On April 1, 2018, the United States Department of Labor (“DOL”) final regulations that revise the claims procedure requirements for disability benefits plans under the Employee Retirement Income Security Act (“ERISA”) went into effect.  The DOL rule was initially published on December 19, 2016, and is aimed at providing additional protections to employees in the disability claims process.

The new claims procedure applies to any claim for disability benefits made under an employee benefit plan that is covered by ERISA.  This may include, but is not limited to, 401(k)s, pension plans, and other retirement plans.  The new claims procedure does not apply to non-ERISA arrangements where an insurer does not pay the benefits such as a short-term disability arrangement in which the employer simply continues the employee’s salary for a period of time while the employee is unable to work.

A summary of the DOL final rule includes the following changes to the process for disability claims:

–  Benefit denial notices must include a more complete discussion of why the claim was denied and the standards used in denying the claim.

–  Benefit denial notices must include a statement that the claimant is entitled to receive the entire claim file upon request and the internal rules, guidelines, protocols and other criteria of the plan that were used in denying the claim or a statement that none were used.

–  Plans are prohibited from denying benefits on appeal based on new or additional evidence that was not included when the benefit was denied at the claims stage, unless the claimant is given a notice and a fair opportunity to respond.

–  Plans are required to ensure that disability claims and appeals are adjudicated in a manner that ensures independence and impartiality of the persons making the decision.

–  Claimants may pursue their claim in court without exhausting administrative remedies if plans do not adhere to all claims processing rules, unless the violation only results in a minor error and certain other conditions are met.

–  Rescissions of coverage, including retroactive terminations (but not rescissions for non-payment of premiums), must be treated as adverse benefit determinations which trigger the appeals procedure.

–  Plans must provide benefit denial notices in a culturally and linguistically appropriate manner if the claimant’s address is located in a county where 10 percent or more of the population is literate only in the same non-English language.  In such cases, benefit denial notices must include a prominent statement concerning the availability of language services in the relevant non-English language.

What Does This Mean For You? Employers with self-funded disability and retirement plans will need to update plan documents to reflect the new claims procedure as well as update the summary plan description.  While the plan documents and summary plan description are being updated, employers should be using the new claims procedure.  Employers with fully-insured disability plans should communicate with their insurance carrier to make sure the new claims procedure has been implemented and to verify how the new procedure will be documented.

If you have any questions about this or any other employment or labor law issue, please contact Grace Nguyen Bond at 717-509-7226 or gcnb@blakingerthomas.com, or Whitney Rahman at 717-509-7237 or swr@blakingerthomas.com.