If you have an ERISA plan from your employer and you are pursuing a personal injury claim, there are some things you should be aware of. ERISA liens can be complex so you may need the help of an experienced personal injury attorney to walk you through everything you need to know and how to protect your personal injury settlement.
What is ERISA?
ERISA is an acronym for the Employee Retirement Income Security Act of 1974. It is a federal law that sets standards for most retirement and health plans offered by private employers. This law requires the plans to do the following:
- Provide plan participants with information and features of the plan and how it is funded
- Set minimum standards for participation
- Establish responsibilities for plan administrators who must look out for the best interests of the plan participants
- Establish and publish a grievance process for plan participants
- Give participants the opportunity to file suit for benefits and breaches of duty
- Retirement plans must be tax deductible
- Must allow participants to temporarily retain health benefits after termination of employment
- Should never discriminate when offering coverage due to health or disability
ERISA was originally designed to protect employee pension funds, but it also affects employer-sponsored health policies. It was created to protect employee contributions to these plans.
ERISA laws do not govern plans offered by a church or government entity. Publicly subsidized plans such as Medicaid and Medicare or private policies purchased outside of an employer-offered group policy are also not covered under ERISA laws. Plans which are used for the sole purpose of complying with worker’s compensation, unemployment, or disability, or those maintained outside of the US for non-resident aliens are also not under the ERISA umbrella.
What is the Difference Between ERISA and Non-ERISA Plans?
Non-ERISA plans are those that do not have any employer contribution. These plans do not have the same legal protection offered by the federal government as those ERISA plans. Both ERISA and non-ERISA plans must conform to IRS regulations but only ERISA plans follow the Department of Labor regulations. Most health plans provided by the private sector to their employees, such as a group health policy or retirement plan is an ERISA-governed plan.
What is an ERISA Lien?
If you are pursuing a personal injury claim, you may be compensated for your medical expenses that are the result of someone else’s negligence. Your ERISA plan may have originally paid for those expenses. If your compensation for damages is also paying for these expenses, your employer may place a lien on your settlement to recoup the money that they spent on your healthcare. Since you no longer have the medical expenses, the lien is placed on the settlement and reduces the amount you receive by the total dollar amount.
An example might be if you were injured in an accident and received medical treatment for your injuries amounting to $10,000. The provider filed the claim against your insurance company which paid it in full. When your settlement is processed, a lien is placed upon it for the $10,000 reducing your final amount by the amount paid by your insurance company.
What to Do If You Have an ERISA Lien?
The first key thing that you should do is to discuss your plan with your personal injury attorney. Not all plans are the same, so your attorney can go over the plan with you so you have a good understanding of your rights and the rights of the insurance company to recoup their funds. You and your attorney can determine if the ERISA plan is insured or self-funded and whether the lien can seek reimbursement for the expenses.
Even though the documentation may allow for the lien to recoup funds, there may be some extenuating circumstances where you may be able to retain some of the lien amounts. For example, if your compensation award does not totally make you whole, or pay for all of the expenses you have, you may be able to get the lien amount reduced. If you were found to be partially responsible for your injuries, and your compensation for damages was reduced by that amount, you may also be able to reduce the lien by that same percentage. In some cases, your legal fees may also be deducted.
Will an ERISA Lien Affect My Personal Injury Claim?
It can. Each case is unique and it is important to get legal representation from Jett Legal to optimize your compensation for damages. Contact a Jett Legal personal injury attorney who has experience in dealing with ERISA liens and who will fight for your rights and your protection.