What Happens When Your Employer Ends Coverage

Know Your Rights and Responsibilities

When an employer offers life insurance to their employees, they are required to meet certain standards laid out by The Employee Retirement Income Security Act of 1974 (also known as “ERISA”).  This is a federal law with which companies throughout the United States must comply.

Some of ERISA’s most basic functions include a requirement that participants are given information about their plan’s features and funding, the establishment of duties that the plan’s fiduciaries must uphold, and the ability for participants to seek remedies and access the federal courts if necessary.

According to the Bureau of Labor Statistics, 59% of non-government workers havr access to employer-provided life insurance.

An employer may decide to stop offering coverage to their employees for a variety of reasons.  It is also possible that you may no longer be eligible for coverage if you leave your job.

In either situation, however, there are steps that your employer is required to follow under federal law once your group life insurance policy has been terminated.

Employers Have To Notify You of Policy Changes

If an employer cancels the life insurance policy of an employee, the employee must be notified.  The courts impose additional duties on employers to notify the employee of their option to convert the group policy to an individual policy.

In the 8th Circuit (which is comprised of Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota), for example, the employer, as the “fiduciary”, must communicate material facts affecting the interests of beneficiaries regardless of whether the insured or beneficiary asks for that information.  Fink v. Dakotacare, 324 F.3d 685 (8th Cir. 2003).

Additionally, the fiduciary’s duty includes a duty not to misinform, as well as an affirmative duty to inform when they know that silence might be harmful.  Shea v. Esensten, 107 F.3d 625 (8th Cir. 1997).  This would require an employer to inform an employee of their option to convert their group life insurance policy to an individual policy.

You Have A Short Window To Convert Coverage

After notifying you of your option to convert, there is a period of time in which the company must allow you to make the decision about whether you would like to convert your policy.

For example, the Insurance Department of Maryland notes that “the notice you receive states the deadline for making the selection of an individual policy. The insurance company must allow you at least 31 days after your group coverage ends in which to make a decision.”

If you decide to convert to an individual policy, you personally (not your employer) will be entering into a new contract with the insurance company.  Thus, it is important to keep in mind that you will become responsible for paying the premiums of your individual policy directly to the insurance company.

ERISA Claims Can Protect Your Life Insurance

In situations where an ERISA-related problem has occurred, do not delay in seeking our advice.  There is a short time-frame in which you may bring an ERISA claim, as well as certain other time requirements for notices of appeals and the like.

Even if years have passed since you have been denied your life insurance benefits, however, not all hope is lost.  By consulting our attorneys, we may uncover new information regarding your claim that essentially “resets the clock” on that time limit.

It is rather common for employers to fail to meet their duties to employees regarding their group life insurance policies.  The Boonswang Law Firm has vast experience in this area.

Life Insurance Lawyers for ERISA Claims

Our lawyers at The Boonswang Law Firm have had a great deal of success in handling life insurance policies governed by ERISA.  We have had outstanding results in advocating for our clients against their former employers and life insurance companies.