Wall Street Journal Examines Effect of ERISA on Employee Lawsuits
The Wall Street Journal examines employee concerns about the Employee Retirement Income Security Act, which has "hamstrung employees' ability to sue over disputes involving their employer-sponsored health care coverage" and other benefits. ERISA, passed in the early 1970s, exempts employer-sponsored pension plans -- as well as health coverage and other benefits provided by employers -- from state regulation. Over the past decade, insurers have increased sales of polices through employers for disability-income insurance, dental coverage, dread-disease coverage and long-term care insurance, all of which are covered under the ERISA state law exemption. Many employees purchase the insurance policies through employers because the premiums are less expensive and insurers are less likely to reject their applications, but many employees "aren't aware that the policies carry restrictions, should disputes arise, that policies bought by shopping around wouldn't" because of ERISA, the Journal reports. Insurers maintain that they have increased focus on the sale of policies through employers because the practice is "more efficient than trying to peddle one policy at a time outside the workplace," not because of the legal "advantages" of ERISA, the Journal reports. However, employee "frustrations" with the legal restrictions of ERISA "now may be reaching a boiling point," the Journal reports. "They've turned ERISA on its head," Joseph Belth, professor emeritus for insurance at Indiana University in Bloomington, said, adding, "It was supposed to protect employees, and it's being used to protect insurers" (Oster, Wall Street Journal, 8/6).
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