New DOL Rules for ERISA Disability Claims
On January 5, 2018, the U.S. Department of Labor announced its decision for April 1, 2018, as the applicability date for employee benefit plans to comply with a final rule under the Employee Retirement Income Security Act (ERISA) that will give America’s workers new procedural protections when dealing with plan fiduciaries and insurance providers who deny their claims for disability benefits.
The new rule ensures, for example, that disability claimants receive a clear explanation of why their claim was denied as well as their rights to appeal a denial of a benefit claim, and to review and respond to new information developed by the plan during the course of an appeal. The rule also requires that a claims adjudicator could not be hired, promoted, terminated, or compensated based on the likelihood of denying claims.
The new procedures apply to any claims for disability benefits made under an employee benefit plan covered by the Employee Retirement Income Security Act (ERISA). Any ERISA plan that provides for benefits based on a disability determination, including 401(k), pension and other retirement plans, is affected by this rule change.
The final rule specifically requires the following:
- Avoiding conflicts of interest. Disability claims and appeals must be adjudicated in a way designed to ensure independence of the persons involved in making the benefit determination.
- Notice requirements. Notices must contain a complete discussion of why the plan denied the claim and the standards applied in reaching the decision, including the basis for disagreeing with the views of healthcare professionals or vocational professionals or with Social Security Administration disability benefit determinations.
- Culturally and linguistically appropriate. The required notice and disclosures must be written in a culturally and linguistically appropriate manner. The plan must also provide verbal customer assistance in the non-English language and to provide written notices in the non-English language upon request.
- Right to respond during appeal stage. Claimants must be given notice and a fair opportunity to respond to new or additional evidence or rationale that was not included when the benefit was denied at the claims stage before the plan can deny an appeal based on the new evidence or rationale.
- Right to court review. Disability plans cannot prohibit a claimant from seeking court review of a claim denied based on a failure to exhaust administrative remedies under the plan if the plan fails to comply with the claims procedure requirements.
- Click here for the full text published in the Federal Register.