There’s often an erroneous assumption that any insurance a person buys in connection with their employment is automatically subject to ERISA. But ERISA does not regulate all employer-adjacent insurance. ERISA only applies to employee benefit “plans.” Whether an ERISA “plan” exists can be complex, but without one, an insurance policy will not be subject to ERISA even if an employer was involved in its purchase.
A recent Ninth Circuit decision is a good reminder of this. In Steiglemann v. Symetra Life Ins. Co., the appellate court determined that an insurance policy purchased in connection with the plaintiff’s employment was not subject to ERISA because the requirements for an employee benefit “plan” were not met. The decision is unpublished, meaning it may be persuasive to lower courts but is not binding.
Jill Steiglemann bought a disability insurance policy from Symetra Life Insurance Company. She had access to the policy through her membership in a trade association for insurance agents. Her company paid for the insurance. The lower court held that the policy was part of an employee benefit plan and subject to ERISA.
The Ninth Circuit Court of Appeals reversed the lower court and held that the policy was not governed by ERISA. Even though Steiglemann’s employer arranged for the option for her to buy coverage and paid premiums, this was not enough to show the employer established an ERISA plan.
The employer never contracted to provide for coverage. It never promised to act as an administrator for the insurance. And it never took the steps necessary to maintain an ERISA plan, like recordkeeping and filing returns with the Department of Labor.
Steiglemann’s trade association also did not do the things necessary to create an ERISA plan. The association did not function for the main purpose of representing employees against their employer.
There was therefore no evidence that Steiglemann’s insurance policy was part of an employee benefit plan. And without a plan, the policy was not subject to ERISA.
This decision is a helpful reminder not to assume that ERISA applies to all employer-adjacent insurance.