Last month, the Department of Labor issued final regulations revising the minimum required claims procedures for disability benefit claims. Although the regulations became effective January 18, 2017, the new rules generally apply to claims for disability benefits filed on or after January 1, 2018. (Under a special transition rule, for disability benefit claims filed under a plan from January 18, 2017 through December 31, 2017, denial letters must disclose reliance on internal rules or other similar limitations, and the process must generally comply with the group health plan claims procedures).
The new rules apply to disability benefit claims which, in addition to claims under disability benefit plans, includes claims under other plans, such as pension or 401(k) plans, where the availability of a benefit is conditioned upon the participant being disabled unless the finding is conditioned on another party's determination of disability (such as the Social Security Administration or the insurer under the employer's LTD policy). The new regulations mimic the claims and appeals requirements added to group health plans by the Affordable Care Act (ACA) and implemented by the DOL. The new rules add the following requirements to the claims and appeals process for disability benefits:
1. Plans must ensure that claims and appeals are decided independently and impartially. For example, there may not be any incentives based on the level of claim denials and a plan may not contract with a medical expert based on the expert's reputation for outcomes in contested cases.
2. Denial letters must include the following:
- An explanation as to why the plan did or did not agree with the views of health care and vocational professionals, or with the disability determination made by the Social Security Administration.
- Notice of a claimant's right to access their claim file and other relevant documents.
- Disclosure of any internal rules, guidelines, protocols, standards or similar criteria relied upon in deciding the claim, or that no such criteria exist.
- Culturally and linguistically appropriate language, including in certain cases, a prominent statement about the availability of language services. This rule adopts the standards that apply to group health plans under the ACA claims and appeal rule.
- Description of any applicable plan imposed time limits on filing a lawsuit, as well as the date any contractual limitations period expires.
3. If an appeal denial is based on new or additional rationales, or evidence, the claimant must be given notice and a fair opportunity to respond before a final decision is made.
4. If the plan fails to comply with its claim procedures, claimants are not barred from suing the plan for failure to exhaust the plan's claim procedures.
5. Coverage rescissions, including retroactive terminations due to alleged misrepresentations of fact, must be treated as an adverse benefit determination triggering the plan's appeal procedures.
In light of the new rules, employers should be proactive in 2017 and review their plan documents, SPDs and procedures, including claim denial letters, and, as appropriate, work with their service providers to ensure compliance with the new rules for claims made on or after January 1, 2018.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
