Social Security:
Can Your Employer Fire You For Asserting Your Rights Under ERISA?
Can a person with a terminal illness qualify for Disability benefits?
What kind of disability benefits does Social Security pay?
What is the difference between Social Security disability and SSI?
I receive Social Security disability benefits. Will my Social Security benefits change when I turn age 65?
How do I apply for Social Security disability benefits?
What will I need to apply?
How many credits are required to be eligible for disability?
How does a child qualify for disability benefits?
Can Your Employer Fire You For Asserting Your Rights Under ERISA?
ERISA prohibits employers from promising pensions and then firing or disciplining workers to avoid paying a pension. To that end, ERISA says it is unlawful for an employer to discharge, fine, suspend, expel, discipline, or discriminate against you or any beneficiary for the purpose of interfering with the attainment of any right to which you may become entitled under the plan or the law.
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Can a person with a terminal illness qualify for Disability benefits?
To be eligible for benefits, a person must be unable to do any kind of substantial gainful work because of a physical or mental impairment (or a combination of impairments), which is expected either to last at least 12 months or to end in death.
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What kind of disability benefits does Social Security pay?
People who are severely disabled may be eligible for monthly benefits under one or more of the programs we administer. Both the Social Security program and the SSI program provide a monthly income for people with severe disabilities. However, the eligibility requirements for the two programs are different.
The Social Security program pays benefits to disabled or retired workers and their families and to the families of deceased workers. To be eligible for Social Security disability benefits, you must be disabled and must have earned a minimum number of credits from work covered under Social Security. (The required number of credits varies depending on your age at the time you became disabled.)
The SSI program provides monthly income to people who are age 65 or older, or are blind or disabled, and have limited income and financial resources. Effective January 2000, the SSI payment for an eligible individual is $512 per month and $769 per month for an eligible couple. If you are married, and only one person is eligible, a portion of your spouse`s income may be counted. In addition, your financial resources (savings and assets you own) cannot exceed $2,000 ($3,000 if married). You can be eligible for SSI even if you have never worked in employment covered under Social Security.
Generally, to be eligible for SSI, an individual also must be a resident of the United States and must be a citizen or a non-citizen lawfully admitted for permanent residence. Also, some non-citizens granted a special status by the Immigration and Naturalization Service may be eligible.
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What is the difference between Social Security disability and SSI?
Social Security disability insurance is a program that workers, employers and the self-employed pay for with their Social Security taxes. You qualify for these benefits based on your work history, and the amount of your benefit is based on your earnings.
SSI is a program financed through general tax revenues-not through Social Security trust funds. SSI disability benefits are paid to people who have a disability and who don't own much or have a lot of income.
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I receive Social Security disability benefits. Will my Social Security benefits change when I turn age 65?
When you turn age 65, nothing will change, except for Social Security purposes, your benefits will be called retirement benefits instead of disability benefits.
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How do I apply for Social Security disability benefits?
You can apply by calling your local Social Security Office. A representative will schedule an appointment for you. You can apply in person or over the phone. You should apply as soon as you become disabled. However, Social Security disability benefits will not begin until the sixth full month of disability. This waiting period begins with the first full month after the date we decide your disability began.
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What will I need to apply?
The claims process for disability benefits is generally longer than for other types of Social Security benefits, from 60 to 90 days. It takes longer to obtain medical information and to assess the nature of the disability in terms of your ability to work. However, you can help shorten the process by bringing certain documents with you when you apply and by helping the S.S.A. get any other medical evidence you need to show you are disabled. Helpful documents include the following:
- your Social Security number;
- your birth certificate or other evidence of your date of birth;
- your military discharge papers, if you were in the military service;
- your spouse's birth certificate and Social Security number if he or she is applying for benefits;
- your children's birth certificates and Social Security numbers if they are applying for benefits;
- your checking or savings account information, so your benefits can be directly deposited;
- names, addresses, and phone numbers of doctors, hospitals, clinics, and institutions that treated you and dates of treatment;
- names of all medications you are taking;
- medical records from your doctors, therapists, hospitals, clinics, and caseworkers;
- laboratory and test results;
- a summary of where you worked in the past 15 years and the kind of work you did;
- a copy of your W-2 Form (Wage and Tax Statement), or if you are self-employed, your federal tax return for the past year; and
- dates of prior marriages if your spouse is applying.
