The final rule for the Department of Labor’s disability claims procedures will go into effect this week, applying to new claims filed after April 1st on all employee sponsored disability plans that are subject to ERISA. Originally issued on December 19, 2016, the new rules impose procedural standards similar to that which applies to benefit determinations on ERISA health plan claims, as per ACA rules. It will ensure that employees with claims cannot be hired, promoted, terminated or compensated based on the pending status of their claims, or the probability of a denied claim, and that claimants will be given a full and clear explanation for any claims that are denied.
Included in the rule are most long-term disability plans (LTDs) and those short-term disability (STD) programs that do not fall under the Department of Labor’s payroll practice exemption. If an STD plan is insured, then it is subject to ERISA and therefore the new rules will apply here, as well.
Originally slated to go into effect on January 1, 2017, these regulations were delayed in response to President Trump’s Executive Order 13777 allowing time for further review. The Department of Labor later issued a statement saying that it had been determined that the rules “did not establish that the regulations impose unnecessary burdens or significantly impair workers’ access to disability benefits” and confirmed the revised date for these rules to go into effect is April 1, 2018. For the full release with the statement from the Department of Labor click here.
To help guide the compliance process, employers should do the following:
1. Review the language of your short-term disability plan summaries.
2. Review and update any documents such as employee handbooks, insurance certificates and benefit plan books to include a description of these new rules.
Most companies depend on their insurance carriers and claim administrators to oversee the claims process for disability coverage and this will not change with these new regulations. If you’re concerned about how this claims process works, give us a call and we can walk you through these changes and/or guide the claims process to determine how the rules apply to your employee disability claims.
Please Note: The information in this post is not meant to be legal advice. You should consult your attorney should you have specific legal questions surrounding these new laws.