What Is ERISA and How It Affects Your Health Insurance Appeal Rights

If your health insurance comes through your employer, it is almost certainly an ERISA plan. This single fact changes your appeal rights in ways that matter significantly if you ever need to fight a denial.

What ERISA is

The Employee Retirement Income Security Act of 1974 is a federal law that governs employer-sponsored benefit plans. ERISA preempts most state insurance laws for employer-sponsored health plans. This means state consumer protection laws, state external review requirements, and state insurance regulations generally do not apply to your plan.

Not all employer plans are ERISA plans. Governmental employer plans (federal, state, and most local government employers) and church plans are exempt. If you work for a state university, a city government, or a church-affiliated organization, your plan may not be an ERISA plan.

How ERISA affects your appeal rights

ERISA requires plan administrators to provide written notice of denials with specific reasons and a description of the review process. You have at least 180 days to file an internal appeal. The plan must complete the appeal review within defined timeframes.

After exhausting internal appeals, your primary avenue under ERISA is federal court, not state court and not a state insurance commissioner. This is the most significant limitation. You cannot sue your insurer in state court for bad faith denial of claims. You can only sue in federal court for benefits owed, and the standard of review is deferential to the plan administrator unless the plan gives discretionary authority to the administrator.

The full and fair review requirement

ERISA requires plans to provide a full and fair review of denied claims. This means providing the specific reasons for denial, the plan provisions on which the denial is based, and the ability to review and respond to all information the plan considered.

Critically, ERISA requires plans to provide you with any new evidence or rationale developed during the appeal process before issuing a final decision, giving you an opportunity to respond. If a plan denies your appeal based on a new medical review that you never saw, that may violate ERISA procedural requirements.

Building an administrative record

Because federal court review under ERISA is typically limited to the administrative record developed during the internal appeal process, building a complete record before exhausting internal appeals is essential.

Submit all supporting documentation during the internal appeal, not just the initial claim. Medical records, physician letters, peer-reviewed literature, and any other evidence you want a court to consider must be in the administrative record. You generally cannot introduce new evidence in federal court that was not part of the internal appeal.

If you believe you may need to litigate, consulting with an ERISA attorney before exhausting internal appeals is worth considering.

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Bill Advantage is a document literacy tool. Nothing in this article constitutes legal or medical advice.