Question #1 – If my insurance is provided by my employer, what law governs my health or disability benefits claim?
If you have health insurance or a disability plan that is provided for you by your employer, then the law that applies is more than likely the Employment Retirement Income Security Act (also known as “AERISA”). This federal law governs the duties owed to you by the insurance company (also known as the “A plan administrator”.)
Question #2 – What is ERISA?
ERISA is the name of the group of federal laws that sets out certain standards for establishing, administering and maintaining most employee benefit plans. It was originally enacted by Congress to address public concern that funds of private pension plans were being mismanaged and abused. It has since been expanded to include health care and disability benefits.
Although ERISA was designed to ensure that employees receive the benefits promised to them by their employers, unfortunately, the law has backfired. In a sense, it is now used to protect the insurance company when it does not pay your benefits. While the Act does provide certain guidelines and time frames that an insurance company must meet in order to process a claim for benefits, it doesn’t allow the average person much recourse against the insurance company when it wrongfully does not pay. It only allows a narrow process of determining whether the company abused its discretion, and if you can prove that, then you can get paid your claim. Very few penalties are imposed on companies that aggressively deny claims. As a result, there is a lot of aggressive behavior.
Question #3 – How do I file a claim for health or disability benefits?
First, review your Summary Plan Description. The Summary Plan Description is a document that the insurance company/plan administrator must provide to you. The plan provides a detailed overview of how your plans works, what is covered, and how to file claims. You should read the plan to make sure that your potential claim is covered and determine how to file a claim.
Second, know the Time Limits Applied to Claims. Your Summary Plan Description should explain how and when benefits are paid on claims. ERISA requires that all health and disability benefit determinations must be made within a certain time period.
Finally, provide as much information and detail as possible to allow the insurance company/plan administrator to make an informed decision.
We have outlined some general time guidelines for the following benefits:
Health Benefits
A) Urgent Care claims – these are claims that usually involve the necessity of quick health care decisions, such as emergency care. Insurance companies/plan administrators must provide a notification of whether or not benefits will be paid within 72 hours of receipt of the claim by the plan. If the insurance company/plan administrator needs more information to make a determination about the claim, they must notify you within 24 hours of receipt of the claim. You then must be given at least 48 hours to provide specific information to the insurance company/plan administrator. 29 C.F.R. ‘2560.503-1(f)(2)(i). After the insurance company/plan administrator is provided the specified additional information, its has 48 hours, or until the end of the period allotted you to provide the specified material whichever is earlier, to decide whether or not the claim is covered. 29 C.F.R. ‘2560.503-1(f)(2)(i)(A).
B) Pre-service claims – these are claims that usually involve a preauthorization by the insurance company/plan administrator as to whether or not the care is medically necessary. The plan must give notification of benefits or denial within 15 days of receipt of your claim. If more time is required, the plan administrator must notify you prior to the end of the initial 15 days. The plan may only extend its decision another 15 days, unless it requires additional information from you. In that event, the plan must give you 45 days within which to supply the information. Once you have supplied any additional information to the plan, the plan has 15 days or the end of the period of time allotted for you to supply the information, whichever occurs first. 29 C.F.R. ‘2560.503-1(f)(2)(iii)(A).
C) Post-service claims – these are claims made after medical services are rendered to you. The insurance company/plan administrator has no later than 30 days after the plan has received the claim to issue a decision. If more time is needed to review your request, the plan may allow the administrator an additional 15 days, but only after the plan notifies of its need for the additional time. If the plan requires more information from you to make its determination, it must allow you 45 days in which to supply the information. After the information is supplied, the administrator must provide a response to your claim within 15 days of receipt of the information or the end of the period of time allotted for you to provide the additional information, whichever ends first. 29 C.F.R. ‘2560.503-1(f)(2)(iii)(B).
Disability Benefits
Disability benefits must be decided within 45 days of receipt of the claim. If more time is needed, the plan can extend the time period another 30 days, as long as the plan notifies you of the need for additional time prior to the end of the initial 45 days. 29 C.F.R. ‘2560.503-1(f)(3).
Question #4 – After I file my claim, what happens?
