Under new regulations, individuals who file disability insurance claims will receive the same procedural protections that apply to group health plans under the Affordable Care Act.
Protection for Group Disability Insurance
The U.S. Department of Labor recently announced a new rule that impacts bad faith determinations in group disability claims. Effective April 1, 2018, consumers will be provided the same protections that currently apply to group health plans under the Affordable Care Act. The new rule applies to plans that provide disability insurance benefits where determination is made by a claims adjudicator. If determination of benefits is made by a third party, such as an employer’s long-term disability plan, pension plan, or the Social Security Administration, the new rule will not typically apply.
The Labor Department instigated the new rule to ensure disability claimants an accurate, fair review of their claims. A department review of disability cases indicated numerous conflicts of interest when the party determining the eligibility of claim benefits was also the payer of the benefits. According to the department, long-term disability cases accounted for approximately 64 percent of ERISA cases reviewed between 2010 and 2016. Health care plans accounted for only 14.4 percent of cases and pension plans accounted for only 9.3 percent.
The new rule has certain requirements that must be met including:
- Conflict of Interest – Disability claims, as well as appeals, must be processed accurately and fairly to ensure no bias on the part of any person who is involved in making the benefit determination.
- Notice Requirements – Claimants must receive denial notices that explain in detail why the disability claim was denied, and what standards were used to reach the determination of benefits.
- Access to Claim Files – Claimants must be notified in a timely manner of their right to access their complete claim files and other pertinent documents, as well as their right to present evidence and/or testimony that supports their claims during the review process.
- Appeals – Claimants must be notified of their right to an appeal to respond to new or additional evidence that was not included at the time of their disability claim denial.
- Court Review – Disability plans cannot prevent claimants from seeking a court review of their denied disability claims if the plan failed to follow the proper claims procedure requirements.