The documents presented as evidence must be either originals or copies certified by the issuing agency. The S.S.A. will not accept uncertified or notarized photocopies as evidence since they cannot verify their authenticity. Do not delay filing for benefits just because you do not have all of the information you need. The Social Security office will be glad to help you. If you are applying for Supplemental Security Income benefits you also need the following:
- information about the home where you live, such as your mortgage or your lease and landlord's name;
- payroll slips, bankbooks, insurance policies, car registration, burial fund records, and other information about your income and the things you own.
How many credits are required to be eligible for disability?
To qualify for Social Security disability benefits, you must have worked long enough and recently enough under Social Security. You can earn up to a maximum of four work credits per year. The amount of earnings required for a credit increases each year as general wage levels rise. Family members who qualify for benefits on your work record do not need work credits. The number of work credits you need for disability benefits depends on your age when you become disabled. Generally you need 20 credits earned in the last 10 years ending with the year you become disabled. However, younger workers may qualify with fewer credits.
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How does a child qualify for disability benefits?
Children who are severely disabled may be eligible for monthly benefits under one or more of the programs we administer. Both the Social Security program and the SSI program provide a monthly income for people with severe disabilities. However, the eligibility requirements for the two programs are different.
The Social Security program pays benefits to disabled or retired workers and their families and to the families of deceased workers. Child's benefits generally may be paid to a dependent unmarried child under age 18, to a child age 18 or older who became disabled before age 22, and to a full-time elementary or secondary school student under age 19. If the parent is alive, he or she must be entitled to retirement or disability benefits. If deceased, the parent must have worked long enough under Social Security for survivor's benefits to be paid on the record.
A child age 18 or older may be entitled to Social Security benefits based on his or her disability when a parent who has worked long enough under the program is entitled or dies. The criteria used to evaluate the disability are the same as those used to evaluate disability in adults. The child must be unable to do any substantial work because of a medical condition that has lasted or is expected either to last at least 12 months or to result in death. (Usually a job that pays $700 or more per month is considered substantial.) The child's disability must have begun before age 22.
The SSI program provides monthly income to people who are age 65 or older, or are blind or disabled, and have limited income and financial resources. Children can qualify if they meet the definition of disability and if the household income of the parents and the child are within the allowed limits.
ERISA:
What is the Employee Retirement Income Security Act (ERISA)?
Which pension plans fall under ERISA regulations, and how do they compare to other plans?
What are the overall fiduciary duties and disclosure responsibilities that must be adhered to when employers setup a pension plan?
How Do You Make A Claim For Benefits?
Under what circumstances may I file a lawsuit to recover my benefits under ERISA?
Can Your Employer Fire You For Asserting Your Rights Under ERISA?
What is the Employee Retirement Income Security Act (ERISA)?
The U.S. Congress, out of concern over corporate mismanagement of worker's retirement funds, passed this act in 1974. It establishes detailed regulations effecting employee "welfare" and pension benefits; it establishes certain rights for employees, and it establishes responsibilities for employers concerning benefit plans that were created after January 1, 1975. ERISA effectively federalizes all disputes over employment related benefits, and preempts all state law for cases involving business engaged in interstate commerce.
Welfare plans are programs sponsored by the employer or an employee organization for the benefit of the employees. Some of those programs include:
- health insurance;
- life insurance;
- disability and unemployment benefits;
- paid vacation time;
- vocational training benefits;
- daycare, and
- prepaid legal services.
Pension plans provide retirement funds to employees from a fund administered by the employer, or an employee organization, where funds are set aside to provide qualified employees with a cash benefit in the form of a lump sum or lifetime annuity.
There are two major types of pension plans: defined benefit and defined compensation. Two other variations are: cash balance and simplified employee plans (SEPs).
