As a reminder, the Department of Labor (DOL) delayed the effective date of new claims procedures for disability-related benefits (including claims under group health plans and retirement plans that require a determination of disability by the plan administrator) issued by the Obama Administration. These were originally effective January 1, 2018. On January 5, 2018, the DOL announced these procedures will now take effect April 1, 2018.
These regulations modify the procedures that must be followed by ERISA plans when ruling on disability-related claims and appeals. Discretionary disability determinations ( i.e., where a plan does not simply rely on a determination made by a third-party, such as the Social Security Administration or a long-term disability insurer) will now be subject to many of the same rules that already apply to health claims. Any plan that fails to follow these procedures could find it harder to defend against litigation filed by a plan participant or beneficiary.
Presumably, disability insurers will be ready to comply with these regulations by the April 1 date. But sponsors and administrators of self-funded plans that require discretionary disability determinations should consider taking the following steps:
- Come into substantive compliance with the regulations by April 1. This may require coordination with a third-party administrator when disability claims are not administered by a fully insured carrier.
- If you currently have an up to date Wrap Plan Document (WPD), adopt any necessary plan amendment, if possible by that same date. It is not entirely clear that IRS guidance would allow a welfare plan amendment to be adopted retroactively.
- If you do not currently have a Wrap Plan Document, create one. Truss has two partnerships for WPD creation. The pricing for these services comes directly from the partner and varies based on needs. Your dedicated Truss Client Advisor can discuss options with you further.
- If appropriate, issue a Summary of Material Modifications (or revised Summary Plan Description). Although ERISA allows ample time for doing so, a more prompt SMM may put the plan sponsor in a better position in the event of litigation.
- Update any internal policies or procedures for resolving disability-related claims. For the most part, this will require conforming those policies to ones already in place for health claims when disability claims are not administrated by the fully insured carrier.
Note: Wrap Plan Documents (and any applicable amendments) are legal documents that should be drafted and/or reviewed by your ERISA attorney. Truss cannot offer legal advice.