If your insurance company has denied your voluntary benefit claim, you’re probably getting a lot of conflicting advice. One person might tell you that you need to file an appeal with the insurance company, while another will insist that you should file a lawsuit in an Illinois court. Meanwhile, your employer will probably refuse to help you with your insurance claim — referring you to your insurer or broker instead.
At Bryant Legal Group, we want to clarify the confusing world of voluntary benefit plans, so we wrote this blog to explain the essentials and offer sound advice about your potential options. Keep reading to learn more.
1. Voluntary Benefit Plans Are Growing in Popularity
In recent years, many businesses have started looking into voluntary benefit plans to sweeten their employees’ compensation packages. These are optional benefits that employees can choose to purchase (typically at a group discount). They often include life insurance, long-term care coverage, disability insurance — even gym memberships.
So why are voluntary plans so attractive to employers? Unlike your core benefits package, your employer typically does not contribute to your voluntary benefit premiums. Therefore, they can offer a wide range of benefits without any added costs. For example, some employers have added optional critical illness insurance options to their offerings, letting their employees offset the costs associated with a high deductible health plan.
Voluntary benefit plans are usually convenient for employees. Typically, these plans offer group discounts, and you can choose to pay your premiums through a payroll deduction.
2. Read Your Voluntary Benefit Plan’s Terms and Conditions Carefully
Like all insurance plans, your voluntary life or disability insurance plan is a contract. Your insurer has agreed to specific terms and conditions laid out in the plan in exchange for your premiums. If you don’t understand these procedures and requirements, you’re at a significant disadvantage.
Suppose your loved one purchased optional life insurance coverage through their employer. The policy contains specific exclusions, including one for suicide. If your loved one intentionally harms themselves shortly after enrolling in the benefit plan, the insurer will likely deny your claim. That doesn’t mean that its assessment is right, however.
If you don’t already have copies of your plan documents from your insurance company, you should request them immediately. These documents will contain a slew of definitions, claim and appeal procedures, and filing deadlines that you must follow. Since many of these documents contain highly technical language, you should contact an experienced Illinois benefits attorney for help translating them into plain English.
3. ERISA May Cover Your “Voluntary” Plan
ERISA, a federal law that controls most employer-sponsored benefit claims, contains a voluntary benefit “safe harbor.” If your voluntary plan meets certain requirements, ERISA will likely apply. These requirements include:
- The employee must pay the benefit plan’s full premium.
- The employer cannot endorse the voluntary benefit plan.
- Participation must be completely voluntary.
- The employer cannot receive compensation from the plan, other than the reasonable reimbursement of payroll deduction costs.
According to ComplianceBug, a company that provides compliance and risk assessment tools for employers, ERISA governs an estimated 80% of voluntary benefit plans.
While many employers hope to avoid the burdens of ERISA reporting, the safe harbor’s requirements aren’t easy to meet. For example, if you pay your “voluntary” benefit plan’s premiums with pre-tax dollars, the government considers that pre-tax saving an employer contribution.
Other violations of the safe harbor can include:
- Using your employer’s name or logo in conjunction with a voluntary benefit plan
- Recommending a plan to an employee or encouraging them to enroll
- Negotiating the plan’s terms and structure
- Assisting an employee with their insurance dispute
It’s easy for employers to make mistakes that exclude them from the voluntary benefit safe harbor. Even the U.S. Department of Labor’s opinions contain conflicting statements!
How Will ERISA Impact My Claim?
If ERISA applies to your claim, you must comply with strict claim and appeal procedures. Before you file an ERISA lawsuit, you must complete an administrative insurance-level appeal. More importantly, you must file your claim in federal court and cannot request a jury trial.
If Your Plan Falls Within the Safe Harbor, State Law Applies to Your Claim
If your voluntary benefit plan complies with ERISA’s safe harbor, you still have the potential for a legal claim. However, state laws will apply. In an insurance dispute, these laws can offer significant benefits for you as an employee, including the ability to:
- Request a jury trial
- Present new evidence to judge and jury
- Demand compensation for bad faith claim denials
If you’re not sure whether federal or state law applies to your claim, the team at Bryant Legal Group can help you assess your claim and identify the appropriate system and process.
Bryant Legal Group: Guiding People Through Their Complex Insurance Claims
If you’re struggling with a voluntary benefit claim, such as a life insurance claim, you don’t have to fight alone. At Bryant Legal Group, we’ve been guiding Illinois workers and residents through their insurance disputes for decades.
29 CFR §2510.3-1 (2010). Retrieved from https://www.govinfo.gov/app/details/CFR-2010-title29-vol9/CFR-2010-title29-vol9-sec2510-3-1
The content provided here is for informational purposes only and should not be construed as legal advice on any subject.