1 Big Difference Between ERISA and Non-ERISA Health Insurance Plans

August 30, 2023

1 Big Difference Between ERISA and Non-ERISA Health Insurance Plans

ERISA and non-ERISA health plans can affect a personal injury claim

ERISA and non-ERISA health insurance plans cover many Americans.

ERISA and non-ERISA health insurance can have a major impact on bad faith claims. It’s important to know what plan you have if you were ever to file a bad faith claim against your health insurance company.

Bad faith happens when a health insurance company illegally denies a claim made to them for unlawful circumstances.

According to the United States Department of Labor (DOL), the “Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry to provide protection for individuals in these plans”.

ERISA establishes rules and regulations for employers and employees. Under the law, employees are notified of benefits such as funding, coverage, or costs.

ERISA “protects retirement savings from mismanagement and abuse, and clarifies that those in charge of those savings be held to a high standard”. The company must work within the “best interest” of the client.

ERISA sets a standard of what the DOL considers “transparency” and “accountability”.

You cannot file an insurance bad faith lawsuit for an ERISA policy. Claims pertaining to ERISA policies are limited to the contract benefits wrongfully denied and the attorney fees you incurred to obtain the wrongfully denied benefits.

A non-ERISA plan is exempt from ERISA standards, in this case regarding specific benefits. 

With ERISA and non-ERISA plans, are certain professions more likely to have one over the other?

To answer that question, it’s more simple to look at who is covered under a non-ERISA plan.

Examples of non-ERISA health insurance plans can include:

  • Churches or religious organizations
  • School systems
  • Government entities
  • Public workers
  • purchased on an individual basis through Covered California

While no legal action is ever “easy”, your chances of filing a successful bad faith claim increase under non-ERISA plans.

If you have an ERISA plan, you are bind by the federal law (ERISA) as opposed to any state laws. The federal law of ERISA tops anything at the state level.

Let’s look at two situations involving ERISA and non-ERISA plans.

First, Paula has an ERISA HMO through her job. She suffers from mental trauma after a near-death incident.

Paula seeks medical help, but some of her claims are denied through the health insurance company. She’s not given a reason for the claim denial.

Under ERISA rules, Paula doesn’t have the same protections for a bad faith health insurance claim, despite blatant ignorance from the health insurance company. 

Now, let’s imagine Paula is instead a 3rd-grade teacher who suffers a slip and fall injury while at the grocery store. 

Paula files a claim with her insurance for medical bills incurred after her fall, but doesn’t hear anything. She follows up, but she’s still met with silence.

Paula has a potential bad faith insurance claim. As a school teacher, her plan is within a school system, thus making her non-ERISA. 

A personal injury claim for a trip can be dependent if your insurance plan is ERISA and non-ERISA

Not all claims denied by health insurance company’s for a non-ERISA worker involve acting in bad faith. Certain claims may not meet policy guidelines. 

If you’re unsure as to whether or not your claim was denied in an act of bad faith, it’s best to speak with an attorney. 

If you need more information about ERISA and non-ERISA, our Los Angeles bad faith attorneys at C&B Law Group are ready to help. 

The team of Southern California lawyers at C&B Law Group have decades of combined experience assisting victims of different personal injury, workers compensation, and employment claims. 

ERISA and non-ERISA plans can be very confusing. Most people are probably unaware there is even a difference, or are unsure of their plan.

Having an attorney on your side with a vast knowledge of the system can be beneficial to you and a potential claim. 

An attorney can help recover damages that may include:

  • Loss of income/wages
  • Emotional distress
  • Medical expenses

The number of potential injuries, illnesses, and health conditions that may be denied under ERISA and non-ERISA seems endless, with injuries including:

  • Concussions
  • Broken bones
  • Cuts and lacerations
  • Internal bleeding
  • Organ damage
  • Whiplash
  • Scarring and disfigurement
  • Paralysis

Potential illnesses or other health condition treatment(s) often denied under ERISA and non-ERISA  include:

  • Autism
  • Autoimmune disorders like lupus or multiple sclerosis 
  • Cancer
  • Heart disease
  • Mental health conditions
  • More

Don’t get bullied by a health insurance company.

Contact the Los Angeles attorneys at C&B Law Group today for a free consultation regarding your bad faith claim!

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