bluecollardollar: on employer insurance

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on employer insurance

There may very well be. The distinction between insurances, one provided by your employer and the policy you buy on your own are based on who regulates the product being offered. Individual policies are regulated by state insurance regulators. Company sponsored plans fall under the jurisdiction of ERISA judges.

While the distinction may not seem to matter, the insurers like the arrangement of the company plans. Why? Language is as the core of every claim. How the insurer interprets their obligation in paying any claim can always be suspect, the complaint may be handled differently with different awards.

In a policy held by an individual, state regulators are often harsh arbiters of claims, leveling not only decisions that make the claim whole but often award additional damages and even fines against the insurer.

In a company sponsored policy, an ERISA judge has no such power. They may find for the claimant but only for what the insurer actually owes. And because these judges are not insurance experts (at least not like state regulators are assumed to be) they are a much easier target for confusing jargon.

These so called discretionary clauses are at the heart of the problem. While insurers must take all employees, often without a medical exam, they have added language that makes knowing what you are covered for more difficult. According to Mary Ellen Signorille, a lawyer with the AARP Foundation, consumers should obtain a copy of their employer's plan document. Once in possession of this document, the real trouble begins. Examining the document should focus on one thing: legibility. The hunt for this specific and often convoluted language can uncover that the plan may have at its discretion the right to make eligibility decisions.

According to a recent article in the Wall Street Journal, Leslie Scism writes: "With Erisa-governed policies, insurers often have discretion to interpret policy language, and a judge can overrule a coverage decision only if the insurer has advanced an illogical policy interpretation or acted in an "arbitrary and capricious" manner".

You may still stay with your company's policy because of the cost savings. But understanding the language before you make a claim can help with the process, particularly because at the time you make the claim, you may not be in the position emotionally to read through the policy.

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