Department of Labor Proposes 90-Day Delay of New Disability Claims Procedures
On October 10, 2017, the Department of Labor (“DOL”) released proposed regulations that would delay for 90 days the effective date of the final disability claims procedures regulations finalized on December 19, 2016. As explained in our August 1, 2017 blog entry, the new disability claims procedures added various participant protections and rights to existing disability claims procedures. The new procedures largely track the procedures that were applied to group health plans under the Affordable Care Act.
This proposed regulatory delay comes pursuant to Executive Order 13777, which mandates agencies to evaluate existing regulations for potential repeal or modification. The DOL appears concerned with the financial effect of the final regulations, including the effect the final regulations may have on premium rates and the demand for disability coverage. The DOL also appears interested in comments on the litigation and administrative costs inherent in the final regulations’ deemed exhaustion and enhanced disclosure rules.
If the proposed regulatory delay is finalized, the new disability claims procedures provided under the final regulations would apply only for disability benefit claims filed on or after April 1, 2018. The DOL explained that it would use this time to invite the public to submit further comments and data regarding the final regulations while it further analyzes the financial effects of the new procedures and potential regulatory alternatives. The DOL noted that after its analysis it may allow the final regulations to take effect as written, propose a further extension, amend the regulations, or withdraw the regulations entirely. Comments on the proposed delay must be submitted to the DOL by October 27, 2017. If the proposed delay is finalized, any comments on the final regulations must be submitted to the DOL by December 11, 2017.
Although it appears likely that the 90-day delay will be finalized, employers and plan administrators that are currently working to implement the new claims procedures for claims submitted after January 1, 2018 should continue to do so.