Deadline Approaching for Compliance With New Disability Claims RegulationsPublications - Client Alert | March 30, 2018
Following a 90-day delay from the U.S. Department of Labor (the “DOL”), the disability claims procedure regulations, originally published in December 2016 (the “Regulations”), will become applicable to claims for disability benefits filed after April 1, 2018 under certain employee benefits plans. The Regulations generally require that employers and plan administrators provide more detail and access to relevant information when denying a claim for disability benefits (for a more detailed analysis of the requirements under the new Regulations, see our previous Client Alert). The Regulations were originally set to become applicable to claims for disability benefits filed on or after January 1, 2018. In November 2017, however, the DOL delayed the applicability date, making the Regulations applicable to all claims for disability benefits filed after April 1, 2018.
The Regulations apply to any employee benefit plan covered by the Employee Retirement Income Security Act of 1974 that conditions the availability of benefits upon a finding of disability, but only if the finding of disability is made under the plan. This means the Regulations may apply not only to short-term and long-term disability plans, but may also apply to retirement plans, nonqualified plans, and other welfare plans. The DOL takes the position that the Regulations do not apply if the determination of disability is made by a party outside of a plan. For example, the Regulations would not apply to a pension plan that conditions a disability benefit on a finding of disability made by the Social Security Administration or under the employer’s long-term disability plan.
Employers should review all of their employee benefit plans to determine which plans are subject to the new Regulations. To the extent the Regulations apply, employers should consider complying with the new requirements under the Regulations by updating the claims procedures in their plan documents and summary plan descriptions. Alternatively, employers may avoid the Regulations altogether by amending their plan documents so that the determination of disability is made by a party outside of the plan (e.g., the Social Security Administration). In addition to reviewing their plans, employers should examine their day-to-day practices to ensure that the new Regulations are being followed operationally. Employers should review the notices provided to participants upon the denial of a claim for disability benefits to determine whether such notices are compliant with the Regulations. Finally, employers should contact the third-party administrators of their benefit plans to verify compliance with the Regulations.
If you would like assistance amending plan documents, reviewing administrative procedures, or working with service providers to comply with the Regulations, please contact a member of our Employee Benefits Practice Group.