The Employee Benefits Security Administration (EBSA) of the US Department of Labor (DOL) published final regulations governing the ERISA claims and appeals process that apply to all claims for disability benefits filed on or after January 1, 2018.
The new regulations apply to all ERISA-governed plans that provide disability benefits.
Background:
Section 503 of ERISA generally requires employee benefit plans to provide written notice to any participant or beneficiary whose claim for benefits has been denied, and to provide the claimant a full and fair process for review of the claims denial.
New Regulations:
The new rules add important procedural protections and consumer safeguards for claims for disability benefits. In general, they require more detail in denial notices, impose additional criteria to ensure independence and impartiality in decision-making, treat most recessions as adverse benefit determinations, allow claimants to go directly to court if a plan’s procedures do not strictly comply with the requirements, and make disability claims subject to the same “culturally and linguistically appropriate” rules as group health plan claims.
The final rules include the following improvements
| Disclosure Requirements | Benefit denial notices must contain more complete discussion of why the plan denied a claim and the standards used in making the decision. |
| Right to Claim File | Benefit denial notices must include a statement that the claimant is entitled to receive, upon request, the entire claim file and other relevant documents. |
| Internal Protocols | Benefit denial notices 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. |
| Right to Review and Respond to New Information Before Final Decisions | Prohibition from denying benefits on appeal based on new or additional evidence or rationales that were not included when the benefit was denied at the claims state, unless the claimant is given notice and fair opportunity to respond. |
| Conflict of Interest | Plans must ensure that disability benefit claims and appeals are adjudicated in a manner to ensure the independence and impartiality of the person involved in making the decisions. |
| Deemed Exhaustion of Claims and Appeals Processes | If plans do not adhere to all claims processing rules, the claimant is deemed to have exhausted the administrative remedies available under the plan, unless the violation was a result of a minor error and other specified conditions are met. If the claimant is deemed to have exhausted the administrative remedies available, the claim or appeal is deemed denied on review without the exercise of discretion by a fiduciary and the claimant may immediately pursue his or her claim in court. |
| Coverage Recessions are Adverse Benefit Determinations | Rescissions of coverage, including retroactive terminations due to alleged misrepresentation of fact (e.g. errors in the application for coverage) must be treated as adverse benefit determinations, thereby triggering the plan’s appeals procedures. Note: This does not apply to rescissions for non-payment of premiums. |
| Notices Written in Culturally and Linguistically Appropriate Manner | Benefit denial notices must be provided in a culturally and linguistically appropriate manner if a disability claimant’s address is in a county where 10 percent or more of the population is literate only in the same non-English language, benefit denial notices must include a prominent statement in the relevant non-English language about the availability of language services.
The plan is also required to provide a verbal customer assistance process in the non-English language and provide written notices in the non-English language upon request.
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The improvements in the claims procedure process are generally applicable to disability benefit claims submitted on or after January 1, 2018.
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