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Northwest OH Legal Blog

Tuesday, March 28, 2017

WILL AMENDMENTS TO ERISA CLAIMS AND APPEALS’ PROCEDURES FOR DISABILITY BENEFITS STICK FOR 2018?

The Department of Labor (“DOL”) recently finalized amendments to the ERISA (Employee Retirement Income Security Act) claims and appeals procedures for disability benefit plans. The final rule released December 16, 2016, took effect on January 18, 2017, but will only apply to claims for disability benefits filed on or after January 1, 2018. 

But don’t stop reading because you don’t sponsor a stand-alone disability plan. While many retirement and health plan sponsors may not think this amendment applies to their plans, they should re-examine the specific details contained within its provisions. On the contrary, the implications of this amendment are likely to apply to any ERISA plans that provide benefits conditioned upon a finding of disability, including pension and 401(k) plans.

Such procedures and requirements already apply to health and welfare funds and the new amendment aligns with provisions for disability claims previously set out by the Affordable Care Act (“ACA”).  However, this regulation is not affected by the viability of the ACA. Therefore, sponsors of self-funded plans should pay close attention to this regulation’s requirements and might assume that it will remain in force.

The DOL’s goal has historically been to minimize conflicts of interest between employers and disability investigations when requests for disability benefits are made, leaving final determinations to Boards of Trustees who can consult their own “go-to” medical professionals to assist them in such determinations.  Since bias can often be found during such determinations, the DOL requires full and fair reviews of disability claims.  Specifically, disability plans must ensure that all claims and accompanying appeals for disability benefits in ERISA plans must be adjudicated in a way that ensures “the independence and impartiality” of plan administrators and trustees involved in making such decisions related to claims of disability.

In a recent Fact Sheet, the Employee Benefits Security Agency (“EBSA”) set out a list with seven parts that must be followed by plan sponsors to comply with the amendment of rules imposed on procedures and appeals’ processes regarding disability benefits.  Such criteria include the following:

1.   basic written disclosure requirements,

2.   right to claims’ files and internal controls,

3. right to review and respond to new information before final decision,

4.  avoiding conflicts of interest with medical investigators,

5.  deemed exhaustion of administrative processes and procedures,

6.  certain coverage rescissions are considered adverse benefit determination subject to the claims procedure protections, and

7. notices written in a culturally and linguistically appropriate manner.

The final element in the EBSA refers to the benefits determination process as well as requests and appeals for disability benefits to be written in a language that a participant can easily understand. This element would require procedures for disability benefits’ requests, appeals procedures and rights for participants to be clearly written in their native language. Such a requirement clearly mirrors the requirement for plan sponsors to explain health and welfare benefits’ communications in the most common languages spoken by participants within the state in which they reside.

At this juncture, it appears that this regulation will not affect plans that determine whether a participant qualifies for disability benefits using the determination process developed and used by the Social Security Administration.  Plan trustees will have to keep an eye on this amendment for several reasons. Primarily, with the inauguration of President Trump, regulations that were designed to align with the ACA could be changed or even repealed after some established regulatory processes are applied, such as proposed regulations’ reversals and comment periods.  As 2017 progresses, a pattern in regulatory changes should become evident.

Additionally, regardless of changes in Administrations, sponsoring employers who do not use the Social Security Administration’s determination of disability status should be reviewing their current processes and procedures for determining the approval of disability benefits (as a distribution option or element of normal or early retirement benefits) so they can make revisions which meet the seven (7) elements of the EBSA’s amendment for disability determinations made in 2018. 


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With offices in Toledo and Lima, OH Allotta Farley Co., L.P.A. serves clients throughout northwest OH with various legal matters. Areas of service include Allen County, Ashland County, Auglaize County, Crawford County, Defiance County, Erie County, Fulton County, Hancock County, Hardin County, Henry County, Huron County, Lucas County, Marion County, Mercer County, Morrow County, Ottawa County, Paulding County, Putnam County, Richland County, Sandusky County, Seneca County, Van Wert County, Williams County, Wood County, Wyandot County.

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