Disability Claim Regulation Update

What Happened?

The U.S. Department of Labor (DOL) recently announced final regulations which revise the claims procedures for employee benefit plans providing disability benefits (See 29 C.F.R. §2560.503-1). These regulations will take effect for disability claims made on or after April 1, 2018. Plan documents and Summary Plan Descriptions (“SPDs”) must conform to these legal requirements. If a plan participant has been denied a benefit based on an adverse determination of disability and the new procedures are not strictly followed, then the claimant will be deemed to have exhausted administrative remedies and may seek action in court and other remedies.

Accordingly, EZ ERISAPlan has updated the Wrap document to include new default Claims Procedure language to include the updated disability terms in the revised regulations.

How Does the Default Language Work with Insurance?

When a Constituent Benefit Program is insured, the insurer is the Claims Administrator and the lead fiduciary for any benefit determinations under that Program. This default language does not take effect with respect to a plan or Constituent Benefit Program, unless the underlying Program does not have legally sufficient language, and the Plan Administrator makes such a determination, in writing. This language is added to be sure that your ERISA-governed Wrap document and SPD meet these new legal requirements. 

So, if the insurer for one of your Programs that includes disability is doing what it is supposed to, it is updating its insurance policy (or certificate or document in a self-funded context) to comply with the regulation update, and you have nothing to worry about. If not, your Wrap Plan is compliant and you can address this appropriately, if it ever becomes necessary.

What Do I Need To Do?

All ERISA Wrap Document subscribers should republish their document by the end of the 2018 Plan Year. Remember that an updated SPD must be furnished no later than 210 days following the Plan Year in which a Plan change was made. So, ERISA Wrap Document subscribers should republish the document by the end of their 2018 Plan Year, and that updated version can be retroactively effective to at least April 1, 2018 (the beginning of the Plan Year works as well).

For example, if your Plan Year is the calendar year, you can republish your Wrap document at open enrollment time, but definitely prior to December 31, 2018, with an effective date of January 1, 2018. We know you will be planning for potential changes at open enrollment time, but make sure before you make those changes, you republish (finalize again) the 2018 version. Of course, an earlier adoption is fine and subscribers can update their documents during the Plan Year at any time at no added cost.   

Please contact us at info@ezerisaplan.com if you have any questions.