Insurance claims can become more complex when the Employee Retirement Income Security Act (ERISA) of 1974 is involved. While insurance companies typically cannot recover when the settlement amount is less than your damages and you haven’t been “made whole,” insurance policies governed by ERISA often don’t adhere to this rule.
In general, if a policy qualifies as a legitimate ERISA plan, the insurance company has the right to subrogate most or all of the benefits it paid out. ERISA plans enjoy these enhanced subrogation rights because they are “self-funded,” meaning they are entirely funded by the premiums paid by members (employees) contributing to it. Conversely, general insurance policies offered to the public, often through employers, can more easily absorb losses since they are funded by premiums from individuals across the state or country.
This means that ERISA plans can claim a larger portion of your settlement. However, many insurance companies may demand reimbursements under ERISA policies even when they are not entitled to them. When dealing with an ERISA plan, it is essential to engage an experienced personal injury attorney who can explain your rights and advocate on your behalf.