Last year brought new ERISA rules for the long-term disability benefits claim process. If you have short- or long-term disability insurance in an ERISA plan, most of these changes affect your employer, giving employees more rights. Here’s what you should know about the new system.
This blog post will provide an overview of the 2018 ERISA rules for long-term disability benefits claim process. It will describe the background and history of the changes, and will help beneficiaries understand how those changes could affect their claims.
New ERISA Rules Two Years in the Making
The new ERISA rules that took effect in 2018 shouldn’t have been a surprise to employers, HR directors, or long-term disability insurance providers. The final version of the regulations took almost 2 years to go into effect. The Department of Labor first published its “Final Rule” on December 19, 2016. It was scheduled to take effect January 18, 2017.
However, the Department of Labor then got swept up into the change of administration. When President Donald Trump took office, he issued an executive order on February 24, 2017, ordering a Regulatory Reform Task Force to take another look at the a broad range of existing regulations, looking for ways to make them less burdensome on employers and business owners.
The Task Force heard claims that the Final Rule would raise the cost of long-term disability insurance and stop employers from offering coverage. It took another look at the regulation and on October 12, 2017, the Department of Labor tried again, issuing a Notice of Proposed Rulemaking and asking for public comment.
After another ninety days of comments and consideration, the final version of the regulations went into effect on April 1, 2018. At this point, employers and insurance companies have had over two years to adjust to the new rules. However, many are still falling short of the new requirements.
What ERISA Insurance Providers Must Do Under the New Rules
The new ERISA rules for the long-term disability benefits claim process protect disabled employees and help them understand when, and why, their claims are denied. It also improves employees ability to take long-term insurance companies to court if they don’t follow the set procedure. Future blog posts will go into further details about your rights as an employee under the new rule. However, generally speaking, employers or their insurance providers must now:
- Use impartial decision-makers at every stage of the process
- Separate employment decisions from the possibility of disability claims
- Explain the standards used in denying long-term disability benefits claims
- Specifically describe why long-term disability benefits claims are denied
- Explain the reason for disagreeing with your doctor or the Social Security Administration’s decisions about your disability
- Include the internal rules, standards, and guidelines used to make long-term insurance claim decisions in any denials
- Give you access to the scientific basis for decisions about medical necessity, experimental treatment, or other policy exclusions
- Give you access to your entire claim file, without charge, in time to present evidence of your disability before a final decision is reached
- Notify you if it is using new evidence or reasoning for denying your claim on appeal and giving you a chance to respond to that evidence
- Complete the entire appeals process (including advanced notice) within 45 days, with one 45 day extension
- Provide denial notices in other languages if 10% or more of the local population speaks the same non-English language.
Generally speaking, this means that employees will receive far more information about why their claims were denied and the long-term disability benefits claim process. That way if your claim is denied, or new evidence comes up that works against you, you have an opportunity to get the help of a long-term disability attorney and prove your need for benefits before it is too late and your claim is lost.
What Happens if Employers or Insurance Companies Don’t Follow the Long-Term Disability Benefits Claim Process
Another important part of the new ERISA rules for the long-term disability benefits claim process are the built-in protections for employees when their employers or insurance companies don’t follow those rules. This comes up in two important ways:
Employees Can Sue for Failure to Follow the Long-Term Disability Benefits Claim Process
If an employer, HR department, or insurance adjuster fails to live up the standards set by the Department of Labor, the new ERISA rules say you can take them straight to court. It used to be that employees would have to “exhaust their administrative remedies” first. In other words, you couldn’t sue until you went through all the in-house claims and appeals processes.
However, the problem often was that employers and insurance companies would drag their feet in reaching these decisions. That left employees without necessary long-term disability benefits. Under the new ERISA rule, if an employer or insurance company breaks any of the rules in any non-minimal way, the employee can go straight to court without having to finish the appeals process first.
Employees Can Sue for Any “Adverse Benefit Determination”
Before the new rules came into effect, you could only sue your employer if your long-term insurance benefits were wrongful denied. Employees facing other negative outcomes were sometimes left without a remedy. Under the new ERISA rules, the definition of “adverse benefit determination” is much broader. It includes:
- Reduction of benefits
- Benefits terminations
- Failure to make full or partial payment
- Rescission of coverage (other than for nonpayment)
- Retroactive terminations based on claims of fraud
Any of these broader range of events can be appealed through the courts.
The new ERISA rules for the long-term disability benefits claim process are designed to improve employees’ understanding of the process, access to information, and ability to appeal denials. If you receive notice that your claim has been denied, or if you feel like your employer isn’t following the rules, the long-term disability attorneys at Bross & Frankel are here to help. We will review your denial and your condition, and help you make your strongest case. Contact us for a complimentary consultation.