages. The summary plan description must contain all the material terms of the plan, including the formal name of the plan, the name of the administrator(s), how to submit claims, and any procedure regarding internal appeals.
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6. What Is the Statute of Limitations to Bring a Claim under ERISA?
ERISA only proscribed statutes of limitations for claims alleging breach of fiduciary duty. The statute in those cases is 6 years from the alleged act or omission, or 3 years after the claimant had actual knowledge of the claim. What exactly the claimant needs to have had knowledge of differs from jurisdiction to jurisdiction.  For all other claims made under ERISA (such as sect; 502(a)(1)(B) claim for benefits under the terms of the plan), ERISA provided no statute of limitations, and courts will look to the most analogous state statute of limitations in the appropriate jurisdiction. For a benefit claim, this will usually be a statute for breach of a written contract. However, courts have uniformly held plans are free to further limit that period, provided it is disclosed to participants, and they often do. These limitations still must provide you with a reasonable amount of time, though. That self-imposed limitations period, however, must still be reasonable to be legal. The summary plan description should state how much time you have to submit a claim, and how much time you have to bring an action in court. Call us if you need to know if the limitations period is likely to be upheld.
7. Can I File a Lawsuit Right Away If My Claim Is Denied?
Generally no. ERISA requires plans include reasonable claims procedures, and include the opportunity to appeal a claim denial to a named fiduciary of the plan. You must exhaust all administrative claims procedures before filing a complaint in court. If you fail to exhaust these procedures, your case will almost certainly be dismissed for failure to do so. Only in rare circumstances will a court determine exhaustion was not required because, for example, it would have been futile.
8. Should I handle the case myself during internal appeals and just hire an ERISA lawyer when I need to sue in court?
No. I have heard clients tell me that the insurer or claims administrator told the client not to hire a lawyer until after the claims procedure had been exhausted. That would be an enormous mistake, and a way to almost guarantee you will not get the benefits you deserve. When seeking redress in court, the judge will limit her review to the record created before the insurer or administrator, meaning if you wait to get us involved until after you have exhausted internal appeals we cannot add value to your case by leveraging our experience to create the sort of record that is difficult for the insurer to deny a claim based upon, and that gives you the best chance of a judicial decision in your favor.
9. Do I Need a Lawyer Who Focuses on ERISA?
Yes. ERISA is an extremely complex and ever-changing area of the law. It is not conducive to a law practice that dabbles in the area or plans to learn as it goes. ERISA’s statutory, regulatory, and case law are so expansive and constantly growing that lawyers who primarily represent individuals in injury or other employment matters cannot stay up to date with all the changes in the law. You should retain a lawyer dedicated to ERISA for your ERISA case.
10. nbsp; How come the Social Security Administration awarded me disability benefits but my long term disability plan insurer denied my claim?
Social Security laws and regulations provide a uniform definition of “disabled.” The definition of "disabled" in ERISA long term disability insurance plans varies from policy to policy, varies within a policy based on the time period after the initial onset of disability, and similar policy language can be construed differently in different jurisdictions. Social Security claims will be administratively decided by an Administrative Law Judge, an independent arbiter with no stake in the outcome. ERISA long term disability plans will usually administratively be adjudicated by the very insurer or administrator that stands to gain financially from denying your claim. The Social Security Administration has limited resources to dispute claims, so with each level of appeal, your odds of success increase. ERISA long term disability insurers and administrators have virtually unlimited resources to dispute your claim.  The only way to increase your odds of success is to engage an ERISA lawyer who is as familiar with the process as the insurer and its army of lawyers and doctors.
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11. If I am receiving long term disability benefits, do I have to continue seeing a doctor?
Yes. Most, if not all, plans will require that in order to continue receiving benefits, you must be under the continuing care of a physician, and you must continue to submit the doctor’s notes to the disability plan insurer or administrator.
12. What if my doctor said I am disabled?
A mere conclusion from your doctor that you are disabled is useful but never sufficient to get you disability benefits. The evidence will have to clearly demonstrate why the doctor opined you are disabled.
13. Should I answer the telephone when the disability insurance company calls me?
Yes, or call back from your home telephone number when you are available. Insurers have been known to conclude that if you cannot be reached at your home telephone number, it means you must not ever be home and thus are not disabled. As flawed as the logic is, insurers use it as a basis to terminate benefits.
14. Should I put everything in writing with the Disability Plan Insurer or Administrator?
Yes. Even when you speak on the telephone, send a dated and signed letter confirming the substance of the conversation. That way, if the insurer’s notes of what you said differed from what you actually said, it will be documented. You should send the letter certified mail, with return receipt, and keep a copy of the signed and dated letter for your records.