The insurance company/plan administrator must provide you with a decision within the time set out above. It must also give you an explanation in writing or electronically. If your claim is denied, the explanation must provide: the specific reasons for the adverse determination; reference to the specific plan provisions on which the determination is based; a description of the plan’s appeals process and the time limits applicable to any review procedures. 29 C.F.R. ‘2560.503-1(f)(4)(g)(1)(I)-(2).
Question #5 – Can I appeal a denial of benefits?
Yes. Under ERISA, for both health care benefits and disability benefits, you are entitled to at least 180 days to file an appeal (or longer if your plan provides for a longer period). 29 C.F.R. ‘2560.503-1(h)(3)(i); 29 C.F.R. ‘2560.503-1(h)(4).
Health Benefits Appeal -when to expect an answer.
A) Urgent Care Claims. Review of a denial must take place within 72 hours after the plan receives your request for review. 29 C.F.R. ‘2560.503-1(i)(2)(I).
B) Pre-Service Claims. Review of a denial must take place no later than 30 days after your request for review. 29 C.F.R. ‘2560.503-1(i)(2)(ii).
C) Post-Service Claims. Review of a denial must occur within 60 days after the plan receives your request for appeal. 29 C.F.R. ‘2560.503-1(i)(2)(iii).
Disability Claims Appeal – when to expect an answer.
A review of your claim must occur within 45 days of notice of your appeal. If, however, the plan finds that more time is needed for review, the plan must notify you before the end of the 45 day period and cannot have more than another 45 days extension. 29 CFR ‘2560.503-1(i)(3)(I).
There are exceptions to these time limits that may apply in a single-employer collective bargaining plan or a multi-employer collective bargaining plan. In those situations, you should refer to your plan=s SPD and collective bargaining agreement for guidelines.
Question #6 – What happens if my appeal is denied? Can I sue?
If your appeal is denied, federal law allows you to bring a suit in federal district court to recover any benefits owed to you under the plan. 19 U.S.C.A. ‘1132(a)(1)(B).
Question #7 – What do I have to show in order to overturn the appeal decision by the insurance company/plan administrator?
The Court will apply a deferential abuse of discretion standard when looking at the plan administrator’s decision on appeal. Jessup v. Alcoa, Inc., 481 F.3d 1004 (8th Cir. 2007). What this means is B the court will give weight to the insurance company/plan administrator’s decision unless there is clear evidence that the company/administrator went against the plan provisions in making the denial.
Question #8 – If my claim has been wrongfully denied, and my insurance falls under ERISA, can
I sue the insurance company for bad faith claims practices?
Probably not. Even though you will have to spend time and money to force the insurance company/plan administrator to properly pay your benefits, federal law only allows you to bring a suit to recover the benefits owed to you under the plan.
The court, in its discretion, may award reasonable attorney=s fees and costs of bringing the action to either party. U.S.C.A. 1132(g)(1). However, that does not happen very often.
The remedies that are available under state law to sue an insurance company for punitive damages for unreasonably denying a claim do not apply in ERISA situations because ERISA is a federal law and it preempts state law.
Question #9 – Is there anything else I can do if my claim has been wrongfully denied?
If you feel that your claim has been unreasonably denied or you have been treated unfairly, your United States Senators and Congressional Representatives need to be alerted about the situation. The ERISA laws are a problem because they encourage predatory claims behavior by insurance institutions and the only way to address this is through change in federal law. If your Senators and Congressional Representatives are educated about these problems, maybe the law will change. You can educate them by telling them about your problems with the system.
In South Dakota, you may contact these representative at the following addresses:
Senator Tim Johnson136 Hart Senate Office Building Washington, DC 20510
Senator John ThuneUnited States Senate SR-493Washington, DC 20510
The Honorable Kristi Noem 1323 Longworth House Office Building Washington, DC 20515
Question #10 – Who do I contact if I have further inquiries about my health claim or disability claim?
You should contact the insurance company/plan administrator and stay in touch with them. If you need further assistance or have inquiries regarding your claim, you can call the Department of Labor’s Employee Benefits Security Administration (EBSA) at 1-866-444-3272.