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Disability Claims Regulations Delayed

On Behalf of | Oct 26, 2017 |

The DOL has proposed a 90-day delay in the effective date of the new ERISA disability claims regulations. This would change the effective date of the regulations to April 1, 2018.

Background. In December 2016, the DOL released final regulations that amended the procedures for ERISA disability claims. The final regulations were slated to apply to disability claims made on or after January 1, 2018, and would impact initial disability claim determinations, benefit denial notifications, and appeals processes.

The final regulations will affect all ERISA-covered plans that condition benefits on the plans’ finding of disability (as opposed to the determination of a third party, such as the Social Security Administration). Some of the more substantial changes made by the final regulations include:

  • Increased disclosure requirements. Benefit denial notices must contain a more complete discussion on why the plan denied the claim and the standards used in making the decision.
  • Claim file and internal protocols. Benefit denial notices must include a statement that the claimant is entitled to receive, upon request, the entire claim file and other relevant documents. Benefit denial notices also must include the internal rules, guidelines, protocols, standards, or other similar criteria of the plan that were used in denying a claim, or a statement that none were used.
  • Review and Respond to New Information. Plans may not deny benefits on appeal based on new or additional evidence or rationales that were not included when the benefit was denied at the claims stage, unless the claimant is given notice and a fair opportunity to respond.
  • Conflicts of Interest. Plans must ensure that disability benefit claims and appeals are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision.
  • Deemed Exhaustion. If a plan does not adhere to all claims processing rules, the claimant is deemed to have exhausted the internal appeal process and may immediately pursuehis or her claim in court.
  • Coverage Rescissions. Rescissions of coverage, including retroactive terminations due to alleged misrepresentation of fact (e.g., errors in the application for coverage) must betreated as adverse benefit determinations, thereby triggering the plan’s appeals procedures.
  • Communication Requirements in Non-English Languages. Plans must provide benefit denial notices in a non-English language in certain situations, using essentially the same standard applicable to group health benefit notices under the ACA.

Many stakeholders expressed concerns that these revisions will increase plan costs and litigation as well as impair workers’ access to benefits.

DOL Delay. In response to stakeholders’ concerns about the impact of the final regulations, DOL has proposed a 90-day delay to the effective date for the regulations to enable it to seek additional comments and data about the impact of the final regulations and consider whether to rescind or modify the rule. If the DOL’s proposed delay becomes finalized, the final claims regulations would begin applying to disability claims made on or after April 1, 2018 (instead of January 1, 2018).

The DOL’s proposal is available for review at: https://www.gpo.gov/fdsys/pkg/FR-2017-10-12/pdf/2017-22082.pdf

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