Top 3 Ways to Determine If Your Long-Term Disability Insurance Is Governed by ERISA

Employees in Chicago with long term disability coverage often ask whether ERISA applies to their coverage or not. ERISA is a law that federally regulates employee benefit plans. Much like many labor and employment laws are at the federal level, so are employee benefit laws. In General, if your employer includes you in group coverage on a policy issued to the employer, ERISA likely applies. Here are a few circumstances in which ERISA would not apply.

1. You Work for a Government Body or Agency

   ERISA exempts from its coverage “government plans.” That means if you work for the State of Illinois, a county, City of Chicago, or any municipality, ERISA does not apply. We frequently see large group policies issued to the City of Chicago, the Chicago Public Schools, and State University Retirement System participants that mimic the same group policies governed by ERISA, but because the employer is a government or agency thereof, ERISA does not apply.
   

2. You Bought the Insurance Yourself Outside the Place of Employment

   ERISA only governs employee benefits, so if you bought an insurance policy directly from an insurer or broker, and it had nothing to do with your employment, ERISA does not apply.

    

    

3. You Got the Coverage Through Work, But Your Employer Did Not Establish or Maintain any Plan for Employees

Some employers are owned by individuals who purchased an individual disability policy, and the insurer or broker offers employees a promotion if they also buy coverage. That generally will not become an employee benefit plan. But the lines can become a little gray when the employer pays for those individual policies issued to employees. Such was the case recently in Steigleman v. Symetra Life Insurance Co., No. CV-19-8060, 2021 WL 778605 (D. Ariz. Mar. 1, 2021). There, when Plaintiff purchased the policy, she was the owner of the business and the only individual covered. But then the employer let employees apply to Symetra for long-term disability insurance coverage, and paid the employees’ premiums. When Plaintiff sued to enforce the policy, the insurer argued the claim was preempted by ERISA, and ERISA 502(a) provides the remedy.

If you have long-term disability coverage and are unsure if the policy is governed by ERISA, call an experienced ERISA long-term disability insurance lawyer.