The U.S. Department of Labor (DOL) announced its decision for April 1, 2018, as the applicability date for ERISA-covered employee benefit plans to comply with a final rule (released in December 2016) that
imposes additional procedural protections (similar to those that apply to health plans) when dealing with claims for disability benefits. In October 2017, the DOL had announced a 90-day delay of the final rule, which was scheduled to apply to claims for disability benefits under ERISA-covered benefit plans that were filed on or after January 1, 2018.
Effective Date
While the DOL’s news release indicates that the DOL has decided on an April 1 applicability date for the final rule, the regulatory provision modified by the 90-day delay specified that the final rule will apply to claims filed “after April 1, 2018.”
Plans Subject to the Final Rule
The final rule applies to plans (either welfare or retirement) where the plan conditions the availability of disability benefits to the claimant upon a showing of disability. For example, if a claims adjudicator must make a determination of disability in order to decide a claim, the plan is subject to the final rule.
Generally, this would include benefits under a long-term disability plan or a short-term disability plan to the extent that it is governed by ERISA.
However, the following short-term disability benefits are not subject to ERISA and, therefore, are not subject to the final rule:
In addition, if benefits are conditioned on a finding of a disability made by a third party other than the plan itself (such as the Social Security Administration or insurer/third-party administrator of the employer’s long-term disability plan), then a claim for such benefits is not treated as a disability claim and is also not subject to the final rule. For example, if a retirement plan’s determination of disability is conditioned on the determination of disability under the plan sponsor’s long-term disability plan, then the retirement plan is not subject to the final rule (but the final rule would apply to the underlying long-term disability plan).
Overview of the Final Rule
The DOL has published a Fact Sheet that provides an overview of the new requirements, which include the following:
Next Steps
Before April 2018, employers should:
About the Authors:
This alert was prepared for us by our friends at Marathas Barrow WeatherheadLent LLP, a national law firm with recognized experts on the Affordable Care Act. Contact Peter Marathas or Stacy Barrow at pmarathas@marbarlaw.com or sbarrow@marbarlaw.com.
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