The Department of Labor recently announced that the delay of its Final Rule regarding disability claims procedures is, in fact, final. This means all employee welfare plans providing benefits based on a determination of disability, including health plans, stand-alone disability benefits, 401(k), pension, and other retirement plans, must have these new procedures, including new contract provisions, in place by Sunday, April 1, 2018.
Which plans are affected?
Any plan governed by ERISA with provisions for disability determinations must implement new claims procedures, whether that be long-term disability benefits, most short-term disability plans, group health plans, stand-alone disability benefits, 401(k), pension, and other retirement plans. These new procedures must be in place by April 1, 2018 and apply to all disability-related claims received on or after April 1.
The new procedures will not apply to non-ERISA arrangements, such as instances where an employer continues paying salary during a time an employee's disabled.
What do affected plan sponsors need to do?
Fully Insured Plans
For employers that maintain insured disability plans, you will want to discuss with the insurance carrier how to apply and document the new procedures.
Employers with self-funded disability plans or retirement plans with benefits based on disability determinations will need to update plan documents and summary plan descriptions to reflect the new requirements. These employers will also need to update their claims procedures to include the new claims denials and appeals requirements outlined briefly below.
Self-Insured Plans with TPAs
Additionally, if an employer's self-funded but has a third-party administrator (TPA), the employer should amend the TPA administrator agreement to ensure the TPA's handling claims in compliance with this new rule.
What are the new requirements?
Similar to the new claims requirements for group health plans under the Affordable Care Act, new requirements for disability claims include but not limited to:
— The individual who decides a disability claim must not have any conflict of interest or incentive to deny or approve the claim. This includes certain aspects of that individual’s compensation, promotion, termination, etc.
— Claim-denial notices must be both culturally and linguistically appropriate, including assistance with filing claims in non-English languages.
— Certain appeals procedures must be put into place, such as providing the claimant, free of charge, with any new or additional evidence considered or relied upon before the administrator may deny an appeal.
— Potential "penalty" of faster access to litigation and court decision for claimants for whom the plan administrator did not comply with the new claims denials and appeals procedures.
Let Plexus lend a hand
Employers with applicable ERISA benefits plans must have these new procedures, including new contract provisions, in place by April 1, 2018.
Have questions regarding today's Alert or other employee benefits matters? Then, contact a Plexus benefits client service team member in Deer Park, Ill. (847.307.6100), Chicago (312.606.4800), Dallas (972.770.5010), or Oklahoma City (405.840.3033). You can also visit us online here, PlexusGroupe.com. We're here to help, and we're happy to help.