How Do You Know if You Are An ERISA Plan “Participant” or “Beneficiary”?
Your insurance company told you they would not consider your claim because you are not a plan participant…or they said you were not a beneficiary of a plan participant. Can they do that?
First, you need to know what ERISA is. ERISA – the Employee Retirement Income Security Act of 1974 – is the federal law that regulates employee benefits. To be able to make a claim under for ERISA benefits, you must be a “participant” or “beneficiary” of the ERISA plan. Plan administrators (usually the insurance company in an insurance case) may claim that someone is not a participant, or more commonly not a beneficiary, to avoid having to even consider a claim. The insurer may say that a person was not on the beneficiary form, so they cannot be a beneficiary. Or they may say that an employee was fired, and lost their coverage before the claim became payable. While this sort of defense is most common in life insurance or accidental death benefit cases, it can happen in disability, health, and long term care claims.
The starting point is to know how the insurance was issued. If the insurance was obtained through an employer, there is a good chance that it is an ERISA plan. If you or the owner of the policy bought the policy outside of work, it will not be covered by ERISA, and you do not have to worry about being a participant or beneficiary. If it was an employer-sponsored plan, then ERISA will apply, and the Supreme Court has explained:
In our view, the term “participant” is naturally read to mean either “employees in, or reasonably expected to be in, currently covered employment,” Saladino v. I.L.G.W.U. National Retirement Fund, 754 F.2d 473, 476 (CA2 1985), or former employees who “have … a reasonable expectation of returning to covered employment” or who have “a colorable claim” to vested benefits, Kuntz v. Reese, 785 F.2d 1410, 1411 (CA9) (per curiam), cert. denied, 479 U.S. 916, 107 S.Ct. 318, 93 L.Ed.2d 291 (1986). In order to establish that he or she “may become eligible” for benefits, a claimant must have a colorable claim that (1) he or she will prevail in a suit for benefits, or that (2) eligibility requirements *118 will be fulfilled in the future.