You know that many ERISA governed plans provide basic life insurance benefits.

But what happens when the plan offers employees the choice to purchase supplemental life insurance? If the employee pays the entire premium for the supplemental benefit, is that benefit still governed by ERISA?

Here’s the case of Cox v Reliance Standard Life Insurance Co. [PDF], 2013 WL 2156546 (E.D. Cal. May 17, 2013) (supplemental life benefit, where premiums paid solely by employee, governed by ERISA).

The case outlines the tests to determine when ERISA should govern supplemental life insurance benefits.

FACTS: Steven Miles was eligible for life insurance under a group policy. He applied for supplemental life insurance and was responsible for all of the premiums for the supplemental life benefit.  After Miles died, his estate sued claiming Reliance had failed to pay portions of the supplemental life insurance benefit.  Plaintiff contended ERISA did not apply and that state law claims were not preempted.

TRIAL COURT HELD:  Supplemental insurance coverage, with premiums paid solely by beneficiary, is governed by ERISA.


  1. The Ninth Circuit has stated, “[a]n employer can establish an ERISA plan rather easily.”  The life insurance purchased is an ERISA plan because all five Donovan factors are met. The plan was “established and maintained”. Op. at 4
  2. ERISA applied because Plaintiff could not establish the four ERISA safe harbor factors. Op. at 4
  3. ERISA applied because the plan was not completely voluntary because the employer guaranteed that 33% of its eligible employees would take the supplemental life benefit. Op. at 4.
  4. ERISA applied because the supplemental life benefit could not be severed from the plan as a whole to defeat ERISA coverage. The employer’s contribution to the basic life coverage applies to the supplemental life insurance plan as well.  Op. at 5.
  5. The supplemental life benefit was not a different “plan” from the plan containing the basic life insurance benefit. There are no facts showing different identification numbers or documents that the employer intended to establish multiple plans.  Op. at 6-7.