DOL Issues Disability Regulations - Do They Affect Your Plans?
The Department of Labor issued regulations that revise the ERISA claims procedure regulations for employee benefit plans that provide disability benefits with an effective date of April 1, 2018. The regulations are based on the Affordable Care Act’s enhanced claims and appeals procedures applied to group health plans. The new regulations generally affect the procedures for filing disability benefit claims, providing notice of adverse benefit determinations, and then appealing a claim denial.
While the new regulations apply to all ERISA plans, the claims procedures will specifically apply to plans providing disability benefits where a plan fiduciary has discretionary authority to determine whether a participant is "disabled" under the terms of the plan. Therefore, the majority of the ERISA plans impacted by these regulations will be health and welfare plans that provide disability benefits, such as loss-of-time, income replacement, disability plans, or accident and sickness benefit programs. An ERISA covered qualified retirement plan or non-qualified plan may be impacted by these new regulations as well, if the plan provides for benefits in the event of a disability. However, these regulations will only impact a qualified retirement plan or non-qualified plan if the plan fiduciary is making an independent determination of a participant’s disability (as opposed to relying on a disability determination by a third party such as a Social Security Administration determination of disability).
In general, the new regulations will require that plans offer reasonable disability claims procedures, provide more information to participants when denying disability benefits (both initially and on appeal), and ensure an impartial review process.
Sponsors of ERISA plans will want to work with legal counsel and advisors to determine whether their plans are subject to the final regulations, and to review and ensure that the claims procedures of those plans affected are amended to reflect the updated regulations. If you have questions or would like to discuss any of the above, please contact a member of our Employment, Labor and Benefits Practice Group.