ERISA also requires employers to provide detailed descriptions of their benefit plans; it outlines who must receive a pension, and it requires that a percentage of an employee's benefit contribution be vested at a certain point in a worker's employment history and at a certain age. ERISA also requires that pension plans provide survivor's benefits for each qualified worker and the administrators of these plans must conduct themselves within specific fiduciary criteria. ERISA set guidelines for employers to follow to assure they adequately fund their pension plans, and ERISA requires that employers purchase insurance to protect their pension plans through the Pension Benefit Guaranty Corporation (PBGC).
Two governmental agencies share most of the responsibility to enforce ERISA rules and regulations. The IRS is responsible for enforcing the vesting and funding requirements by removing tax-exempt status for those employers who violate these regulations. The U.S. Labor Department enforces the provisions associated with rules of disclosure, reporting, and the fiduciary responsibilities of an employer. Finally, individual employees may file civil lawsuits based on ERISA violations.
ERISA regulates an employee's right to carry-over their benefits from job to job. The Health Insurance Portability and Accountability Act (HIPAA) amend ERISA to endure the portability of an employee's health care plan by preventing exclusions in a new employers plan due to preexisting conditions. In addition, ERISA was amended by The Women's Health and Cancer Act to provide protection for women breast cancer patients seeking breast reconstruction in connection with a mastectomy.
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Which pension plans fall under ERISA regulations, and how do they compare to other plans?
Two major types of pension plans that fall under the regulations of ERISA:
- defined benefit plans, and
- defined contribution plans.
A defined benefit plan promises you a specified monthly benefit at retirement. The plan may state this promised benefit as an exact dollar amount, such as $100 per month at retirement. Or, more commonly, it may calculate a benefit through a plan formula that considers such factors as salary and service such as one percent of your average salary for the last 5 years of employment for every year of service with your employer, for example.
A defined contribution plan, on the other hand, does not promise you a specific amount of benefits at retirement. In these plans, you or your employer (or both) contribute to your individual account under the plan, often at a set rate, such as 5 percent of your pre-tax earnings annually. These contributions are invested on your behalf. You will ultimately receive the balance in your account, which is based on contributions plus or minus investment gains or losses. The value of your account will fluctuate due to the changes in the value of your investments.
Examples of defined contribution plans include:
- profit-sharing plans & stock bonus plans;
- 401k plans;
- stock ownership plans, and
- money purchase pension plans.
Profit sharing plans & stock bonus plans:
A profit sharing or stock bonus plan is a defined contribution under which the plan may provide, or the employer may determine, annually, how much will be contributed to the plan (out of profits or otherwise). The plan contains a formula for allocating to each participant a portion of each annual contribution. Both profit sharing plans and stock bonus plans include a 401(k).
A 401K plan:
Your employer may establish a defined contribution plan that is a cash or deferred arrangement, usually called a 401(k) plan. You can elect to defer receiving a portion of your salary, and have it contributed on your behalf to the 401(k) plan. In addition, your employer may match your contributions.
There are special rules governing the operation of a 401(k) an. For example, there is a limit on the amount you may defer each year. It was $9,240 in 1995. The amount is occasionally adjusted by the Treasury Department to reflect changes in the cost of living. Other limits may apply to the amount that may be contributed on your behalf. For example, if you are highly compensated, you may be limited depending on the extent to which rank and file employees participate in the plan. Your employer must advise you of any limits that may apply to you. Although a 401(k) plan is a retirement plan, you may be permitted access to funds in the plan before retirement.
Employee stock ownership plans (ESOPs):
Employee stock ownership plans (ESOPs) are a form of defined contribution plan in which the investments are primarily in employer stock. Congress authorized the creation of ESOPs as one method of encouraging employee participation in corporate ownership.
IRAs (SEPs):
An IRA is known as a simplified employee pension plan (SEP). These allow employees to setup their own individual retirement accounts (IRAs), and make tax-deductible contributions. Employees have the option of having their employer contribute to their account. The employer can contribute up to 15 percent of the employee's pay each year (maximum of $30,000).