15. Should I allow an Insurance Case Manager to Come to My Home?
If the disability plan insurer requests to have a case manager meet with you, you should politely accept. The case manager will invariably request to meet you at your home, portraying it as a courtesy to you. It is not a courtesy to you. The insurer wants the meeting to take place at your house so it can examine where you live to discover any basis whatsoever to terminate your benefits. Things as simple as seeing stairs in your home, or seeing a vacuum cleaner out, could form a basis (as unreasonable as it may be) for the insurer to terminate your benefits or deny your claim. You should meet the case manager, but agree to do so at a neutral location, and offer to meet when a family member or friend can drive or otherwise escort you.
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16. What Should I Do If the Insurer or Administrator Ordered Me to See an IME or an FCE?
If the insurer or claims administrator of a disability plan wants you to see an Independent Medical Examiner or have a Functional Capacity Equivalence evaluation, the first thing to keep in mind is that these “independent” individuals are not truly independent. They get hired by the insurer, and if they return opinions unfavorable to the insurer, the insurer will send the referrals to somebody else. I have heard clients tell me the IME or FCE evaluation did not accurately describe what happened, or left out critical parts of the evaluation. To protect yourself, either bring another person with you who will take notes, or better yet, video record the evaluation. You must, of course, obtain the evaluator’s consent to be recorded before doing so.
17. What If the Insurer or Administrator’s Description of My Job Duties Is Not Accurate?
When assessing a claim of whether or not you are disabled such that you cannot perform functions and duties of your job, the long term disability insurer will most often not actually consider your actual job, but will consult a book which describes your job, the Dictionary of Occupational Titles or something similar. The definition may or may not accurately describe your job tasks, required hours, and physical requirements. You should be prepared to obtain a written statement from a co-worker or supervisor which describes your job, hours, and physical requirements.
18. Why Do the Disability Insurance Claims Forms Leave So Little Room for Responses?
Disability plan insurers and administrators do not want you or your doctor to provide thorough answers to their questions. Short, terse answers make it easier for the insurer or administrator to deny claims. Adding additional pages or an addendum helps provide the space you need to accurately and thoroughly answer any question.
19. How Do I Describe a “Typical Day" on a Disability Claim Form or Update?
Many illnesses will have your pain or other discomfort vary from day to day. You should avoid providing an average, or only describing what some days feel like. You should clearly describe that the pain or discomfort varies, by how much it varies, and how often you experience each level of pain or discomfort.
20. How Should I Describe My Limitations?
Avoid using words or phrases that can be open to interpretation or can be ambiguous. For example, if you state you “cannot walk far,” you may mean you can only move a few steps, but the insurer may read that to mean you cannot walk one mile. Be clear and objective with your words.
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21. Do Insurance Companies Really Put People Under Surveillance?
Yes. They will frequently send an investigator out to monitor your actions for several days. The investigator will observe you whenever you leave your home and note what he or she observed you doing, such as running errands, carrying bags, driving, how far you walked from the parking spot to the store entrance, and how long you were out of the house. Investigators will also search the Internet for your name, and immediately try to find any social networking pages, such as Facebook, MySpace, LinkedIn, Twitter, etc. If you post anything on those pages that is available to the public and that the insurer can construe as inconsistent with what you or your doctor has reported to the insurer, it will likely be used to deny your claim or terminate your benefits. For example, your limitations may state you cannot sit for more than 10 minutes, but you posted having a great day at the beach, the insurer will certainly terminate your benefits (even if you had to lie down the entire time).
22. What If the Insurance Representative Tells Me How to Appeal?
Do not rely on the representative’s oral statement about what to do on appeal. You will receive a denial letter that advises you of your rights, and gives you time limitations. Merely submitting a written appeal, without any additional supporting documentation, is never successful, and will likely make your case between difficult and impossible to win after exhausting internal appeals.
23. How Do I Pay for Doctor Visits After I Go on Disability?
Your employer-sponsored health insurance plan will offer you COBRA coverage after you are no longer eligible for the employer-subsidized participation. COBRA ordinarily allows you to buy the insurance coverage for 18 months. If you can demonstrate you were awarded benefits for disability from the Social Security Administration, your coverage under COBRA can be extended even further. Upon exhaustion of COBRA benefits, you will have to qualify for early Medicare benefits. Keep in mind, however, that beginning in 2014, you will be able to purchase individual insurance without being denied on the basis of preexisting conditions.
24. Do I Need to Apply for Benefits from the Social Security Administration?
Most ERISA disability plans will require you to apply for benefits from the Social Security Administration, and will pay you the benefits after offsetting any benefits you receive from Social Security. The plans will not require you be awarded benefits, but you must try to get them. Some plans will even provide you with a lawyer to seek those benefits.
