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ERISA and Disability Claims

Posted: January 5, 2017

Final rules were issued in December that update the claims procedure that ERISA Plan Administrators must follow to determine whether benefits are due or payable on account of a plan participant’s disability. There are two effective dates applicable to the  new rules – January 18, 2017 and January 1, 2018. The final regulations make minor changes to the notice requirements that apply to disability claims filed between January 18, 2017 and December 31, 2018.  The final rules fully take effect on January 1, 2018. Fully-insured arrangements, where the carrier makes the disability determination, must now incorporate the new claims procedure into their certificates of coverage or benefit booklets. For example, if you sponsor a fully-insured long-term disability program, the insurance carrier will be making the determination as to whether an individual is entitled to benefits as the result of a disability, and must follow the new claim procedure. A self-funded short-term disability program is considered a payroll practice by the Department of Labor, and is not subject to ERISA or the new rules. Some retirement programs contain provisions that permit the payment of benefits if the participant is disabled.  If the disability determination is made by the Plan Administrator, then the new claim procedure must be followed. If a disability determination for a retirement plan follows a determination made by a third party for another purpose, such as a disability determination by the Social Security Administration for Social Security purposes, then the new rules do not apply. If the new claims procedures apply to any disability-related benefits under a welfare or retirement plan you sponsor, the new claims procedure should be incorporated into the summary plan description. 

Final Rules:  https://www.gpo.gov/fdsys/pkg/FR-2016-12-19/pdf/2016-30070.pdf