A money purchase pension plan:
A plan where your employer makes fixed annual contributions to your individual account. These regular contributions are required; making them subject to specific rules including rules addressing the funding of the plan.
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What are the overall fiduciary duties and disclosure responsibilities that must be adhered to when employers setup a pension plan?
Prior to the creation of ERISA, those who managed pension plans occasionally made risky investments with the plan's money. ERISA placed fiduciary responsibilities upon those who are caretakers of the plans. This means that they have a responsibility to manage the pension in a manor that is always in the best interest of the plan's enrollees.
In the past, if a manager of a pension plan invested the pension fund and returned an excess of funds, the manager or employer would keep the excess for other purposes. Alternatively, if the employer was not successful in picking ways to invest the fund, the fund would fall short of the necessary amount to pay out the plan benefits.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 provides some protection for employees when employers engage in these practices. It requires the employer or manager to purchase an annuity to cover current retirees, and to protect active employees by begin a new pension plan immediately upon ending an existing plan - a common way of taking excess funds.
Fiduciary guidelines also set specific standards for practices of good financial management. These guidelines also require that employers provide employees with adequate information and documentation of the plan's financial status.
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How Do You Make A Claim For Benefits?
If your employer is not providing the benefits that you believe you are entitled to, you can file a claim with your plan administrator. In fact, ERISA requires all plans to have a reasonable written procedure for processing your claims for benefits and for appealing if your claim is denied. Your summary plan description should contain a description of the procedure.
If you make a claim for benefits that is denied, the plan must notify you in writing - generally within 90 days after receipt of the claim - stating the reasons for the denial and the specific plan provisions on which the denial is based. If the plan denies your claim because the administrator needs more information to make a decision, the administrator must tell you what information is needed. Any notice of denial must also tell you how to file an appeal. If special circumstances require your plan to take more time to examine your request, it must tell you within 90 days that additional time is needed, why it is needed, and the date by which the plan expects to make a final decision. If you receive no answer at all in 90 days, you should consider this as a denial, and you can proceed to appeal.
You must be allowed at least 60 days to file an appeal. After receiving your appeal, the plan should issue a ruling within 60 days, unless the plan provides for a special hearing. If the plan notifies you that it must hold a hearing, or that it has other special circumstances, it may have an additional 60 days.
Ultimately, the plan must furnish you with a written decision on your appeal that explains their decision according to the rules of your plan. If you disagree with the final decision, you may want to consult with legal counsel and discuss filing a lawsuit. First, be sure that you have exhausted the preliminary steps outlined above, sense the court requires this prior to allowing a lawsuit.
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Under what circumstances may I file a lawsuit to recover my benefits under ERISA?
As a plan participant or beneficiary, you may bring a civil action in court to:
- Recover benefits due you and enforce your rights under the plan.
- Get access to plan documents you requested in writing. If your plan administrator does not supply the plan documents within 30 days of your written request, a court could find the plan administrator personally liable and assessed penalties for up to $100 per day (unless the failure results from circumstances reasonably beyond his or her control).
- Clarify your right to future benefits.
- Get appropriate relief from a breach of fiduciary duty.
- Enjoin any act or practice that violates the terms of the plan or any provision of Title I of ERISA, such as the reporting and disclosure, participation, vesting or funding, and fiduciary provisions, or to obtain other equitable relief.
- Enforce the right to receive a statement of vested benefits upon termination of employment.
- Obtain review of a final action of the Secretary of Labor, to restrain the Secretary from taking action contrary to ARISE, or to compel the Secretary to take action.
- Obtain review of any action of the PBGC or its agents that adversely affects you
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Can Your Employer Fire You For Asserting Your Rights Under ERISA?
ERISA prohibits employers from promising pensions and then firing or disciplining workers to avoid paying a pension. To that end, ERISA says it is unlawful for an employer to discharge, fine, suspend, expel, discipline, or discriminate against you or any beneficiary for the purpose of interfering with the attainment of any right to which you may become entitled under the plan or the law.
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Copyright 2003 by Hengst & Henderson.
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