In January 2018, the U.S. Department of Labor (DOL) announced that final regulations affecting how some ERISA plans process claims and appeals will apply beginning . As explained below, the final regulations require that plans, plan fiduciaries, and insurance providers comply with additional procedural requirements when deciding claims involving disability determinations, which can impact a variety of different types of plans, including pension and non-qualified plans. The final regulations were initially released in December 2016, but had been delayed several times.
The final regulations add procedural requirements designed to provide a full and fair claims review process for disability claims, similar to those applicable to non-grandfathered group health plans under the Affordable Care Act (ACA). The final regulations apply to any disability claim filed after April 1, 2018, under any ERISA-covered plan that makes its own disability determinations (rather than relying on the determination of a third-party like the Social Security Administration (SSA) or a long-term disability insurer). The types of plans impacted could include:
- Short- and long-term disability plans
- Defined benefit pension and 401(k) plans
- Severance Plans
- ERISA-covered 403(b) plans
- Top-hat plans (e.g., certain non-qualified deferred compensation plans)
Among other things, the final regulations require that: (1) adverse benefit determinations contain a discussion of the decision, including the basis for disagreeing with a disability determination made by the SSA, if presented by the claimant in support of his or her claim; (2) before a final decision on appeal can be issued, the claimant must have a right to review and respond to any new or additional evidence relied upon or generated in connection with the claim; (3) if a plan fails to comply with all ERISA-required claims processing rules, the claimant may immediately pursue his or her claim in court (other than for de minimis violations); and (4) notices must be written in a culturally and linguistically appropriate manner, similar to the ACA standard for group health benefit notices.
If your company maintains an ERISA plan that makes its own disability determinations, you should take the following steps prior to April 2018:
- Carefully review and amend, if necessary, current claims procedures in plan document(s) and summary plan description(s) to ensure compliance with the final regulations;
- Review service agreements with service providers (e.g., disability insurers and third-party administrators) to clarify who has responsibility for compliance with the final regulations and who will be liable for any failures to comply. If any service providers make and/or communicate these determinations for your plans(s), confirm that their procedures and related participant communications are or will be in compliance with the new rules; and
- Confirm that practices for internal and external appeal committees will be compliant with the final regulations.