Dept. of Labor Proposes Delay of New Rules Governing Disability Claims

Authored by Dannae L. Delano

Oct 16, 2017

Last week, the Department of Labor (DOL) proposed a 90-day delay of the new rules that require amending ERISA-covered employee benefit plan claims procedures with regard to disability claims filed on or after Jan. 1, 2018.  The proposed delay would make the rules effective for claims filed on or after April 1, 2018.  Further, the DOL also requests input regarding the costs associated with the implementation of the new rules.

You already know that the new ERISA claims requirements for disability benefits, which were to take effect and apply to disability claims filed on or after Jan. 1, 2018, applied to all disability claims and not just short-term and long-term disability programs. Some of the changes include:

  • Increase in the denial notice requirements, including detailed explanations for disagreeing with the claimant’s treating physician or a Social Security Administration determination and describing internal protocols and claim file requirements;
  • Requiring a claimant to be allowed the opportunity to respond to new information before an appeal-level denial is issued;
  • Enhanced impartiality standards designed to assure impartiality of claims adjudicators, and vendors, including a restriction on the use of bonuses and financial incentives based on the outcome of a claim;
  • Requiring a rescission of coverage be considered an adverse benefit determination;
  • All benefit denial notices must include a description of any contractual limitations period and the expiration date; and
  • The plan must provide, upon request, translation services for claimants who speak languages other than English.

What this means to you is a delayed effective date for the new rules governing how disability claims must be handled, which gives you additional time to consider and implement necessary amendments to your disability, qualified retirement and non-qualified deferred compensation plans that provide for disability benefits.  In addition, you should consider that the DOL may be reconsidering the future implementation of the rules based on the impact of the rules’ expected costs.

If you have any questions about these compliance issues or any other employee benefits matter, please do not hesitate to contact Dannae Delano or any of the members of Lowenbaum Law’s benefits team.

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