ERISA Plan Language and Reimbursement Issues

Before you settle any personal injury case, you should first determine who may have a potential lien or legal interest in your recovery. If your employer provides an ERISA insurance based plan, the provider will likely be entitled to reimbursement for medical expenses from any settlements or judgements related to those injuries. To determine whether your company’s plan is an ERISA based policy, you should look up their IRS 5500 form or IRS 5500-SF (if your employer has less than 100 employees).

These forms can be found at, and an example of an IRS 5500 form can be found at the end of this article. While most ERISA base insurance programs must file an IRS 5500 form, not all are required to do so. In the instances where your provider does not file an IRS 5500 form, you will need to receive a copy of the summary plan description from your health care provider by contacting the plan administrator. Your employer will be able to provide the proper contact information. The summary plan description will provide whether or not the plan is subject to ERISA laws. For an example of a summary plan description that is ERISA based, please visit the link below. Sample Erisa Plan Language can be downloaded by clicking the button below. Please look at the highlighted sections on PDF page 141 of 188.

Not only do you have to determine whether your insurance coverage is an ERISA plan, you must also determine whether the plan properly qualifies for a lien or subrogation right. In order for an ERISA plan to be able to establish or attach to your recovery proceeds, the plan must be self-funded and include the proper language. Determining whether an ERISA plan includes the necessary factors to claim a right of reimbursement can be very difficult. This article will attempt to provide a better understanding of how to determine whether an ERISA plan will receive a right of reimbursement from your recovery or award.

How to Determine Whether the Two Key Factors Are Present

Again, in order for an ERISA plan to acquire a reimbursement right (lien) it must be self-funded and include certain language in the plan’s contract. Let’s look at each requirement separately for a better understanding.

Requirement Number 1 – The ERISA Plan Must Be Self-Funded

An ERISA plan must be self-funded in order to be able to claim reimbursement from a settlement or award. It can be very tricky to determine if a plan is self-funded, even for lawyers. Essentially, a plan is self-funded if the program is responsible for paying the medical bills of those whom the plan covers, as opposed to an insurance policy held by the plan. In order to be self-funded, the ERISA plan should pay for all of its beneficiaries’ medical expenses from a pool of money that is funded by the company itself, the employees, or a combination of both. If, however, an ERISA policy uses another insurance provider to pay for all employees’ medical expenses and coverages, then the program is not self-funded. When the program is determined to not be self-funded, the plan will fall under North Carolina’s anti-subrogation laws, thus prohibiting the plan from receiving reimbursement rights. Almost all ERISA providers claim to be self-funded; therefore, further inquiry is often required and provided below.

A good place to start in determining whether an ERISA plan is self-funded is the IRS 5500 form discussed previously. On the IRS 5500 form, a section entitled “Box 9” will give indication as to how the plan is funded. Generally speaking, if Box 9 states something like “company assets” or “Trust” then the program is likely self-funded. However, if Box 9 indicates “insurance coverage” then the plan is likely not self-funded. Provided below is an example of a self-funded IRS form 5500 box 9:

While looking at the IRS form 5500 is a useful start, the form is not always conclusive as mistakes can happen. Therefore, you should also request copies of the controlling plan language. Two documents should be requested when trying to determine the program’s funding: the master plan document and the summary plan description. These documents are often provided to you by your employer once your coverage begins. If these have not been provided, or you have misplaced the documents, then you should contact the “plan administrator” who is statutorily obligated to provide you with the plan language.
The contact information for the plan administrator is located in Box 2c on the IRS 5500 form. Both documents should include a section that describes how the plan is funded. In most cases, by viewing the two documents alongside the IRS 5500 form, it should become apparent as to whether or not the program is self-funded.

Even after viewing all the related documents, it still may not be apparent as to whether or not the plan is self-funded. In these cases, it is highly recommended that you hire an attorney to deal with ERISA and their potential right to reimbursement.

Requirement Number 2 – The ERISA Plan Must Include the “Proper Language”

An ERISA plan must also correctly claim a right to reimbursement. An ERISA plan receives a right of reimbursement from a personal injury settlement or award based on the language of its policy contract. An ERISA plan must explicitly authorize their claim for reimbursement. This means that the plan must actually state their right of reimbursement from settlements or awards in their plan contract. This language should be found in the master plan document that can be acquired by contacting the plan administrator.

Moreover, the plan contract must state where the plan can seek reimbursement (particular fund) and how much the plan can take of that particular fund (particular share). Generally, the plan will state that reimbursement will come from any recovery proceeds related to those injuries and medical expenses the plan covered, including recoveries from an at-fault third party or insurer. Also, ERISA plans generally include that they are entitled to full reimbursement from the recovery proceeds or will allow for a deduction for attorney’s fees. The plan includes this type of language in order to address the particular share requirement. If an ERISA contract neglects to include the proper language, the ERISA provider will not likely receive a right to reimbursement. Please understand, however, that an ERISA plan’s failure to include the proper language is rare.

Sample IRS 5500 for Review


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