The Department of Labor has published new regulations that will affect ERISA disability insurance claims as well as the appeals process. The new rules will apply to any claims for disability benefits filed on or after January 1, 2018.
These rules will apply to any ERISA-governed disability plan, includig short-term and long-term disability plans and other plans that offer benefits based on whether a participant is disabled, including pension plans and 401(k) plans.
The following are the most important changes coming to the ERISA claims process.
#1. All claims and appeals must be decided impartially and independently.
This means that the individuals who decide to approve or deny claims cannot have an incentive to deny claims. This rule will prohibit a plan from offering bonuses to claims adjusticators based on the number of claims they deny. It will also prevent plans from contracting with medical providers based on their reputation for giving outcomes that benefit the plan in contested cases. This is an important change as insurance companies routinely contract supposed independent medical providers who have an incentive to deny claims that would cost their employer too much money.
#2. Denial letters must include specific information.
The new regulations will require claim denial letters to include:
– A notice of the claimant’s right to access their claim file and other documents.
– An explanation about why the plan did or did not agree with the opinion of medical providers or with any disability determinations that were made by the Social Security Administration.
– Any internal guidelines the plan used while deciding whether to approve or deny the claim.
– Linguistically and culturally appropriate. As an example, a denial letter sent to an address in an area in which at least 10% of the population is literate only in the same non-English language must have a statement that the information provided is available in other languages. The notice must be provided in the claimant’s native language upon request.
#3. Claimants must receive notice and an opportunity to respond before an appeal is denied.
Before an appeal can be denied, the plan must give the claimant sufficient notice and a fair chance to respond if the denial is based on new or additional evidence or opinions. All appeal denial letters will need to describe any plan-imposed time limits on filing a lawsuit and the date of expiration for any limitations.
#3. Claimants cannot be barred from filing a lawsuit due to failure to exhaust the plan’s claims process in some cases.
When the new rules take effect, a claimant will be allowed to sue even if the plan’s claims procedure is not exhausted if the plan fails to comply with its own claims procedures.
These regulations will take several important steps to protect disabled workers from unfair denial of disability benefits.