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New regulations for ERISA disability benefits

Last week, our blog discussed how the Department of Labor, the agency tasked with enforcing the Employee Retirement Income Security Act of 1974, recently published a final rule that will introduce new provisions designed to enhance the procedural protections and consumer safeguards offered under Section 503 of this landmark law.

To recap, Section 503 of ERISA dictates that administrators of workplace disability insurance plans must provide written notice to employees if a claim for benefits is denied, as well as an equitable appeals process through which to challenge any denial of disability benefits.

In today’s post, we’ll continue our discussion of the enhancements to section 503 under the newly finalized rule, which will apply to plans, plan fiduciaries and insurance providers as of January 1, 2018.

  • Conflicts of interest eliminated: The independence and impartiality of the persons tasked with making decisions concerning initial disability benefits claims and/or appeals must be ensured. This, in turn, means that parties such as medical experts, vocational experts or claims adjudicators cannot have their hiring, compensation, promotion or termination contingent upon the probability of their denying benefits claims.
  • Expanded protection for coverage rescissions: When a plan makes the decision to rescind coverage, it has to be treated as an adverse benefit determination, which, in turn, initiates the appeals process under the plan. While rescissions of coverage undertaken for nonpayment of premiums are excluded from this mandate, retroactive rescissions taken over purported misrepresentations of fact — i.e., omissions or errors in the initial application — are included.
  • Written notices to be culturally and linguistically appropriate: If claimants reside in a county in which 10-plus percent of the population is only literate in the same non-English language, their written denial notices must include prominent statements in this non-English language discussing the availability of language services. By extension, plans are required to provide verbal customer assistance and written notices (if requested) in the non-English language in question.

Private-sector employees who rely on the availability of benefits under their workplace disability insurance plan should derive some much-needed comfort from these changes introduced to section 503 by the DOL.

Source: U.S. Department of Labor, “Final rule strengthens consumer protections for workers requesting disability benefits from ERISA employee benefit plans,” December 2016

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