25. Why Does My Disability Insurance Plan Claim I Owe Them My Social Security Disability Award?
As stated above, most plans provide for a certain level of benefits after an offset for any benefits received from Social Security. So if you received a payment for past due benefits from Social Security, and were receiving payments under your employer-sponsored long term disability plan for that time period to which the past due benefits relates, the disability plan will be entitled to the entire amount. Plans often include terms stating how this can be enforced, which will include withholding your future benefits.
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26. What Is an ESOP?
An ESOP is an employee stock ownership plan. Essentially, the retirement plan in which the employees participate owns the stock of the company sponsoring the plan. Both very large and very small employers can have ESOPS. ESOPs were designed in part to give employees an ownership interest in the employer, thereby motivating them to work extra hard so they could share in the appreciation of the employer’s stock. The downside can be that as an employee, all or substantially all your retirement savings can be in one proverbial basket: the employer’s stock. Couple that with the fact that you depend on the employer for your wages as well, and a collapse of the employer could be a financial disaster.
27. What Is the Difference Between a Defined Benefit and Defined Contribution Plan?
Defined benefit plans promise to pay you upon retirement a certain benefit amount, say 1% of your final average earnings per year of service for up to 35 years of service. Defined contribution plans, on the other hand, promise to pay only whatever is in the participant’s account upon retirement. The primary distinction is who bears various risks. In a defined benefit plan, the employer bears the risk of performance of investments in the plan and the risk that you could live longer than your life expectancy. In a defined contribution plan, however, you bear the risk of performance of investments because if the assets in your account lose value, there is less money there for you upon retirement. Likewise, you bear the risk that you might outlive the money in your account.
28. What is a Cash Balance Plan?
A cash balance plan is a hybrid plan. Traditionally, there were defined benefit plans and defined contribution plans. A cash balance plan is a form of defined benefit, but promises the benefit in terms of an account balance that promises a given rate of return (interest credits), making it look and feel more like a defined contribution plan. But it is not a defined contribution plan because you, the participant, do not bear the risk of performance of the assets in the plan.
29. What is a Profit Sharing Plan?
A profit sharing plan is one of the most common forms of retirement plans today, and often includes a 401(k) feature to it. A profit sharing plan is a defined contribution plan that includes some sort of employer contributions, either discretionary contributions or matching contributions, if the plan has a 401(k) feature to it. Contrary to what the name would indicate, it is not a plan where the employer actually shares profits. The employer does not need to have any profits at all to make contributions to a profit sharing plan. The contributions can be based on profitability, but they are generally discretionary, unless the plan document provides for fixed employer contributions.
30. What Is a 401(k) Plan?
A 401(k) plan is a type of profit sharing plan that has a cash or deferred arrangement feature, meaning you can defer part of your salary or wages by electing for it to be contributed to the plan instead of paid out to you now. It is this election that is the hallmark of the 401(k) plan. These plans also typically have some nonelective employer contribution level, as well as some matching contribution. The name of the plan is derived from section 401(k) of the internal revenue code. Some 401(k) plans now come with an automatic contribution arrangement, whereby the employer will notify you that if you fail to make an affirmative election on how much, if any, money you want to defer and contribute to the plan, the employer will automatically elect to defer a given percentage on your behalf. These automatic contribution arrangements always have some form of an opt-out feature, though.
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31. What Is a Whipsaw?
The whipsaw is a term of art used with respect to cash balance plans. It derives its name from the type of saw used by lumberjacks, where they would push and pull the saw back. Whipsaw in the cash balance plan context describes the manner in which some plans calculate the lump sum payable. First the plan would calculate the future dollar value of the account based on the plan’s stated interest crediting rate, and then discount that amount back to today’s dollars based on another discount rate prescribed by law. Problems arose in plans where the interest crediting rate was lower than the rate prescribed by law for discounting because this would always result in a current lump sum payable that was lower than the stated account balance disclosed by the plan.
32. What is Wear Away?
Cash balance plans are usually the product of a conversion from a traditional defined benefit pension plan. Most plan sponsors defined the benefit payable under the cash balance plan in one of two ways. The benefit could be A plus B, where A is the total accrued benefit to date under the previous pension plan, and B is the new benefit calculated under the interest crediting formula of the cash balance plan. Alternatively, some plans specify the benefit will be A or B, where again A is the frozen benefit under the pension plan, and B is the new benefit calculated under the interest crediting of the cash balance plan, with the B calculation dating back to the employee’s start of participation in the pension plan. Wear away typically then occurs when several facts are present. The benefit accrual rate under the cash balance plan is not as generous as it was under the pension plan, and the affected employees have many years of service in the pension plan, such that it takes some or many years for the calculation under the cash balance plan to “catch up” to the frozen benefit under the pension plan, resulting in a period of time where the benefits “wear away.”
