ERISA Claims Procedures For Disability Benefits To Get An ACA Make Over
The Employee Benefits Security Administration (EBSA) of the Federal Department of Labor plans to publish on November 18, 2015, new claims procedures for adjudicating disability benefits designed to enhance existing procedures for those benefits under Section 503 of the Employee Retirement Income Security Act (ERISA). EBSA’s goal is to apply to disability benefits many of the new procedural protections and safeguards that have been applied to group health plans under the Affordable Care Act (ACA). Interested parties may submit comments to these proposed regulations no later than 60 days after publication.
What are disability benefits?
In general, if an ERISA-covered plan conditions the availability of a benefit to the claimant upon a showing of disability, that benefit is a disability benefit. This is true whether the plan is a pension plan or a welfare plan. See FAQs About The Benefit Claims Procedure Regulation, A-9.
Why the change?
Fearing an increase in disability claims due to an aging population likely to be more susceptible to disabilities, EBSA anticipates an increase in disability litigation. The agency also expressed concern that disability benefit costs may be motivating insurers and plans to aggressively dispute disability claims. The proposed regulations states:
This aggressive posture coupled with the inherently factual nature of disability claims highlight for the Department the need to review and strengthen the procedural rules governing the adjudication of disability benefit claims.
What would the DOL like to change?
In short, the proposed regulations would incorporate into the rules for processing disability benefits many of the procedural protections for healthcare claim in the Affordable Care Act (ACA), such as:
Procedures would need to be designed to ensure independence and impartiality of the persons making the decision. For example, plans would not be permitted to provide bonuses to a claims adjudicator based on the number of denials.
Denial notices would be required to provide a full discussion of the basis for denial and the standards behind the decision. For instance, denial notices would have to do a better job explaining why the plan’s decision is contrary to the claimant’s doctor’s view.
Claimants would need to be given access to their entire claim file and permitted to present evidence and testimony during the review process.
Notice would need to be given to claimants, along with an opportunity to respond to, any new evidence reasonably in advance of an appeal decision. EBSA is considering whether the timing rules will need to be adjusted to allow for dialogue between the plan and the claimant about the new evidence.
Final denials at the appeals stage would not be permitted to be based on new or additional rationales unless claimants first are given notice and a fair opportunity to respond.
Claimants would be deemed to have exhausted administrative remedies if the plan fails to comply with the claims processing rules, with limited exceptions. These exceptions include circumstances where the violation was: (i) de minimis; (ii) non-prejudicial; (iii) attributable to good cause or matters beyond the plan’s control; (iv) in the context of an ongoing good-faith exchange of information; and (v) not reflective of a pattern or practice of non-compliance.
Certain rescissions would be treated as adverse benefit determinations, subject to appeals procedures.
Notices would need to be written in a culturally and linguistically appropriate manner. In short, if a claimant’s address is in a county where 10 percent or more of the population residing in that county, as determined based on American Community Survey (ACS) data published by the United States Census Bureau, are literate only in the same non-English language, notices of adverse benefit determinations to the claimant would have to include a prominent one-sentence statement in the relevant non-English language about the availability of language services. Such services would include (i) oral language services in the non-English language, such as through a telephone hotline, (ii) written notices in the non-English language upon request, and (iii) answering questions and providing assistance with filing claims and appeals in any applicable non-English language.
Plan sponsors, plan administrators and carriers will have to watch the development of these rules carefully. Once finalized, changes likely will be needed to ERISA-covered pension and welfare plan documents that provide disability benefits.