DOL Issues Final Rule for Disability Benefits Claims Process
Final Rule Strengthens Protections for Workers Requesting Disability Benefits
The U.S. Department of Labor (DOL) has issued a final rule requiring employee benefit plans offering disability benefits to provide additional procedural protections to claimants.
Section 503 of the Employee Retirement Income Security Act (ERISA) generally requires employee benefit plans that provide disability insurance benefits to provide written notice to any participant or beneficiary whose claim for disability insurance benefits has been denied, and to provide the claimant a full and fair process for review of the claim denial.
New Procedural Protections
A final rule, effective January 18, 2017, adds certain procedural protections to these requirements by, among other things, protecting claimants from conflicts of interest, increasing transparency, and ensuring claimants have a fair opportunity to respond to the evidence and reasoning behind a claim denial. The new rule also ensures that protections for disability claimants parallel protections under the Affordable Care Act (ACA) that already apply when workers file claims for group health benefits. The new protections apply to all ERISA disability benefit claims, whether the claim arises under a welfare plan (e.g., a long-term or short-term disability plan) or a qualified retirement plan.
The final rule includes the following changes in requirements for claim processing:
- Benefit denial notices must include a statement that the claimant is entitled to receive, upon request, the entire claim file and other relevant documents.
- Plans will be prohibited from denying benefits on appeal based on new or additional evidence or rationales not included when the benefit was denied at the claim stage (unless the claimant is given notice and a fair opportunity to respond).
- Plans must avoid conflicts of interest by ensuring claim adjudication is designed to ensure the independence and impartiality of the persons involved in making the decision.
- If plans do not adhere to all claims processing rules, the claimant is deemed to have exhausted administrative remedies under the plan (thus generally resulting in the claim or appeal being deemed denied on review, allowing the claimant to pursue a court claim), unless the violation was the result of a minor error and other specified conditions are met.
A summary of additional changes can be found by clicking here. The changes in the claims procedure process are generally applicable to disability benefit claims submitted on or after January 1, 2018.
Click here to read the full text of the final rule.