33. What Is My Contribution or Benefit Limit for My Retirement Plan?
The answer depends on the type of plan. Generally, profit sharing plans have a contribution limit of $49,000 per year. However, if the plan has a 401(km) feature or is merely a 401(k) plan, you can only elect to defer $16,500 of your salary into the plan. The remainder of the $49,000 must come from employer contributions (matching or discretionary). For 2011, the maximum benefit payable under a defined benefit plan is $195,000 per year.
34. What If My Employer Does Not Deposit My 401(k) Deferrals into My Account?
Your employer is generally a fiduciary with respect to the 401(k) plan. When money is withheld from your paycheck to be deposited into a retirement plan, after a certain amount of time, those funds become plan assets, whether the employer deposited them in the plan or not. Regulations provide for some time, called the safe harbor, by when an employer must deposit the funds in the trust. If the employer fails to do so within the allowable time, the employer is breaching its fiduciary duty by exercising control over plan assets, and will be liable to you. In addition, if the employer is an insolvent entity, ERISA imposes personal liability, and makes a fiduciary any person that exercised that control over plan assets.
35. Are My Pension Benefits Guaranteed?
Defined benefit pension plans are insured by the Pension Benefit Guaranty Corporation, known simply as the PBGC. The PBGC acts something like the FDIC does for bank deposits. Your benefits are insured, but only to a certain level. So at least some of your vested pension benefit is guaranteed, but not always all of it.
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36. Why Are State Pension Plans So Underfunded?
ERISA specifically exempts from coverage all state retirement plans. Consequently, all of ERISA’s requirements that sponsors fund the plan do not apply to any state plans, thereby permitting states to make pension promises to employees without funding the plans, and making it doubtful whether the state will ever be able to make good on its promise.
37. How Long Can My Retirement Plan Make Me Wait Until I Am Vested?
There generally are two vesting schedules allowable by law. First, is the 5-year cliff or 3-to-7-year graded. In the 5-year cliff, you are not vested until you obtain 5 years of service, and then you are immediately 100% vested in any accrued benefits. Under the 3-to-7-year graded vesting schedule, you are not vested in anything during the first two years of service, then you vest in 20% of the accrued benefits each year for 5 consecutive years. These two vesting schedules are only allowable for defined benefit plans that are not deemed “top heavy.” For defined contribution plans and “top heavy” defined benefit plans, the plan may use either a 3-year cliff or a 2-to-6-year graded vesting schedule. Keep in mind two things, though. You are always immediately vested in any money you contributed to the plan, and plans are free to offer more generous vesting schedules than those allowable by law.
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2. How does ERISA protect me?
3. How do I know if my benefits are covered by ERISA?
4. I work for the state. Am I protected by ERISA?
5. What are the plan documents?
6. What is the Statute of Limitations to bring a claim under ERISA?
7. Can I file a lawsuit right away if my claim is denied?
8. Should I handle the case myself during internal appeals and just hire an ERISA lawyer when I need to sue in court?
9. Do I need a lawyer who focuses on ERISA?
10. How come the Social Security Administration awarded me disability benefits but my long term disability plan insurer denied my claim?
11. If I am receiving long term disability benefits, do I have to continue seeing a doctor?
12. What if my doctor said I am disabled?
13. Should I answer the telephone when the disability insurance company calls me?
14. Should I put everything in writing with the Disability Plan Insurer of Administrator?
15. Should I allow an Insurance Case Manager to come to my home?
16. What should I do if the Insurer or Administrator ordered me to see an IME or an FCE?
17. What if the Insurer or Administrator's description of my job duties is not accurate?
18. Why do the Disability Insurance Claims Forms leave so little room for responses?
19. How do I describe a "Typical Day" on a Disability Claims Form or Update?
20. How should I describe my limitations?
21. Do insurance companies really put people under surveillance?
22. What if the Insurance Representative tells me how to appeal?
23. How do I pay for doctor visits after I go on Disability?
24. Do I need to apply for benefits from the Social Security Administration?
25. Why does my Disability Insurance Plan claim I owe them my Social Security Disability Award?
26. What is an ESOP?
27. What is the Difference Between a Defined Benefit and Defined Contribution Plan?
28. What is a Cash Balance Plan?
29. What is a Profit Sharing Plan?
30. What is a 401(k) Plan?
31. What is a Whipsaw?
32. What is Wear Away?
33. What is My Contribution or Benefit Limit for My Retirement Plan?
34. What if My Employer Does Not Deposit My 401(k) Deferrals in to My Account?
35. Are My Pension Benefits Guaranteed?
36. Why are State Pension Plans so Underfunded?
37. How long can My Retirement Plan make Me wait until I am Vested?
1. What is ERISA?
The Employee Retirement Income Security Act of 1974 is commonly referred to as ERISA. It is a federal law concerning employer provided benefits to employees. Generally, any retirement, health insurance, life insurance, accidental death & dismemberment, or disability insurance plan will be an employee benefit plan covered by ERISA, so long as it is established or maintained by your employer.
