4 Steps for Compliance with the New Disability Claims Procedures

On January 5, the Department of Labor announced its decision that the new disability claims procedure rules will take effect on April 1 of this year. Here is our suggested plan of attack for employers:

Step 1: Familiarize yourself with the new rules.

Step 2: Identify which of your plans offer disability benefits.

Remember to check both your ERISA qualified and nonqualified plans.

Step 3. Determine whether you need to amend your plan and/or SPD.

Under the new rules, participants who file a disability claim must receive an expanded explanation of their adverse benefit determination and a notice of their rights. The explanation will need to include the following:

• A discussion of the claimants’ description to their own doctors regarding their disability,
• the views of the health care and vocational professionals hired by the plan,
• any disability determinations made by the Social Security Administration and presented by the claimants, and
• any specific rules, guidelines, protocols, or standards used by the plan in making its determination.

Claimants must also be notified that they are entitled to receive upon request, and free of charge, all documents relevant to their claim, and a statement of their right to bring an action under Section 502(a).

Step 4.  Update your plans, SPDs and internal policies.

If you determine that your plan and/or summary plan description needs an update, or you are not sure whether an update is appropriate, contact your attorney. Even if your plan does not require amendment, you should closely review your disability denial policy and modify any form letters, internal manuals, or similar documents governing disability claims procedures so that they comply with these new procedures.

Finally, remember that the new rules expand the definition of “adverse benefit determination”.  This definition now includes any cancellation or discontinuance of disability coverage that, except to the extent attributable to a failure to timely pay required premiums or contributions, has a retroactive effect with respect to a participant or beneficiary.

So for all of you who failed to heed our earlier advice, your final deadline for complying with the new disability claims procedures is April Fool’s Day.  Draw your own conclusions.