5 Facts About Claims Governed Under ERISA Law

The Employee Retirement Income Security Act of 1974 was established as a method of ensuring that employer pension plans were funded adequately. The President’s Committee on Pension Plans had been established during the Kennedy Administration as an official response to the failing pension plan of the Studebaker Corporation after filing bankruptcy. The law does not require any corporation to provide company pension plans for employees, but it does set forth minimum standards and conditions of transparency with respect to the financial strength of the plans.

In addition, the law also provides COBRA health availabilities for terminated employees. When a person can been denied a claim unfairly that is pertinent to ERISA disability law then retaining an experienced legal representative is important. Claims regulated under these laws are different than regular insurance claims, and an attorney experienced in handling these kinds of denial claims, such as Marc Whitehead & Associates, of www.disabilitydenials.com, could be essential during the appeal process. Here are five employment benefit components associated with the ERISA Law:

1. Defined Pension Plans

It is important to understand which type of pension plan your employer has utilized. Defined benefit plans are funded by the company and are subject to the terms applied by the company for qualification. Some defined pension plans can also include the company participation in a multiple-employer pension plan, which expands earning ability of the fund by combining company assets.

Problems for participants arise when any of the companies experience a decrease in business or files for bankruptcy. ERISA governs the process which determines the benefit level the company must pay employees in association with the dissolution.

2. Defined Contribution Plans

Defined contribution plans involve employee contributions to a savings account, such as a 401(K) retirement plan. Employers are required to match a minimum amount, but the employer can contribute in excess of the legal minimum. It is important to understand the contribution percentage rate that the employer provides. ERISA only requires a minimum standard, but employers that pay at a higher standard are still required to honor that employee benefit by the law.

3. Defined Vestment Periods

Before pensions were brought under government guarantee, many companies would require an employee to work until age 65 in order to qualify for benefits. The Pension Protection Act of 2006 changed this company determination and now requires employee pensions to be fully vested after three years, but the company is allowed to fund the plan in an annual pro-rated percentage through the three-year period.

This stipulation is essentially congruent to the employee contribution pension system, as the employer will still be required to either match the minimum or apply a higher rate as an employee benefit. The popularity of employee contribution plans has reduced the number of companies offering defined company pension plans, but these contributions can still be significant for covered long-term employees.

4. Portable Healthcare Coverage

Terminated employees are legally allowed to retain their health insurance plan from a previous employer, but the premium rate will be considerably higher. This protection is currently in a state of change, as health insurance providers and employers adjust business models to comply with the Affordable Care Act which is currently being implemented. Companies are not required to contribute to the health plans of former employees under the COBRA requirement, so the terminated employee will cover the entire premium.

5. Sufficient Funding

ERISA legislation also requires employers to sufficiently fund all pension programs. In essence, the asset level of the program must be higher than program liabilities. This sets a minimum assurance that pension plans will be solvent and funding growth can be measured on a continual basis.
Employers are also required to be honest and transparent with each pension beneficiary on an annual basis. All employees should receive a benefit level statement. It is also important for surviving spouses to understand they are eligible for pension benefits in most employee death situations. It is obvious that these claims can become complicated in some situations, so retaining an attorney who is experienced in pension law maybe a necessity in a contested claim.

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