2. How Does ERISA Protect Me?
ERISA includes employee protections by mandating plans have minimum participation, vesting, accrual, and funding standards. It includes protections from employers discriminating in favor of highly compensated employees. ERISA § 502(a) permits participants and beneficiaries to bring civil actions against the plan to collect benefits due under the plan, for breaches of fiduciary responsibility for losses caused to the plan or your account within the plan, or for “other appropriate equitable relief.” ERISA § 510 also prohibits any person from taking any adverse employment action against you for exercising any of your rights under ERISA, and from interfering with your right to the attainment of benefits (for example, by firing you just before your benefits vest).
3. How Do I Know If My Benefits Are Covered by ERISA?
Many plan documents will explicitly tell you that the plan was established to comply with ERISA, leaving little doubt. In other cases, whether the benefits amount to an employee benefit plan covered by ERISA will hinge on all the facts and circumstances. Generally, any plan, fund, or program established or maintained by an employer for the purpose of providing benefits to employees is an ERISA covered plan. ERISA exempts certain things, though, such as wages, vacation time, sick days, and other payroll practices.
4. I Work for the State. Am I protected by ERISA?
No. ERISA expressly exempts from its coverage employee benefit plans established or maintained by state, municipal, or other local governments or units or agencies therein. So public school teachers, police officers, firefighters, etc. have employee benefit plans not covered by ERISA. ERISA similarly exempts any church plans, but church plans can elect to be covered by ERISA.
5. What Are the Plan Documents?
ERISA requires any employee benefit plan be in writing. The plan documents literally are any documents or instruments under which the plan is established or maintained. Typically, there will be a master plan or trust document. The plan administrator also is required to distribute a summary plan description, which is a summary of the plan document commonly spanning 20–80 pages. The summary plan description must contain all the material terms of the plan, including the formal name of the plan, the name of the administrator(s), how to submit claims, and any procedure regarding internal appeals.
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6. What Is the Statute of Limitations to Bring a Claim under ERISA?
ERISA only proscribed statutes of limitations for claims alleging breach of fiduciary duty. The statute in those cases is 6 years from the alleged act or omission, or 3 years after the claimant had actual knowledge of the claim. What exactly the claimant needs to have had knowledge of differs from jurisdiction to jurisdiction.  For all other claims made under ERISA (such as sect; 502(a)(1)(B) claim for benefits under the terms of the plan), ERISA provided no statute of limitations, and courts will look to the most analogous state statute of limitations in the appropriate jurisdiction. For a benefit claim, this will usually be a statute for breach of a written contract. However, courts have uniformly held plans are free to further limit that period, provided it is disclosed to participants, and they often do. These limitations still must provide you with a reasonable amount of time, though. That self-imposed limitations period, however, must still be reasonable to be legal. The summary plan description should state how much time you have to submit a claim, and how much time you have to bring an action in court. Call us if you need to know if the limitations period is likely to be upheld.
7. Can I File a Lawsuit Right Away If My Claim Is Denied?
Generally no. ERISA requires plans include reasonable claims procedures, and include the opportunity to appeal a claim denial to a named fiduciary of the plan. You must exhaust all administrative claims procedures before filing a complaint in court. If you fail to exhaust these procedures, your case will almost certainly be dismissed for failure to do so. Only in rare circumstances will a court determine exhaustion was not required because, for example, it would have been futile.
8. Should I handle the case myself during internal appeals and just hire an ERISA lawyer when I need to sue in court?
No. I have heard clients tell me that the insurer or claims administrator told the client not to hire a lawyer until after the claims procedure had been exhausted. That would be an enormous mistake, and a way to almost guarantee you will not get the benefits you deserve. When seeking redress in court, the judge will limit her review to the record created before the insurer or administrator, meaning if you wait to get us involved until after you have exhausted internal appeals we cannot add value to your case by leveraging our experience to create the sort of record that is difficult for the insurer to deny a claim based upon, and that gives you the best chance of a judicial decision in your favor.
9. Do I Need a Lawyer Who Focuses on ERISA?
Yes. ERISA is an extremely complex and ever-changing area of the law. It is not conducive to a law practice that dabbles in the area or plans to learn as it goes. ERISA’s statutory, regulatory, and case law are so expansive and constantly growing that lawyers who primarily represent individuals in injury or other employment matters cannot stay up to date with all the changes in the law. You should retain a lawyer dedicated to ERISA for your ERISA case.
