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DOL Delays New Rules for Disability Benefit Claims | Maryland Benefit Advisors

On November 29, 2017, the U.S. Department of Labor (DOL) published a Final Rule that delays implementation of new claim rules for disability benefits through April 1, 2018. This 90-day delay is intended to give the DOL, insurers, employers, and other interested parties additional time to review the new rules. The DOL is collecting public comments through December 11, 2017.


The new claim rules apply to disability benefits provided under plans covered by the Employee Retirement Income Security Act (ERISA); that is, plans sponsored by private sector employers. A disability benefit means the plan must make a determination of disability in order for the claimant to obtain the benefit. Group short- and long-term disability plans are the most common examples, although the rules also may apply to pension, 401(k), and deferred compensation plans if the benefit is conditioned on the plan determining that the claimant is disabled.

New Requirements

Assuming the DOL does not announce any further delays, the following new requirements will apply to disability claims filed after April 1, 2018:

  • Improvement to Basic Disclosure Requirements: Benefit denial notices must contain a more complete discussion of why the plan denied a claim and the standards used in making the decision. For example, the notices must include a discussion of the basis for disagreeing with a disability determination made by the Social Security Administration if presented by the claimant in support of his or her claim.
  • Right to Claim File and Internal Protocols: Benefit denial notices must include a statement that the claimant is entitled to receive, upon request, the entire claim file and other relevant documents. (Previously this statement was required only in notices denying benefits on appeal, not on initial claim denials.) The notice also must include the internal rules, guidelines, protocols, standards or other similar criteria of the plan that were used in denying a claim or a statement that none were used. (Previously it was optional to include a statement that such rules and protocols were used in denying the claim and that the claimant could request a copy.)
  • Right to Review and Respond to New Information Before Final Decision: Plans are prohibited from denying benefits on appeal based on new or additional evidence or rationales that were not included when the benefit was denied at the claims stage, unless the claimant is given notice and a fair opportunity to respond.
  • Avoiding Conflicts of Interest: Plans must ensure that disability benefit claims and appeals are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision. For example, a claims adjudicator or medical or vocational expert could not be hired, promoted, terminated or compensated based on the likelihood of the person denying benefit claims.
  • Deemed Exhaustion of Claims and Appeal Processes: If plans do not adhere to all claims processing rules, the claimant is deemed to have exhausted the administrative remedies available under the plan (unless exceptions for minor errors or other conditions apply). In that case, the claimant may immediately pursue his or her claim in court. Plans also must treat a claim as re-filed on appeal upon the plan’s receipt of a court’s decision rejecting the claimant’s request for review.
  • Certain Coverage Rescissions Are Adverse Benefit Determinations Subject to the Claims Procedure Protections: Rescissions of coverage, including retroactive terminations due to alleged misrepresentation of fact, such as errors in the application for coverage, must be treated as adverse benefit determinations. Adverse benefit determinations trigger the plan’s appeals procedures. Coverage terminations due to non-payment of premiums are not rescissions and not covered by this provision.
  • Notices Written in a Culturally and Linguistically Appropriate Manner: Benefit denial notices have to be provided in a culturally and linguistically appropriate manner in certain situations. This is consistent with the existing rule for group health benefit notices. Specifically, if a disability claimant’s address is in a county where 10 percent or more of the population is literate only in the same non-English language, benefit denial notices must include a prominent statement in the relevant non-English language about the availability of language services. The plan would also be required to provide a verbal customer assistance process in the non-English language and provide written notices in the non-English language upon request.

Next Steps

The DOL is in the process of reviewing the new claim rules, which originally had been issued by the prior Administration. While it is possible that the Department will make revisions or provide another delay before implementation, employers should take steps now to work with their carriers, third-party administrators, and advisors to review their current procedures and ensure they will be prepared to comply with the new requirements, if needed.

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Preston Rutledge to be Nominated as Next EBSA Head | Maryland Benefit Advisors

President Trump has announced his intent to nominate Preston Rutledge as Assistant Secretary of Labor, Employee Benefits Security Administration (EBSA). The position as head of the EBSA has been vacant since Phyllis Borzi stepped down in January 2017.

The White House announcement includes highlights of Mr. Rutledge’s career which clearly demonstrate his knowledge and experience in the employee benefits field:

“Mr. Rutledge currently serves as senior tax and benefits counsel on the Majority Tax Staff of the U.S. Senate Finance Committee where his responsibilities include employee benefits, retirement issues, tax-exempt organizations, health tax issues, and the tax provisions of the Affordable Care Act. Prior to joining the Finance Committee, Mr. Rutledge served as a senior tax law specialist on the Headquarters Staff of the Tax Exempt and Government Entities Division of the Internal Revenue Service, and as a senior technical reviewer in the Qualified Pension Plans Branch of the IRS Office of Chief Counsel. During his tenure there, he was the recipient of an Office of Chief Counsel National Award. Mr. Rutledge also served as a law clerk on the United States Court of Appeals for the Fifth Circuit, and worked in private law practice as an employee benefits counselor and ERISA litigator. Mr. Rutledge earned a B.S. in business, cum laude, from the University of Idaho; J.D., with high honors, from the George Washington University School of Law, and an L.L.M. – taxation, with distinction, including a certificate in employee benefits law, from the Georgetown University Law Center.”

