Most people either aren’t aware, or don’t realize that for ERISA claimants there is an obvious conflict of interest. You may have read many times on my blog that the two parties to an ERISA Plan are the employer and the insurance company. Employees are referred to as “participants” or “beneficiaries” to the Plan, but actually aren’t owner of anything.
Many people who contact me tell me how helpful and sympathetic their employers are when they have to go out on disability. I think sometimes that employees exaggerate that kindness and then want to believe it. Im reality, employers are NOT on your side.
Consider the following:
- Employers have a vested interest in making sure there is an employee in your position doing the job the way the employer wishes it to be done. It doesn’t help employers to have vacant positions.
- Employers who are NOT self-insured are not happy when employees go out on disability because it increases their “experience rating” and that affects premium. Self-insured employers don’t want the added expense of paying out of pocket for STD either.
- While both the employer and insurance company are fiduciaries to the Plan, the insurance company is the Plan Administrator. Self-insured employers are the Plan Administrator. Both have accountability to act on behalf of the claimant, but they rarely do.
- Whatever the employer knows about your claim, the insurance company does also and vice versa. This is why I do not recommend getting particularly chatty with an employer.
- Employer policies require employees to use up their PTO and sick leave continuation pay before paying for STD. This isn’t actually employee friendly because it moves out the beginning date of STD.
Most people don’t realize that the purpose of HR is NOT to protect them, but to protect the company from Human Rights lawsuits relating to employment laws. Although HR is responsible to answer your questions, it’s never a good idea to give HR medical facts.Unum, for example, used to “sit on” Human Rights complaints, or “lose” the paperwork. Employees only have a certain number of days to file a Human Rights complaint. You might wonder then, who it is that support YOU, the employee, when you go out on disability. And, the answer is: “No one.” You are on your own, even when you think HR is on your side.
While writing on this subject, I should also mention for the Non-ERISA people that “agents” are also NOT ON YOUR SIDE. Professionals often tell me they know their insurance agent so well that they invite him to dinner once a months. The key word here is AGENT. Agent for who? The insurance company of course.
Your insurance agent does not represent your interests but those of the insurance company. And, by the way, insurance agents know enough to sell you a policy, but have no idea how it is adjudicated. Insurance agents are not permitted to make legal Notice of Claim on your behalf by requesting paperwork because they represent the insurance company. Your insurance agent has a conflict of interest because they receive royalties as long as you keep paying your premium. To rely on an insurance agent to help you manage a claim is a mistake.
When the process seems unfair, it usually isn’t. Don’t be surprised when your employer stomps on your tail. It’s expected.