10. nbsp; How come the Social Security Administration awarded me disability benefits but my long term disability plan insurer denied my claim?
Social Security laws and regulations provide a uniform definition of “disabled.” The definition of "disabled" in ERISA long term disability insurance plans varies from policy to policy, varies within a policy based on the time period after the initial onset of disability, and similar policy language can be construed differently in different jurisdictions. Social Security claims will be administratively decided by an Administrative Law Judge, an independent arbiter with no stake in the outcome. ERISA long term disability plans will usually administratively be adjudicated by the very insurer or administrator that stands to gain financially from denying your claim. The Social Security Administration has limited resources to dispute claims, so with each level of appeal, your odds of success increase. ERISA long term disability insurers and administrators have virtually unlimited resources to dispute your claim.  The only way to increase your odds of success is to engage an ERISA lawyer who is as familiar with the process as the insurer and its army of lawyers and doctors.
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11. If I am receiving long term disability benefits, do I have to continue seeing a doctor?
Yes. Most, if not all, plans will require that in order to continue receiving benefits, you must be under the continuing care of a physician, and you must continue to submit the doctor’s notes to the disability plan insurer or administrator.
12. What if my doctor said I am disabled?
A mere conclusion from your doctor that you are disabled is useful but never sufficient to get you disability benefits. The evidence will have to clearly demonstrate why the doctor opined you are disabled.
13. Should I answer the telephone when the disability insurance company calls me?
Yes, or call back from your home telephone number when you are available. Insurers have been known to conclude that if you cannot be reached at your home telephone number, it means you must not ever be home and thus are not disabled. As flawed as the logic is, insurers use it as a basis to terminate benefits.
14. Should I put everything in writing with the Disability Plan Insurer or Administrator?
Yes. Even when you speak on the telephone, send a dated and signed letter confirming the substance of the conversation. That way, if the insurer’s notes of what you said differed from what you actually said, it will be documented. You should send the letter certified mail, with return receipt, and keep a copy of the signed and dated letter for your records.
15. Should I allow an Insurance Case Manager to Come to My Home?
If the disability plan insurer requests to have a case manager meet with you, you should politely accept. The case manager will invariably request to meet you at your home, portraying it as a courtesy to you. It is not a courtesy to you. The insurer wants the meeting to take place at your house so it can examine where you live to discover any basis whatsoever to terminate your benefits. Things as simple as seeing stairs in your home, or seeing a vacuum cleaner out, could form a basis (as unreasonable as it may be) for the insurer to terminate your benefits or deny your claim. You should meet the case manager, but agree to do so at a neutral location, and offer to meet when a family member or friend can drive or otherwise escort you.
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16. What Should I Do If the Insurer or Administrator Ordered Me to See an IME or an FCE?
If the insurer or claims administrator of a disability plan wants you to see an Independent Medical Examiner or have a Functional Capacity Equivalence evaluation, the first thing to keep in mind is that these “independent” individuals are not truly independent. They get hired by the insurer, and if they return opinions unfavorable to the insurer, the insurer will send the referrals to somebody else. I have heard clients tell me the IME or FCE evaluation did not accurately describe what happened, or left out critical parts of the evaluation. To protect yourself, either bring another person with you who will take notes, or better yet, video record the evaluation. You must, of course, obtain the evaluator’s consent to be recorded before doing so.
17. What If the Insurer or Administrator’s Description of My Job Duties Is Not Accurate?
When assessing a claim of whether or not you are disabled such that you cannot perform functions and duties of your job, the long term disability insurer will most often not actually consider your actual job, but will consult a book which describes your job, the Dictionary of Occupational Titles or something similar. The definition may or may not accurately describe your job tasks, required hours, and physical requirements. You should be prepared to obtain a written statement from a co-worker or supervisor which describes your job, hours, and physical requirements.
18. Why Do the Disability Insurance Claims Forms Leave So Little Room for Responses?
Disability plan insurers and administrators do not want you or your doctor to provide thorough answers to their questions. Short, terse answers make it easier for the insurer or administrator to deny claims. Adding additional pages or an addendum helps provide the space you need to accurately and thoroughly answer any question.
19. How Do I Describe a “Typical Day" on a Disability Claim Form or Update?
Many illnesses will have your pain or other discomfort vary from day to day. You should avoid providing an average, or only describing what some days feel like. You should clearly describe that the pain or discomfort varies, by how much it varies, and how often you experience each level of pain or discomfort.
20. How Should I Describe My Limitations?
Avoid using words or phrases that can be open to interpretation or can be ambiguous. For example, if you state you “cannot walk far,” you may mean you can only move a few steps, but the insurer may read that to mean you cannot walk one mile. Be clear and objective with your words.
