South Carolina Life and Health Practice Exam

Under ERISA, what must a plan offer to participants who wish to appeal benefit denials?

1. A written notice without reasons

2. An informal verbal discussion

3. A detailed explanation of the reasons for denial

4. A refund of contributions

The correct answer is: A detailed explanation of the reasons for denial

Under the Employee Retirement Income Security Act (ERISA), when a benefit claim is denied, participants have the right to a comprehensive understanding of the denial. Specifically, they must receive a detailed explanation of the reasons for the denial of benefits. This requirement ensures transparency and allows participants to comprehend the basis for the decision, enabling them to prepare an informed appeal if they choose to contest the denial. The detailed explanation serves multiple purposes: it informs participants of the specific reasons and criteria used to evaluate their claims, outlines any relevant plan provisions, and indicates any additional information that may be required to support an appeal. This provision is crucial for upholding the rights of participants in employee benefit plans and enhancing the overall fairness of the claims process. The other options lack the detail required by ERISA. A written notice without reasons would not provide the necessary information for participants to understand why their claim was denied. An informal verbal discussion would also fail to meet ERISA standards for transparency and documentation. A refund of contributions is unrelated to the process of appealing a benefit denial and does not help clarify the reasons behind the claim denial.