ERISA final rule on new disability benefits claims procedures will apply April 1

On January 5, the Department of Labor announced that April 1, 2018, will be the applicability date for employee benefit plans to comply with a final rule under ERISA that will provide new procedural protections for workers dealing with plan fiduciaries and insurance providers who have denied their disability benefits claims.
On October 12, 2017, the DOL’s Employee Benefits Administration proposed a 90-day delay of the applicability date of the final rule, from January 1, 2018, through April 1, 2018. The Labor Department said the move was aimed at giving stakeholders the opportunity to submit data and information on the costs and benefits of the final rule.
The DOL received about 200 comment letters from the insurance industry, employer groups, consumer advocates, and lawyers representing disability benefit claimants. Only a few comments responded substantively to the DOL’s request for quantitative data to support assertions that the final rule would drive up disability benefit plan costs by more than had been predicted, cause an increase in litigation, and consequently reduce workers’ access to disability insurance protections. The information provided in the comments did not establish that the final rule imposes unnecessary regulatory burdens or significantly impairs workers’ access to disability insurance benefits, according to the DOL.
Major provisions in the final rule, published on December 19, 2016, require that:

  • Claims and appeals be adjudicated in a manner designed to ensure independence and impartiality of the persons involved in making the benefit determination;
  • Benefit denial notices must contain a complete discussion of why the plan denied the claim and the standards applied in reaching the decision;
  • Claimants must be given timely notice of their right to access their entire claim file and other relevant documents and be guaranteed the right to present evidence and testimony in support of their claim during the review process;
  • Claimants must be given notice and a fair opportunity to respond before denials at the appeals stage are based on new or additional evidence or rationales;
  • Plans generally cannot prohibit a claimant from seeking court review of a claim denial based on a failure to exhaust administrative remedies under the plan if the plan failed to comply with the claims procedure requirements;
  • Certain rescissions of coverage are to be treated as adverse benefit determinations triggering the plan’s appeals procedures; and
  • Required notices and disclosures issued under the claims procedure regulation must be written in a culturally and linguistically appropriate manner.

SOURCE: EBSA News Release No. 18-0044-NAT, January 5, 2018.
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