The Department of Labor (DOL) has confirmed that ERISA-covered disability plans must comply with final regulations amending ERISA’s disability claims and appeals procedures (the Final Rules), beginning with disability claims filed after April 1, 2018.
The Final Rules, issued in late 2016, were originally scheduled to be effective for disability claims on and after January 1, 2018. In the fall of 2017, the DOL delayed the effective date for 90 days – until April 1, 2018 – to allow the DOL time to examine regulatory alternatives. Now the DOL has confirmed there will be neither any changes to the rules nor any further delays and that the Final Rules apply beginning with disability claims filed after April 1, 2018.
All ERISA-covered plans that condition benefits upon the plan’s finding of disability are affected by the Final Rules – including retirement plans that permit distribution of benefits upon the participant becoming disabled.
The Final Rules increase the duties of plan administrators and fiduciaries in reviewing and rendering decisions on disability claims. The goal is to better align ERISA claims and appeals procedures for disability plans with internal claims and appeals procedures for group health plans. Some highlights of the new requirements for disability claims and appeals under the Final Rules include:
- More detailed denial notices for both initial claims and appeals;
- Additional criteria to ensure independence and impartiality in decision-making;
- Treating most rescissions as adverse benefit determinations; and
- Allowing claimants to go directly to court if a plan’s procedures do not strictly comply with the requirements.
Employers should review plan documents, summary plan descriptions and administrative materials for their disability benefit programs – including retirement plans – to determine appropriate changes to bring their claims and appeals procedures in line with the Final Rules. Employers should also work with their service providers to ensure compliance with the Final Rules for disability claims made after April 1, 2018.
If you have questions about any of the changes to ERISA’s disability claims and appeals procedures or want to talk through how to modify your plans in light of the Final Rules, please contact any member of the Warner Norcross + Judd Employee Benefits Group.