Time to get your Employee Retirement Income Security Act (ERISA) plans in shape . . . there are no more delays for required new disability claims procedures!
After postponing the original effective date of January 1, 2018, the U.S. Department of Labor (DOL) announced that new disability claims procedure regulations for ERISA-covered plans will definitely take effect April 1, 2018. Many in the benefits industry were expecting more delays or amendments or withdrawal of the new rules, but that didn’t happen.
The new rules apply to all ERISA benefit plans that base any benefit decisions on their determination of whether or not a person is disabled. This includes disability benefit plans as well as some health and retirement plans. Why health or retirement plans? Some of their plan provisions could be based on a disability determination. For example, a retirement plan that allows unreduced early distributions after determining a person is disabled is basing a benefit decision on a disability determination.
[Related: Overview of Disability Plans E-Learning Course]
Effective April 1, 2018, disability claims procedures must include the following:
- The people responsible for determining whether a claimant is disabled must be impartial and independent.
- Denial notices must explain completely why the benefit claim was denied.
- Plans must give claimants adequate time and notice to respond to denials.
- Plans must give claimants timely access to their entire claim file upon request.
- Claimants must be allowed to present evidence and testimony in support of their claim during the review process.
- Certain rescissions of disability benefits are treated like denials for the claims procedures process.
- Plans must write notices in a culturally and linguistically appropriate manner.
- Claimants may seek court review of denials if the plan does not follow the proper claims process.
DOL made similar changes to health benefit claims procedures several years ago. With the new disability claims regulations, DOL intends to similarly protect participants’ rights to fair and full disability claims reviews.
[Related: Ancillary Benefit Plans, September 24-25, 2018, Washington, D.C.]
What should benefit plans do now?
- Review ERISA plan document provisions.
- Review disability claims administrative procedures.
- Amend plans if necessary.
- Make sure your benefits administrators comply with the new requirements.
- If you’re not sure whether your plans comply, it would be a good idea to consult an employee benefits attorney.
Disability claims requirements are tightening April 1, 2018. Now is the time to update your plan documents and procedures.
Lois Gleason, CEBS
Senior Information/Research Specialist at the International Foundation