Before the 1970s, workers had very few rights in the United States. If a company closed, employees could simply lose all of their pension plan and other workplace-funded benefits. After listening to concerns and complaints from the disgruntled workforce, the U.S. government enacted the Employee Retirement Income Security Act (ERISA) to address the irregularities in pension plans and other workplace benefits across the country. Today, many individuals in the workforce benefit from the ERISA. Here is what you need to know about the ERISA and overpayment recovery.
Understanding ERISA
The Employee Retirement Income Security Act (ERISA) was created in 1974. The Employee Benefits Security Administration (EBSA), a division of the U.S. Department of Labor (DOL), is the department that administers ERISA. ERISA is a federal law that applies to many private employers. However, not all private employers qualify. In general, the protective laws under ERISA only apply to non-government and private-industry employers. For those who do qualify, ERISA establishes minimum standards for retirement like pension plans, health plans, welfare benefit plans, life insurance, disability insurance, and apprenticeship plans.
Overall, ERISA is intended to encompass the following points:
- Conduct: ERISA looks to regulate the conduct of managed care and ensure that plan fiduciaries do not misuse plan assets.
- Reporting and Accountability: ERISA provides detailed reporting to the federal government.
- Disclosures: ERISA ensures that participants must be provided certain disclosures that clearly list what benefits are being offered.
- Procedural Safeguards: ERISA ensures that written policy is created and upheld throughout all claims.
- Financial and Best-Interest Protection: ERISA acts as a safeguard, providing plan members with financial and best-interest protection.
The established minimum standards of ERISA were created to protect both employees and employers in the United States. While ERISA does not require employers to offer these plans, it ensures that minimum standards are met for offered plans. Since its creation in 1974, ERISA has been amended twice. Both amendments specifically address health insurance coverage. The additional amendments are known as The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) and The Health Insurance Portability and Accountability Act of 1996 (HIPAA).
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ERISA Overpayment Recovery
While ERISA provides many benefits, there are challenges that may arise with an ERISA plan. The main thing to keep in mind with an ERISA plan is that the plan has a right to be reimbursed for the amount of any benefits it pays out to you, should you receive any money from a third party.
This third party is usually the person responsible for inflicting an injury or an insurance company. It is important to understand that a condition of receiving medical or other benefits from an ERISA plan is that you agree to pay the plan back if you receive compensation through other sources. The most common types of claims subject to ERISA overpayment recovery clauses are health insurance subrogation clauses and long-term disability overpayment recovery clauses.
Health Insurance Subrogation/ Reimbursement Clauses
If you suffer a personal injury caused by a third party, your health insurance will normally pay the medical expenses related to your injury. However, insurance companies generally go after a third party to cover the damages. Subrogation refers to the right held by most insurance carriers to legally pursue a third party that caused an insurance loss to be insured. Reimbursement refers to paying the money back or returning money to the plan should you receive compensation from a third party instead.
Essentially, if you are injured in a car accident that is not your fault, your ERISA plan will pay to treat your injuries. However, through subrogation, the ERISA plan has the right to take legal action against the guilty party in the accident. Should you be rewarded a settlement from the guilty party, later on, you must use these settlement funds to return to the plan 100% of any benefits you received to treat your injuries. Returning funds to the plan is known as reimbursement.
Long-Term Disability Overpayment Recovery Clauses
If you became disabled, you most likely filed claims for both social security benefits and for benefits under the long-term disability policies provided by their employers. When obtaining long-term disability benefits, there will likely be disability offset provisions.
Long Term Disability Insurance Overpayment Recovery
An ERISA plan has the right to recover benefits it has paid on your behalf if these payments were made in error. It is your legal responsibility to return any overpayment. Legal action will likely be taken against you if the funds are not returned.
This includes errors that were:
- advanced during the time period of meeting the calendar year deductible, or
- advanced during the time period of meeting the out-of-pocket maximum for the calendar year.
Consult with an ERISA Attorney Today
Overpayment recovery clauses can be difficult matters to handle alone. If you find yourself in the middle of an ERISA plan dispute, it is in your best interest to contact a qualified ERISA attorney today. A Louisiana long-term disability attorney will be able to help you navigate this complex situation while helping you obtain the best outcome possible.
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