Working under the direction of the Secretary of the Department of Labor, Alexander Acosta, the new EBSA head will play an important role in crafting regulatory guidance on the Employee Retirement Income Security Act (ERISA), the Affordable Care Act (ACA), and other employee benefit plan laws.

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President Directs Federal Agencies to Consider ACA Changes | Maryland Benefit Advisors

On October 12, 2017, President Trump issued an Executive Order directing the Departments of Labor (DOL), Health and Human Services (HHS), and Treasury to develop new rules to allow some exemptions from the Affordable Care Act (ACA).

The Order indicates the Administration’s priorities although it has no immediate effect since any rule changes must first go through a long proposal, review, and public comment process.

The Order’s key directives are:

1. Consider expanding the time period allowed for short-term limited duration insurance (STLDI).
By excluding pre-existing conditions and restricting the scope of covered services, STLDI policies typically offer lower premiums. STLDI policies are already exempt from many of the ACA’s requirements, but are generally limited to three-month coverage periods. Changing the federal rules may allow greater availability for longer coverage periods, although state insurance laws will also need to be considered.

2. Consider allowing employer-funded Health Reimbursement Arrangements (HRAs) to reimburse their employees’ premiums for individual medical insurance.
HRAs allow employers to make tax-free contributions to account plans that reimburse employees for eligible healthcare expenses, such as group medical deductibles and co-pays. The ACA currently prohibits employers (other than certain small employers) from paying or reimbursing an employee’s individual policy premiums either directly or through an HRA. This prohibition could be revised or eliminated by changing the current federal rule.

3. Consider loosening restrictions on association health plans and expand availability across state lines.
Association health plans are designed to cover members of professional and trade groups. Generally they are exempt from some of the ACA requirements and state insurance laws that apply to typical “small employer” group health plans. Expanding the availability of association health plans, which generally offer less coverage at lower costs, would likely require changing how group plans are defined under the Employee Retirement Income Security Act (ERISA). Also, state insurance laws, particularly in states that are wary of association health plans, may limit the impact of any federal rule changes.

ThinkHR will continue to monitor developments as the federal regulatory agencies consider rule changes. In the meantime, all current ACA requirements and state insurance laws continue to apply.

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DOL Guidance for Benefit Plans Impacted by Hurricane Harvey | Maryland Benefit Advisors

The U.S. Department of Labor has issued compliance guidance for benefit plans, employers and employees, and service providers who are impacted by Hurricane Harvey. The guidance generally provides relief from various ERISA requirements and time limits for entities in the disaster area. This follows the Internal Revenue Service (IRS) announcement extending certain filing dates, including Form 5500.

Key excerpts from the DOL guidance include:

“The Department recognizes that some employers and service providers acting on employers’ behalf, such as payroll processing services, located in identified covered disaster areas will not be able to forward participant payments and withholdings to employee pension benefit plans within the prescribed timeframe. In such instances, the Department will not–solely on the basis of a failure attributable to Hurricane Harvey–seek to enforce the provisions of Title I with respect to a temporary delay in the forwarding of such payments or contributions to an employee pension benefit plan to the extent that affected employers, and service providers, act reasonably, prudently and in the interest of employees to comply as soon as practical under the circumstances….

“With respect to blackout periods related to Hurricane Harvey, the Department will not allege a violation of the blackout notice requirements solely on the basis that a fiduciary did not make the required written determination….

“The Department recognizes that plan participants and beneficiaries may encounter an array of problems due to the hurricane, such as difficulties meeting certain deadlines for filing benefit claims and COBRA elections. The guiding principle for plans must be to act reasonably, prudently and in the interest of the workers and their families who rely on their health plans for their physical and economic well-being. Plan fiduciaries should make reasonable accommodations to prevent the loss of benefits in such cases and should take steps to minimize the possibility of individuals losing benefits because of a failure to comply with pre-established timeframes.”

The DOL also released FAQs for Participants and Beneficiaries Following Hurricane Harvey. The eight-page FAQ covers issues regarding health plan claims, COBRA continuation coverage, and collecting retirement plan benefits.

ThinkHR will continue to monitor issues affecting employers impacted by Hurricane Harvey.