In today’s Federal Register, the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor has published its notice delaying, by 90 days, the applicable date of its final rule amending the disability claims procedure requirements applicable to ERISA-covered employee benefit plans (the “Final Rule”). The new claims procedures had initially been set to become applicable on January 1, 2018. That date has now been delayed to April 1, 2018.
The new claims procedures of the Final Rule apply to all ERISA plans that provide disability benefits, which include not only short-term and long-term disability plans but also other types of ERISA plans with disability provisions, such as many retirement plans. The purpose of the delay is to provide EBSA with time to consider the Final Rule’s impact on the group disability insurance market, in light of President Trump’s Executive Order 13777 directing federal agencies to evaluate regulations (with input from affected entities) with an eye toward reducing regulatory burden and expense.
Disability insurers, employers, and administrators have opined that the Final Rule will drive up disability plan costs, cause an increase in litigation, and consequently impair workers’ access to disability insurance protections. In support of their position, these stakeholders have stated that the Final Rule complicates the processing of disability benefits by imposing new steps and evidentiary burdens in the claim adjudication process, and also provides certain incentives for plaintiff’s attorneys to side-step the established administrative review procedures and go to court. They also have estimated that the Final Rule will cause average premium increases of 5-8%, which could result in employers reducing or eliminating disability benefits.
The 90-day delay was initially proposed in October 2017. At the time, EBSA sought input regarding the length of the delay, and received comments both from those who sought a longer delay as well as from those opposed to any delay. As there was no consensus, EBSA adopted the proposal without change, noting that it was “premature” even to consider a delay of longer than 90 days pending receipt of reliable data and information supporting the assertions that the Final Rule will lead to unwarranted cost increases and related diminution in disability coverage benefits.
The period for submitting comments and data relevant to the merits of rescinding, modifying, or retaining the Final Rule ends on December 11, 2017. While many on the defense side have already submitted information, there still remains a limited time frame to contribute. The proposed Final Rule can be reviewed, and comments can be submitted, through the Regulations.gov website, here.