New Disability Claims Rules to Stay

The DOL issued a news release announcing its decision to retain new claims procedures for disability benefits under ERISA.

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Plan Sponsors to Comply by 4/1/2018

The Department of Labor (DOL) issued a news release announcing its decision to retain new claims procedures for disability benefits under ERISA.

Previously, the DOL extended the effective date for the new disability claims procedure rules to claims filed after April 1, 2018, which remains the effective date. We therefore recommend that plan sponsors coordinate with third-party vendors to confirm compliance with the new regulations by April 1st.

Background

In 2016, the DOL issued new final regulations for disability benefit claims. To a large extent, these regulations apply procedures that were already required for health claims under the Affordable Care Act (ACA) to disability claims. These regulations, which substantially change the existing rules for disability claims and appeals, require, among other things, the following:

  • Disclosure requirements: Benefit denial notices must include a full discussion of the reason for and standards behind a denial, including the basis for disagreeing with a disability determination made by the Social Security Administration.
  • Right to review and respond to new information: Plans must allow participants access to their entire claim file and permit participants to present evidence and testimony during the review process. Plans also must notify participants of any new evidence and allow participants an opportunity to respond before an appeal decision.
  • Deemed exhaustion of claims and appeals processes: If plans do not adhere to all claims procedure rules, the claimant will be deemed to have exhausted plan administrative remedies, except in the case of a minor error.
  • Coverage rescissions: Certain rescission of coverage will be treated as adverse benefit determinations, which will trigger appeals procedures.
  • Culturally and linguistically appropriate notices: Plans must provide notices in a culturally and linguistically appropriate manner, under the standard for summaries of benefits and coverage (SBCs) required by the ACA.
  • Independence and impartiality of decision-makers: Hiring, compensation, termination, promotion, or other similar matters for individuals making decisions on disability claims cannot be based on the likelihood that the individuals will support denials of benefits.

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