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ERISA-Qualified Health Plans and Subrogation—Why It Matters

Published on Jun 4, 2019 at 7:08 pm in Car Accidents.

Health care is one of the most complicated matters to U.S. citizens. There are many different healthcare options, and people often may not know how exactly their plan works outside of using it to cover their usual prescriptions and doctor check-ups. However, when a serious injury happens from an accident such as a car collision, the victim’s hospital bills can be substantial.

If you’re in the process of filing a car accident injury lawsuit, knowing the laws in place to help those with healthcare plans may help you understand your case better. Let’s take a look at what protects some health care plans, what those protections do, and how they apply to certain situations regarding health insurance.

What Is ERISA?

ERISA stands for the Employment Retirement Income Security Act. This law came into effect in the 1970s and sets standards for retirement and health plans in the private industry to provide protection for the individuals who have these plans.

Under ERISA, plans are supposed to give people information that includes what the plan features, funding, the responsibilities of those who are in charge of the plan, lay out the process for participants to receive plan benefits, and says that participants can sue when their plan is breached.

ERISA helps employees know more about their plans and how they should proceed when they’re filing a claim. Employers need to give employees this information in writing, so the employee can follow the protocol to get their benefits.

Fiduciaries can also be held accountable for not following the plan. They work for the plan participants’ benefit and if they do something that causes a participant to suffer from large financial losses, then the liability can fall on the fiduciary.

There are different kinds of ERISA plans. There’s a self-funded plan and an unfunded plan. The first plan is when the employer pays the benefits through its general assets. This plan usually gets ERISA preemption benefits. An unfunded plan has the employer purchase an insurance policy, and the insurance company would pay for losses. This plan sometimes receives preemption benefits. ERISA’s Preemptive Clause states that the state law is preempted when it relates to employee benefit plans. This clause and the distinctions between ERISA plans are important if subrogation occurs.

How Does Subrogation Apply to ERISA-Qualified Plans?

Because unfunded plans sometimes get the benefits of the ERISA preemption clause, subrogation can be a tricky subject. Insurance carriers can pursue a third party if they caused a policyholder to sustain losses. The insurance company covers the losses and when the policyholder gets their compensation, the insurance company can seek reimbursement.

When ERISA is involved, there are times where the preemption of law applies, which would mean that state laws cannot affect the plan’s interest. However, there is also the ERISA Saving Clause, which can save state laws from the preemption clause. The state laws that are saved are ones that regulate insurance. This means that the state laws can be used to reduce subrogation interest.

It’s also important to know how the fiduciaries need to act if the plan on seeking reimbursement. They cannot seek reimbursement from a plan participant if the participant received a third-party settlement and has spend the settlement funds. Fiduciaries need to seek reimbursement in a timely manner after the participant has settled their claim.

When You Need Reliable Representatives

Dealing with insurance companies and the complexities of coverage doesn’t have to be difficult. An attorney from Belsky, Weinberg & Horowitz, LLC will stand by your side and help you through this process. We’ll look at what kind of plan you have, how your case has progressed, and then work on what we can do to help you the most.

We focus on representing your best interests no matter what. Our lawyers will answer your questions and explain what’s going on in your case so you be well-informed and will know what to expect. As with most personal injury cases, it’s better to start early. Get in touch with one of our lawyers as soon as possible. We’ll be able to advise you on what to do so you don’t accidentally put your claim in jeopardy. We can also help if you’ve received your compensation but now your insurance is seeking reimbursement. Our firm is here to help you.

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