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21. Do Insurance Companies Really Put People Under Surveillance?
Yes. They will frequently send an investigator out to monitor your actions for several days. The investigator will observe you whenever you leave your home and note what he or she observed you doing, such as running errands, carrying bags, driving, how far you walked from the parking spot to the store entrance, and how long you were out of the house. Investigators will also search the Internet for your name, and immediately try to find any social networking pages, such as Facebook, MySpace, LinkedIn, Twitter, etc. If you post anything on those pages that is available to the public and that the insurer can construe as inconsistent with what you or your doctor has reported to the insurer, it will likely be used to deny your claim or terminate your benefits. For example, your limitations may state you cannot sit for more than 10 minutes, but you posted having a great day at the beach, the insurer will certainly terminate your benefits (even if you had to lie down the entire time).
22. What If the Insurance Representative Tells Me How to Appeal?
Do not rely on the representative’s oral statement about what to do on appeal. You will receive a denial letter that advises you of your rights, and gives you time limitations. Merely submitting a written appeal, without any additional supporting documentation, is never successful, and will likely make your case between difficult and impossible to win after exhausting internal appeals.
23. How Do I Pay for Doctor Visits After I Go on Disability?
Your employer-sponsored health insurance plan will offer you COBRA coverage after you are no longer eligible for the employer-subsidized participation. COBRA ordinarily allows you to buy the insurance coverage for 18 months. If you can demonstrate you were awarded benefits for disability from the Social Security Administration, your coverage under COBRA can be extended even further. Upon exhaustion of COBRA benefits, you will have to qualify for early Medicare benefits. Keep in mind, however, that beginning in 2014, you will be able to purchase individual insurance without being denied on the basis of preexisting conditions.
24. Do I Need to Apply for Benefits from the Social Security Administration?
Most ERISA disability plans will require you to apply for benefits from the Social Security Administration, and will pay you the benefits after offsetting any benefits you receive from Social Security. The plans will not require you be awarded benefits, but you must try to get them. Some plans will even provide you with a lawyer to seek those benefits.
25. Why Does My Disability Insurance Plan Claim I Owe Them My Social Security Disability Award?
As stated above, most plans provide for a certain level of benefits after an offset for any benefits received from Social Security. So if you received a payment for past due benefits from Social Security, and were receiving payments under your employer-sponsored long term disability plan for that time period to which the past due benefits relates, the disability plan will be entitled to the entire amount. Plans often include terms stating how this can be enforced, which will include withholding your future benefits.
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26. What Is an ESOP?
An ESOP is an employee stock ownership plan. Essentially, the retirement plan in which the employees participate owns the stock of the company sponsoring the plan. Both very large and very small employers can have ESOPS. ESOPs were designed in part to give employees an ownership interest in the employer, thereby motivating them to work extra hard so they could share in the appreciation of the employer’s stock. The downside can be that as an employee, all or substantially all your retirement savings can be in one proverbial basket: the employer’s stock. Couple that with the fact that you depend on the employer for your wages as well, and a collapse of the employer could be a financial disaster.
27. What Is the Difference Between a Defined Benefit and Defined Contribution Plan?
Defined benefit plans promise to pay you upon retirement a certain benefit amount, say 1% of your final average earnings per year of service for up to 35 years of service. Defined contribution plans, on the other hand, promise to pay only whatever is in the participant’s account upon retirement. The primary distinction is who bears various risks. In a defined benefit plan, the employer bears the risk of performance of investments in the plan and the risk that you could live longer than your life expectancy. In a defined contribution plan, however, you bear the risk of performance of investments because if the assets in your account lose value, there is less money there for you upon retirement. Likewise, you bear the risk that you might outlive the money in your account.
28. What is a Cash Balance Plan?
A cash balance plan is a hybrid plan. Traditionally, there were defined benefit plans and defined contribution plans. A cash balance plan is a form of defined benefit, but promises the benefit in terms of an account balance that promises a given rate of return (interest credits), making it look and feel more like a defined contribution plan. But it is not a defined contribution plan because you, the participant, do not bear the risk of performance of the assets in the plan.
29. What is a Profit Sharing Plan?
A profit sharing plan is one of the most common forms of retirement plans today, and often includes a 401(k) feature to it. A profit sharing plan is a defined contribution plan that includes some sort of employer contributions, either discretionary contributions or matching contributions, if the plan has a 401(k) feature to it. Contrary to what the name would indicate, it is not a plan where the employer actually shares profits. The employer does not need to have any profits at all to make contributions to a profit sharing plan. The contributions can be based on profitability, but they are generally discretionary, unless the plan document provides for fixed employer contributions.
