Effective for disability claims filed after April 1, 2018, employee benefit plans subject to the Employee Retirement Income Security Act (ERISA) must comply with new requirements.

Background
In 2016, the U.S. Department of Labor (DOL) released a final rule to strengthen the claims and appeals requirements for plans that provide disability benefits and are subject to ERISA. According to the DOL, the information it received during the delay period did not justify modifying or rescinding the final rule. Thus, the final rule will take effect without change.

Final Rule Applies to "Disability Benefits"
A benefit is considered a "disability benefit" if the claimant has to be disabled in order to obtain the benefit. It does not matter how the benefit is characterized or whether the plan as a whole is a retirement plan or a welfare plan. If the claims adjudicator must make a determination of disability in order to decide a claim, the claim must be treated as a disability claim for purposes of the DOL's claims procedures.

Specific Changes Made By The Final Rule
Specifically, the final rule requires that plans, plan fiduciaries and insurance providers comply with additional procedural protections when dealing with disability benefit. 
Employer Action Steps
The final rule applies to ERISA plans that include disability benefits. These plans must comply with the new procedural protections, effective for claims that are submitted after April 1, 2018. Entities that administer disability benefit claims, including issuers and third-party administrators, will need to revise their claims procedures to comply with the final rule. This includes sponsors of defined benefit pension plans, 401(k) plans, 403(b) plans covered by ERISA, and top hat plans, in addition to disability benefit plans.

Specific employer action items include the following:

Identify all ERISA covered plans that provide for a disability benefit. This includes most long-term disability plans and some short-term disability plans, as well as retirement plans that provide for a disability benefit;
Review current plan documents and summary plan descriptions, and update claims procedure descriptions to include the additional requirements of the final rule; and
If applicable, review any contractual agreements with third parties responsible for making disability determinations to confirm appropriate processes are in place on their end and they have responsibility for complying with the new requirements.

For additional information, please contact your PNW Insurance Solutions Benefits Consultant or Wendee Allen at 425-314-0988 or wendee@pnwisol.com.