The DOL has announced April 1, 2018 as the effective date for its final disability claims procedure regulations. The regulations were originally slated to apply to disability claims filed on or after January 1, 2018. (See the Alert of 12-22-2016.) However, in November 2017 the DOL delayed this effective date to allow for stakeholders to submit comments and leave open the possibility to amend (or rescind) the regulations. (See the Alert of 10-26-2017.)
Final Regulations. The final regulations impact initial disability claim determinations and appeals administration processes, as well as benefit denial notifications. As a reminder, the final regulations add the following procedural requirements to the disability benefit claims process:
- Rescissions of Coverage Procedures. Plan administrators must treat certain rescissions of coverage as adverse benefit determinations. (Note: A rescission of coverage occurs when a plan administrator terminates a participant’s coverage retroactively.) As a result, participants may now appeal rescissions of coverage. However, a rescission based on the participant’s non-payment of premiums is not an adverse benefit determination.
Benefit Denial Notices. Benefit denial notices must:
- Provide a more detailed description of the reason for the claim denial. For example, in relevant cases, the notice must explain why the plan administrator disagrees with the opinions of the participant’s health care professionals, or the Social Security Administration’s determination of disability.
- Be written in in a linguistically and culturally appropriate manner, and explain that oral language services are available to the participant. Similarly, the plan administrator must explain to participants that they are entitled to receive, upon request, any notice relevant to the determination in the applicable non-English language.
- Explanation of Claims Procedures. Plan administrators must explain the protocols that were used to determine the participant’s benefit claim.
- Access to Claims File. Plan administrators must inform participants, in benefit denial notices, that they are entitled to access, free of charge, all documents relevant to the adverse claim determinations.
- Access to New Evidence. Plan administrators must provide participants with any new evidence being considered by the plan during the appeal process.
- Conflicts of Interest. Plan administrators must make benefit determinations in a manner that ensures independence and impartiality of the decision-makers involved in the process. To meet this requirement, plan administrators must ensure that the employer does not make employment decisions (i.e., hiring, firing, promotions, etc.) believing that such action will support the benefit denial. Moreover, plans cannot provide bonuses on the basis of denials made by claims adjudicators.
Employer Takeaway. Employers sponsoring ERISA-covered plans that provide disability benefits must be sure that these plans are in compliance with the new regulations by April 1, 2018. Before the effective date for the regulations (i.e., April 1, 2018), employers are advised to engage qualified legal counsel to review and confirm whether their ERISA-covered disability plans have been properly amended to implement the new requirements.