30. What Is a 401(k) Plan?
A 401(k) plan is a type of profit sharing plan that has a cash or deferred arrangement feature, meaning you can defer part of your salary or wages by electing for it to be contributed to the plan instead of paid out to you now. It is this election that is the hallmark of the 401(k) plan. These plans also typically have some nonelective employer contribution level, as well as some matching contribution. The name of the plan is derived from section 401(k) of the internal revenue code. Some 401(k) plans now come with an automatic contribution arrangement, whereby the employer will notify you that if you fail to make an affirmative election on how much, if any, money you want to defer and contribute to the plan, the employer will automatically elect to defer a given percentage on your behalf. These automatic contribution arrangements always have some form of an opt-out feature, though.
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31. What Is a Whipsaw?
The whipsaw is a term of art used with respect to cash balance plans. It derives its name from the type of saw used by lumberjacks, where they would push and pull the saw back. Whipsaw in the cash balance plan context describes the manner in which some plans calculate the lump sum payable. First the plan would calculate the future dollar value of the account based on the plan’s stated interest crediting rate, and then discount that amount back to today’s dollars based on another discount rate prescribed by law. Problems arose in plans where the interest crediting rate was lower than the rate prescribed by law for discounting because this would always result in a current lump sum payable that was lower than the stated account balance disclosed by the plan.
32. What is Wear Away?
Cash balance plans are usually the product of a conversion from a traditional defined benefit pension plan. Most plan sponsors defined the benefit payable under the cash balance plan in one of two ways. The benefit could be A plus B, where A is the total accrued benefit to date under the previous pension plan, and B is the new benefit calculated under the interest crediting formula of the cash balance plan. Alternatively, some plans specify the benefit will be A or B, where again A is the frozen benefit under the pension plan, and B is the new benefit calculated under the interest crediting of the cash balance plan, with the B calculation dating back to the employee’s start of participation in the pension plan. Wear away typically then occurs when several facts are present. The benefit accrual rate under the cash balance plan is not as generous as it was under the pension plan, and the affected employees have many years of service in the pension plan, such that it takes some or many years for the calculation under the cash balance plan to “catch up” to the frozen benefit under the pension plan, resulting in a period of time where the benefits “wear away.”
33. What Is My Contribution or Benefit Limit for My Retirement Plan?
The answer depends on the type of plan. Generally, profit sharing plans have a contribution limit of $49,000 per year. However, if the plan has a 401(km) feature or is merely a 401(k) plan, you can only elect to defer $16,500 of your salary into the plan. The remainder of the $49,000 must come from employer contributions (matching or discretionary). For 2011, the maximum benefit payable under a defined benefit plan is $195,000 per year.
34. What If My Employer Does Not Deposit My 401(k) Deferrals into My Account?
Your employer is generally a fiduciary with respect to the 401(k) plan. When money is withheld from your paycheck to be deposited into a retirement plan, after a certain amount of time, those funds become plan assets, whether the employer deposited them in the plan or not. Regulations provide for some time, called the safe harbor, by when an employer must deposit the funds in the trust. If the employer fails to do so within the allowable time, the employer is breaching its fiduciary duty by exercising control over plan assets, and will be liable to you. In addition, if the employer is an insolvent entity, ERISA imposes personal liability, and makes a fiduciary any person that exercised that control over plan assets.
35. Are My Pension Benefits Guaranteed?
Defined benefit pension plans are insured by the Pension Benefit Guaranty Corporation, known simply as the PBGC. The PBGC acts something like the FDIC does for bank deposits. Your benefits are insured, but only to a certain level. So at least some of your vested pension benefit is guaranteed, but not always all of it.
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36. Why Are State Pension Plans So Underfunded?
ERISA specifically exempts from coverage all state retirement plans. Consequently, all of ERISA’s requirements that sponsors fund the plan do not apply to any state plans, thereby permitting states to make pension promises to employees without funding the plans, and making it doubtful whether the state will ever be able to make good on its promise.
37. How Long Can My Retirement Plan Make Me Wait Until I Am Vested?
There generally are two vesting schedules allowable by law. First, is the 5-year cliff or 3-to-7-year graded. In the 5-year cliff, you are not vested until you obtain 5 years of service, and then you are immediately 100% vested in any accrued benefits. Under the 3-to-7-year graded vesting schedule, you are not vested in anything during the first two years of service, then you vest in 20% of the accrued benefits each year for 5 consecutive years. These two vesting schedules are only allowable for defined benefit plans that are not deemed “top heavy.” For defined contribution plans and “top heavy” defined benefit plans, the plan may use either a 3-year cliff or a 2-to-6-year graded vesting schedule. Keep in mind two things, though. You are always immediately vested in any money you contributed to the plan, and plans are free to offer more generous vesting schedules than those allowable by law.
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