Fully insured employer plans and state protections

If your employer bought an insurance policy for its workers, your plan is “fully insured”. The insurance company carries the cost of claims and has to follow your state’s insurance laws, as well as the federal rules for employer plans. That gives you more places to turn than people in a self-funded plan have. The reference page for this coverage is Employer plan bought from an insurer.

What this means

Two sets of rules meet in your plan.

• Federal. The Employee Retirement Income Security Act (ERISA) sets the claims procedure: what the denial notice must say, your deadline to appeal, and the plan’s decision times. The Affordable Care Act (ACA) adds to those rules for plans that are not grandfathered.
• State. Your state insurance law binds the insurer. The Supreme Court has upheld a state independent-review law as applied to an insured ERISA plan.

States use that power in different ways. The state pages on this site record each state’s regulator, how its independent review works and the state laws its page lists, such as rules on prior authorization, step therapy and surprise billing. Find yours on the state pages. Do not assume a rule in a neighbouring state is yours.

Some state laws are faster or stronger than the federal floor, and some are not. Read the page for your state before you rely on a deadline you saw in a news story.

What to do

1. Confirm the plan is insured (you). Your summary plan description must say whether and how far benefits are guaranteed by an insurance policy. If it does not, ask the plan administrator in writing. Self-funded or fully insured walks through the clues.
2. Ask the insurer for the claim file (you). Use the claim file request letter. The documents relevant to your claim are free.
3. File the plan’s internal appeal inside the deadline (you). The federal minimum is 180 days after you receive the denial notice. Your notice or your state may give more time.
4. Ask for your state’s independent review if the insurer upholds the denial (you). The window is at least four months after you receive the final denial. Most state pages list the state office that runs it and how to file.
5. Complain to the state insurance department if the insurer broke a rule (you). A complaint does not stop your appeal clock. Do both.
6. Look for a state consumer assistance program (you). Some states fund a program that can help you appeal or file an appeal for you. Your state page lists what exists.

What the insurer may say, and what to say back

“Your employer’s plan is governed by federal law, so state rules do not apply.”

Ask the insurer to say in writing whether the plan is self-funded or insured. For an insured plan, federal law keeps state insurance laws that regulate insurance in force. State independent review can apply to an insured ERISA plan.

The rule

A state law that regulates insurance is saved from ERISA’s general override of state law, so it can apply to the insurer of an employer plan. (ERISA section 514(b)(2)(A), Title 29 of the United States Code (U.S.C.), section 1144)

Watch for

• A state fee. A state process may charge a filing fee only if state law authorized it as of 18 November 2015. It may not exceed $25, must be refunded if you win, must be waived for hardship, and may not exceed $75 per person per plan year. Check the fee on your state page.
• Five states use the federal process. As of the check date for this site, Alabama, Florida, Georgia, Texas and Wisconsin use the federal route for external review rather than a state-run process that meets the federal standards. If you live in one of them, follow the instructions in your denial notice.
• State rules versus lawsuits. Even in an insured plan, ERISA limits what a court can award for a benefit denial. State-law damages claims over a denied benefit are generally not allowed for ERISA plans.
• Discretionary clauses. Some plan documents give the administrator wide power to interpret the plan, which makes a court review harder. Some states restrict these clauses in insured policies. This site has not confirmed which states do, so ask your state insurance department.
• Grandfathered plans. A grandfathered employer plan still follows the ERISA claims procedure. It does not have the ACA’s added appeal rights or general independent review.

What next

• Request external review shows what to send to your state’s reviewer.
• Complain to your state insurance department explains what the department can and cannot do.
• The complete employer plan appeal path lays out every stage in order.
• State consumer advocates points to free help near you.