What Kind of Healthcare Policy or Plan Do I Have?

Posted By Kantorlaw || 7-May-2014

Healthcare coverage is not created equal. Depending on your type of healthcare coverage, you are entitled to certain protections under the law. Here is a primer to help you understand your type of healthcare policy or plan:

Individual policies – These are insurance policies which you buy as an individual or family. These policies are not provided through employment. In many states (including California), an insurer may be liable for bad faith damages (such as punitive damages, financial distress damages, emotional distress damages, and attorney's fees) for failing to promptly pay or investigate your insurance claim.

ERISA plans – These health plans are created by employers for the benefit of their employees and families. They may be funded by the employer (aka "self-funded") or insured through an insurance policy purchased by the employer. Either way, the plans are governed by ERISA (Employee Retirement Income Security Act of 1974) which sets forth the requirements for such plans. Bad faith damages are not applicable to ERISA plans. However, ERISA does permit claimants to pursue a federal lawsuit to recover benefits owed, interest, and attorney's fees. ERISA does not apply to governmental entities (see next category). Claimants must exhaust administrative appeals before filing a lawsuit.

Other Self-funded Plans – These include all other plans which are not funded by insurance policies and the employer is a governmental entity such as a city or state. Because these plans are neither insured nor governed by ERISA, the participants do not have the protections of ERISA or insurance law. However, the plans may still be liable for breach of contract for failing to pay claims.

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