Plan Benefits

Many employees pay for extra insurance through work without knowing where their money is really going. These products may include accident insurance, critical illness insurance, cancer insurance, hospital indemnity insurance, voluntary life insurance, AD&D coverage, and disability buy-up coverage. Employees often pay for these benefits entirely through payroll deductions.

These benefits can be useful. But in some cases, employees may be paying more than they should because part of the premium may go to brokers, consultants, carriers, or other vendors instead of toward meaningful insurance protection. When these products are offered through an employer benefit plan, ERISA may require the people running the plan to act carefully, loyally, and in the best interests of employees.

The attorneys at Siri & Glimstad investigate potential ERISA claims involving voluntary benefits, supplemental insurance products, excessive fees, broker compensation, and other benefit-plan arrangements that may cause employees to overpay.

Voluntary benefits are extra insurance products offered through an employer. They are usually presented during open enrollment or through an online benefits portal. Unlike regular health insurance, these products are often paid for entirely by employees through payroll deductions.

• Common voluntary benefits include:
• Supplemental health insurance.
• Critical illness insurance.
• Voluntary life insurance.
• AD&D insurance.
• Short-term or long-term disability buy-up coverage.
• Other supplemental insurance products.

These products are often marketed as a way to provide extra financial protection if an employee gets sick, is injured, goes to the hospital, or experiences another covered event.

The concern is not simply that an employee bought supplemental insurance. The concern is whether the employer’s benefit plan was run in a way that protected employees.

In many voluntary-benefit arrangements, employees pay the full premium. But the premium may include broker commissions, consultant fees, carrier charges, administrative costs, or other compensation that employees never clearly see. In some cases, a large portion of the money taken from employees’ paychecks may go to brokers, carriers, or vendors rather than toward benefits.

That does not automatically mean the arrangement is unlawful. But it may raise serious questions under ERISA, especially if the plan fiduciaries failed to review the costs, compare other options, negotiate better terms, or monitor whether the products provided fair value to employees.

Employers often use brokers or consultants to help choose benefit products. These brokers may recommend insurance carriers, help design the benefit lineup, assist with enrollment, and communicate with employees.

Brokers can be paid in different ways. Sometimes they receive a direct fee. Other times, they are paid through commissions built into the premiums employees pay. They may also receive indirect compensation, bonuses, overrides, or other payments connected to the products offered through the plan.

This can create a problem. If a broker is paid more when employees buy certain products, the broker may have an incentive to recommend products that are more profitable for the broker, not necessarily products that are best for employees. Plan fiduciaries should be paying attention to that risk.

You may want to investigate a potential claim if:

• You paid for supplemental health, critical illness, voluntary life, AD&D, or disability buy-up coverage through payroll deductions.
• Your employer offered the coverage during open enrollment or through a benefits website.
• You paid all or most of the cost yourself.
• The plan materials did not clearly explain broker commissions or other compensation.
• The coverage seemed expensive compared to the benefits provided.
• You work, or worked, for a large employer with many employees enrolled in similar voluntary benefits.

Not every situation will support a lawsuit. But these facts may justify a closer review of the plan documents, benefit guides, payroll records, insurance materials, and compensation disclosures.

The available recovery depends on the facts. In some cases, ERISA may allow recovery of losses to the plan, repayment of excessive or improper fees, changes to how the plan is managed, or other equitable relief.

These cases may be brought as class actions because the same voluntary-benefit arrangement may affect many employees in the same way. Even small payroll deductions can become significant when charged every paycheck over several years and across hundreds or thousands of employees.

If you paid for voluntary benefits or supplemental insurance through work, contact Siri & Glimstad for a free, confidential evaluation. We can review your pay stubs, benefit materials, insurance documents, and plan records to determine whether you may have a claim.

There is no cost for an initial consultation. We get paid only if we recover benefits on your behalf.