IMA Compliance Alert

DOL Disability Rule Unchanged, Takes Effect April 2, 2018

January 15, 2018

The Department of Labor (DOL) announced the final rule for ERISA disability claims is not changed and
will apply to ERISA disability claims after Sunday, April 1, 2018, regardless of plan year.

As a reminder, all ERISA plans conditioning one or more benefits on a disability determination are
subject to the enhanced claims and appeals procedures. This could include not only short-term and
long-term disability plans, but also advance payments on life insurance plans, waiver of premium
provisions, and other benefits only available upon a determination of disability.

Non-ERISA plans are not subject to the new rules, including governmental and church plans and most
self-funded short-term disability plans (which are generally viewed as a non-ERISA payroll practice).

Specifically, the final rules require the following:

1. claims and appeals must be adjudicated in a manner designed to ensure independence and
   impartiality of the persons involved in making the benefit determination;
2. benefit denial notices must contain a complete discussion of why the plan denied the claim and
   the standards applied in reaching the decision, including the basis for disagreeing with the views
   of health care professionals, vocational professionals, or with disability benefit determinations by
   the Social Security Administration (SSA);
3. claimants must be given timely notice of their right to access to their entire claim file and other
   relevant documents and be guaranteed the right to present evidence and testimony in support
   of their claim during the review process;
4. claimants must be given notice and a fair opportunity to respond before denials at the appeals
   stage are based on new or additional evidence or rationales;
5. plans cannot prohibit a claimant from seeking court review of a claim denial based on a failure
   to exhaust administrative remedies under the plan if the plan failed to comply with the claims
   procedure requirements unless the violation was the result of a minor error;
6. certain rescissions of coverage are to be treated as adverse benefit determinations triggering
   the plan’s appeals procedures; and
7. required notices and disclosures issued under the claims procedure regulation must be written
   in a culturally and linguistically appropriate manner.