Final Rule for Disability Claims Procedures Effective as of April 1st

Question:

As an employer, what questions should I be asking about the final rule released by Department of Labor (DOL) providing new requirements for disability claims procedures?

Answer:

As of April 1, 2018, group health plans must comply with new procedural requirements when administering disability benefit claims. While this is no April Fool’s joke, there is good news for employers – insurers and third-party administrators will manage or assist with the necessary changes.

DOL’s Final Rule

The DOL notes that employees who request disability benefits deserve similar protections consistent with rules for group health plan claims. As such, the final rule governs the requirements of disability claims procedures of ERISA-covered plans that provide disability benefits, requiring that plans, plan fiduciaries and insurance providers comply with additional procedural protections when dealing with disability benefit claimants. The new requirements include increased disclosure rules, such as:

  • Improvement to Basic Disclosure Requirements: Benefit denial notices must contain a more detailed discussion of reasons for denial of a claim and the standards used in making the decision.
  • Right to Claim File and Internal Protocols: Benefit denial notices must include a statement that the claimant is entitled to receive, upon request, the entire claim file and other relevant documents. Benefit denial notices also must include the internal rules, guidelines, protocols, standards or other similar criteria of the plan that were used in denying a claim, or a statement that none were used.

There are additional requirements, reference the DOL’s Fact Sheet regarding the Final Rule for disability claims procedures.

What does this mean for employers?

In light of these new requirements, employers have been asking what needs to be done in order to comply. As mentioned above, group health plans that provide disability benefits under an ERISA covered plan are affected and should operate in compliance with the new rule as of April 1st. However, it is important to note that for employers who provide disability benefits via a fully-insured plan, the carrier should implement necessary changes and update documents to comply with these new rules. For employers with self-funded disability plans covered under ERISA, their administrators should assist with updating any documents and processes. Also important to note, short-term disability arrangements considered to be payroll practices are not subject to ERISA (and the new procedures do not apply).

Employers should confirm with their insurers or third-party administrators that there is compliance with the new rule for disability benefit claims filed after April 1st. Please contact your HORAN representative with any questions.

THANK YOU to HORAN for providing the content for this Question of the Week. HORAN serves as a trusted advisor on employee benefits, wealth management and life and disability insurance.  To learn more about HORAN, please contact your HORAN for additional information.

 

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