Listen Up, Workers--and Speak Up Too

Alexis M. Herman is celebrating an anniversary of sorts: a 25-year-old commitment to protect the pension and welfare benefits of American workers. Herman is the secretary of Labor, and this Labor Day was the 25th anniversary of the Employee Retirement Income Security Act, better known as ERISA.

When ERISA took effect in 1974, it covered 270,000 pension plans covering 42 million workers. Today, private pensions account for $4.3 trillion in assets and cover 90 million participants in 700,000 plans. The Labor Department watches over eligibility for plan participation, vesting, rights of spouses, funding of the plans, and financial and administrative reporting and disclosure. In addition to ERISA enforcement, Herman’s department also enforces a host of other laws affecting employee benefits, such as the Consolidated Omnibus Budget Reconciliation Act, better known as COBRA; the Health Insurance Portability and Accountability Act, or HIPAA; and the Newborns’ and Mothers’ Health Protection Act, which sets minimum standards for hospitalization after childbirth.

Given the vast authority of her department, it’s not surprising that Labor officials receive about 620 calls each day--and more than 1 million requests for publications each year--from people who need to know their rights as employees and what to do if these rights are violated.

“Workers should know that their calls and letters matter and can make a positive difference for them and others,” Herman said.

Indeed, these inquiries often touch off Labor Department investigations that have resulted in the recovery of millions of dollars’ worth of benefits that had been improperly denied, Labor officials say. In 1998 alone, the department recovered $42 million in lost benefits.

Herman, who has been Labor secretary since 1997, and several of her top aides recently met with The Times to discuss some of the most commonly asked questions that come into the Pension and Welfare Benefits Administration at the Labor Department.

Question: When should participants expect to receive distributions from a pension plan after terminating employment?

Answer: Generally, the law requires plans to pay benefits no later than the time when a participant reaches normal retirement age, which typically is 65. But many plans, including most 401(k)s, do allow for earlier payments in certain circumstances.

How quickly the money must be distributed varies all over the map. In some plans, it’s after a quarter from the date of separation [that is, a three-month period]; some say at the end of the year that you are terminated; in others, it’s “as soon as administratively possible.”

To know when to expect payment, you need to read the summary plan description. It outlines your benefits and your legal rights under ERISA. If you are uncertain about what your company pension plan allows, ask your employee benefits division for a copy and read it.

Q: What if the plan does allow you to take a distribution upon termination, but three or six months after you leave the company, you still don’t have your pension money? Is there anything you can do to compel the company to speed it up?

A: If you suspect it is taking too long, we encourage you to let us know. Call us.

Q: What information about the plan are participants entitled to receive by law?

A: Employees and their beneficiaries must be informed of their rights and how they can obtain the benefits provided by the plan. The plan administrator is usually the person who is able to give them this information.

Law requires that plan information be furnished to participants and beneficiaries, either automatically or by written request. The documents that your employer must furnish include the summary plan description, summary financial reports and individual statements of accrued and vested benefits. Any responses to written claims must be furnished on request.

Q: Is everyone entitled to receive a pension?

A: Pension and welfare benefits are not mandatory. The only thing that the law does require is that employers treat all their workers fairly. In other words, if an employer does offer a pension, the plan must stipulate which classes of employees can qualify and how. Those rules cannot be so exclusive that they eliminate everyone other than top managers. If you are among the qualifying group and you have worked for the company long enough to vest, you are entitled to receive pension benefits. But nothing in U.S. labor law requires companies to provide pensions. Neither you nor we can compel your company to offer a pension plan if it chooses not to.

Q: What about health benefits? Am I entitled to those as a full-time employee?

A: Again, companies are not required to offer health benefits. However, if they do offer them, they are required to administer them fairly and in accordance with ERISA. In addition, COBRA allows employees who are covered under a health plan to elect to continue that coverage under certain circumstances when they terminate employment.

However, if you elect COBRA coverage, you will be responsible for paying the unsubsidized premiums. Companies can also impose a modest administration fee.

Q: If covered participants and beneficiaries leave employment, what process must be followed to obtain COBRA coverage?

A: A person can elect continuation of health insurance coverage if you terminated employment, if your hours were reduced enough to terminate your eligibility under the plan, or if your child loses coverage as the result of reaching the maximum age for dependent coverage. In addition, if an employee covered under a plan dies, legally separates or divorces, the covered spouse and dependent children may be eligible to purchase temporary extended health coverage for up to 36 months.

To elect coverage, you must notify the plan within 30 days of the employee’s death. In the case of a legal separation or divorce, you have 60 days, but you must notify the plan in writing. The plan will then contact you to indicate how much you must pay in premiums and when those premium payments are due.

Q: Can employers deny new employees coverage for a preexisting medical condition?

A: That depends. This is something that has been evolving since the ERISA law was passed, and as we now seek to implement the Health Insurance Portability and Accountability Act [which took effect in 1998]. Generally, the law limits preexisting-condition exclusions to a maximum of 12 months [of coverage]. But it prohibits employers from using preexisting condition restrictions for certain conditions, such as pregnancy.

Q: What should individuals do if their employers improperly deny them health benefits?

A: Call us or contact us on the Internet. There are a couple of different numbers to use. If you need publications that describe your basic rights under the law, you can call our toll-free information line at (800) 998-7542. However, if you have a problem that requires us to investigate, you should call your nearest Labor Department office. The department has 15 Pension and Welfare Benefits Administration offices around the country.

The division also hosts a Web site, on which phone numbers of the regional offices and a number of publications and fact sheets about employee benefits are posted. The address is https://www.dol.gov/dol/pwba.