New Rules for Disability Benefit Claims Take Effect in 2018

On Dec. 16, 2016, the Department of Labor (DOL) released a final rule to strengthen the claims and appeals requirements for plans that provide disability benefits. According to the DOL, these new protections will ensure that disability claimants receive a full and fair review of their benefit claims, as required by the Employee Retirement Income Security Act of 1974 (ERISA).

The new requirements provide disability claimants with protections that are similar to those that apply to claims for group health benefits. They are intended to protect disability claimants from conflicts of interest, increase transparency and allow claimants to respond more effectively to benefit decisions.

Action Steps

ERISA plans that include disability benefits must comply with the new procedural protections, effective for claims that are submitted on or after Jan. 1, 2018. Entities that administer disability benefit claims, including issuers and third-party administrators, will need to revise their claims procedures to comply with the final rule. Although the DOL has recently indicated that it may delay or amend the final rule, it is possible that the rule’s new requirements will still take effect as scheduled.

ERISA Requirements

Section 503 of ERISA requires every employee benefit plan to:

  • Provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for the denial, written in a manner calculated to be understood by the participant; and
  • Afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.

The DOL first adopted claims procedure regulations for employee benefit plans in 1977. In 2000, the DOL updated its claims procedure regulations by improving and strengthening the minimum requirements for employee benefit plans, including plans that provide disability benefits.

Effective for plan years beginning on or after Sept. 23, 2010, the Affordable Care Act (ACA) amended ERISA to include enhanced internal claims and appeals requirements for group health plans.

DISCLOSURE

The information provided herein is intended solely for the use of our clients. You may not display, reproduce, copy, modify, license, sell or disseminate in any manner any information included herein, without the express permission of the Publisher or Publishers of articles within.

The information provided is for informational purposes only and does not constitute legal advice. The information above contains only a summary of the applicable legal provisions and does not purport to cover every aspect of any particular law, regulation or requirement. Depending on the specific facts of any situation, there may be additional or different requirements. This is to be used only as a guide and not as a definitive description of your compliance obligations.