New Rule on Disability Benefit Claims Goes into Effect Today

Following a 90-day delay to solicit comments, today (April 1, 2018) is 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.

new-rule-on-disability-claims-takes-effectThe 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.

During the 90-day delay, The Department of Labor (DOL) received approximately 200 comment letters from the insurance industry, employer groups, consumer advocates, and lawyers representing disability benefit claimants, all of which are posted on the department’s website.

Only a few comments responded substantively to the department’s request for quantitative data to support assertions that the final rule would drive up disability benefit plan costs by more than the department had predicted, cause an increase in litigation, and consequently reduce workers’ access to disability insurance protections.

One comment came from the joint effort of 28 Congressmen, voicing opposition to the new rule. The lead author of the letter was Rep. David P. Roe, M.D. (R.-Tenn.), who wrote:

One of our primary concerns with the Regulation is that we believe DOL failed to show that there are problems with the current disability claims procedures’ regulatory status. Disability insurance claims procedures are highly regulated, providing employees with many state and federal consumer protections. Claimants are already afforded a full and fair claims review process that balances the rights of claimants with the need for operational and cost efficiency. Despite the existing consumer protections, DOL elected to apply these vastly more complex regulations on ERISA-based plans, which directly conflicts with congressional intent for ERISA.

NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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