You already know that since December 2016 the United States Department of Labor (DOL) has been reworking regulations governing disability plan administration.
New ERISA claims requirements were issued, which were to take effect and apply to disability claims filed on or after January 1, 2018. Some of the changes included:
(1) New Conflict of interest criteria: to assure impartiality of claims adjudicators, and vendors, the regulations restricted bonuses and financial incentives could not be based on the outcome of a claim;
(2) Denial notice requirements increased: the regulations required benefit denial notices to detail the reasons and criteria relied upon when denying benefits, including detailed explanation of the basis for disagreeing with the claimant’s treating physician or a Social Security Administration determination;
(3) Enhanced “full and fair” review, by allowing opportunity to respond to new information. As soon as a physician review report or transferable skills assessment was available, the claimant was to get an opportunity to review and comment before an appeal-level denial was issued;
(4) Non-English translated notices: the regulations required the plan to provide, upon request, translation services for claimants who speak languages other than English; and
(5) Notice regarding contractual limitations period: the regulations required that the benefit denial notification include a description of the contractual limitations period and the expiration date.
These new regulations were going to impose significant costs. ERISA plans and insurers contended these new regulations created extra burdens which would, in turn, increase LTD premiums 5%-8%. According to the DOL, “[a]fter the Department published the Final Rule, certain stakeholders asserted in writing that the Final Rule will drive up disability benefit plan costs, cause an increase in litigation, and thus impair workers’ access to disability insurance protections.”
BREAKING NEWS TODAY: Someone at DOL is listening. The DOL acknowledged this week that it lacked sufficient information to assess the costs of these new requirements. The DOL now seeks input regarding the regulatory impact analysis of the Final Rule. If additional reliable data and information is submitted, the Department will be able to consider whether it supports regulatory alternatives other than those adopted in the Final Rule.
TODAY the Department of Labor published a proposed rule “to delay for ninety (90) days – through April 1, 2018 – the applicability of the Final Rule amending the claims procedure requirements applicable to ERISA-covered employee benefit plans that provide disability benefits.” (Emph. added)
PUBLIC COMMENT DEADLINES:
Comments on the proposal to extend the applicability date (to April 1, 2018) should be submitted by OCTOBER 27, 2017.
By DECEMBER 11, 2017, “comments providing data and otherwise germane to the examination of the merits of rescinding, modifying, or retaining the rule” should be provided. (Emphasis added).
Here is the information the DOL wants to consider:
Data it could use to assess:
(1) the number of disability claims that are filed and denial rates for such claims, including rates separately for claimants who were previously approved under the Social Security Disability Insurance Program (SSDI) and statistics on reasons for denial;
(2) how often plans rely on new or additional evidence or rationales during the claims review process and the volume of the material that comprise such additional evidence or rationales;
(3) the price elasticity of demand for disability insurance coverage;
(4) pricing or premiums for group and individual level policies and factors that affect pricing;
(5) loss ratios and the breakdown of expenses (claims, sales, claims processing, etc.);
(6) aggregate, average, and median benefits paid and ages of claimants;
(7) the projected litigation costs associated with the new procedural requirements for disability claims provided in the Final Rule;
(8) the number of new claims that will be granted that, but for the provisions in the Final Rule, would have been denied, and the value of those benefits;
(9) the systems and technology that plans and insurers use to process disability claims and cost estimates updating such systems to comply with the Final Rule;
(10) statistics on steps, timing of steps, and disposition of claims from initial filing to final disposition, including claims filed but never perfected or decided, up to and including claims denied though appeal and litigated; and
(11) information regarding the costs for non-English services and the estimated population of claimants that might be expected to use such services.