If you have health insurance through your employer, it is likely that your plan is governed by the Employee Retirement Income Securities Act (ERISA). This federal law sets minimum standards for voluntary pension and health care plans offered by private employers. The intent of the law is to protect individuals who subscribe to these plans, but due to recent Supreme Court decisions, it has also presented problems to subscribers who win settlements in personal injury cases. The laws that apply to this situation are complex, but we provide a general overview here.
ERISA Requirements That Protect You
While you may have never heard of ERISA, you can be sure that you have been affected by it—mostly for the better. Passed in 1974, ERISA requires that private insurers offer participants the following:
- Plan information, including plan features and funding
- Fiduciary responsibilities of plan trustees or managers
- A grievance and appeals process to get benefits
- The right to sue for benefits and breaches of fiduciary responsibilities
Several important amendments to ERISA have also been passed over the years that expand protections for health benefit recipients, including:
- Consolidated Omnibus Budget Reconciliation Act (COBRA). This amendment provides some workers and their families with the right to continue their health coverage for a certain amount of time following the loss of a job and other events.
- Health Insurance Portability and Accountability Act (HIPAA). This act provides protections for workers and their families who have preexisting health problems or who face discrimination in healthcare coverage based on their medical status.
Amendments have also been passed regarding mental health and the health of newborns and women. There is no doubt that ERISA is an important law that protects health plan subscribers. However, if you don’t read the fine print provided with your plan, ERISA could come back to haunt you if you win a car accident settlement.
How ERISA Can Affect a Personal Injury Settlement
When you are injured in a car accident and need medical care, your health insurance will generally cover those immediate expenses. If another party (or multiple parties) is responsible for your injuries, you may have cause to sue them or their insurers to recover monetary compensation for injuries, lost income, and pain and suffering. Plaintiffs who are successful in these claims usually end up with settlements that are much greater than the total of their medical bills. Heath insurance companies have the right to claim a portion of your settlement as reimbursement for the medical care they have already covered. This is called subrogation and is very common. Often, the insurer will place a lien on the settlement until they are reimbursed. This means you will not have access to your recovery until you pay back the insurance company.
However, when your health insurer does not place a lien and you fail to pay them back, ERISA gives them the right to make a claim against your settlement. Once this proceeding begins, you are in danger of losing not only what the health insurer covered, but your entire settlement.
This is where the law becomes complicated. Your insurer’s right to your settlement under ERISA depends on the language in your plan, whether the plan is self-funded or insured, overriding state laws, and many other factors.
What You Should Do to Avoid an ERISA Lien
The most important thing you can do is read and understand the language in your plan. ERISA law does not override what you have agreed to in your plan. If your plan requires repayment of medical benefits when you receive a settlement, then you must reimburse your insurer. If your plan limits what the insurance company can demand from your settlement, ERISA does not allow them to demand more.
People often end up with a lien against their claim because they didn’t understand their responsibilities. Recent Supreme Court rulings have given more weight to ERISA law and once a lien is placed, it is very difficult to negotiate, so it is important that you seek the advice of an attorney before a lien is placed. If you were injured in a car accident and you don’t understand your obligations to your health insurer, contact the attorneys at Kansas City Accident Injury Attorneys.