The U.S. Department of Labor’s final disability claims procedures become effective for disability claims filed after April 1, 2018. The purpose of the new procedures is to ensure full and fair claims review procedures for any determination of disability in line with protections for certain group health plans under the Affordable Care Act. This means any employee benefit plan governed by ERISA that conditions a benefit upon a determination that a person is disabled must be amended to adopt these new procedures. The procedures do not only apply to long and short-term disability plans but any qualified or nonqualified retirement or deferred compensation plan governed by ERISA that conditions a benefit on a determination of disability. Likewise, group health plans often extend coverage beyond age 26 for disabled children of insureds.
If a plan conditions a benefit on disability as determined by another plan administrator or program, then the plan need not be amended provided the plan making the determination is amended. For example, nonqualified deferred compensation plans often provide that if the claimant has been determined to be disabled by the Social Security Administration, they will be considered disabled for purposes of the plan. However, if the plan provides that the plan administrator can otherwise determine that the claimant is disabled and entitled to benefits, the plan must adopt the claims procedure. Likewise, if a plan provides for a disability benefit if the employee is determined to be disabled but incorporates by reference the procedures of another plan, such as a long term disability plan, then only the incorporated procedures need to be amended.
Plan documents generally must be amended by the end of the plan year that includes April 1, 2018. However, the procedures must be followed for any claims on or after April 1, 2018.
Employers should take steps to review all plans that might condition a benefit on a determination of disability ASAP, and implement a strategy for compliance. Health plans, qualified retirement plans, nonqualified supplemental retirement or deferred compensation plans, severance plans or any other plan that provides for a benefit upon disability should be reviewed.