Just when we thought the Department of Labor (DOL) was taking a break, it published a Final Rule along with several Frequently Asked Questions as they relate to ERISA claims procedures. This guidance is in addition to the DOL Employee Benefits Security Administration’s Disaster Relief Notice, which it issued in partnership with the Department of Treasury and IRS, and provides similar guidance.
Employers, claims administrators, and insurers are finding the need to be flexible during the difficult times caused by the COVID-19 crisis as they administer claims for disability benefits. Responding to this, the DOL issued an immediately effective new rule, which alters the claims procedure timelines in several areas under applicable regulations.
Examining 29 CFR § 2560.503
29 CFR § 2560.503 requires employers and plan administrators to establish reasonable claim procedures and an opportunity for a review of an adverse benefits determination. This section also outlines the time frames required around these procedures.
The new rule suspends certain claim procedure time frames to “disregard” the COVID-19 “Outbreak Period,” which it defines as the period from March 1, 2020 until sixty days after the announced end of the National Emergency (subject to a potential end date change by the federal agencies in a future notice). The rule specifically impacts the following disability benefits timelines:
- Date for an individual to file a benefit claim under the plan (29 CFR § 2560.503-1)
- Date for an individual to file an appeal of an adverse benefit determination (29 CFR § 2560.503-1(h))
How Does the Final Rule Work? Two Scenarios
Let’s look at a couple of examples of how the Final Rule’s changes work as a practical matter. Consider the Final Rule in the following disability claim circumstances (assuming the National Emergency declaration ends on April 30, 2020, with the Outbreak Period ending on June 29, 2020):
- Scenario A: Individual A became disabled and potentially eligible for short-term disability benefits on April 1, 2020. The plan typically requires the employee to file a short-term disability claim within 30 days of becoming disabled. When is the employee’s last day to file a timely short-term disability claim?
- Analysis: When determining the 30-day period within which Individual A must file a claim, the Outbreak Period is disregarded. Therefore, the last day Individual A is eligible to file a short-term disability claim is 30 days after June 29, 2020, which is July 29, 2020.
- Scenario B (example 6 in Final Rule): Individual B received a notification of an adverse benefit determination from Individual B’s disability plan on January 28, 2020. The notification advised Individual B that there are 180 days within which to file an appeal. What is individual B’s appeal deadline?
- Analysis: When determining the 180-day period within which Individual B’s appeal must be filed, the Outbreak Period is disregarded. Therefore, Individual B’s last day to submit an appeal is 148 days (180-32 days following January 28 to March 1) after June 29, 2020, which is November 24, 2020.
What Employers Should Do
Employers, administrators, and insurers administering ERISA governed policies should update their claims procedure and appeals process guidelines immediately to ensure proper evaluation under the Final Rule. The Outbreak Period, which extends from March 1, 2020 until 60 days after the National Emergency has ended, must be disregarded for both initial level disability requests as well as any timeline around filing an appeal of an adverse determination.
The Final Rule makes similar changes affecting the calculation of certain deadlines and time periods under group health plans, other employee welfare benefit plans, and employee pension benefit plans subject to ERISA or the Internal Revenue Code, so employers, administrators, and insurers should carefully review the Final Rule in its entirety.
What ReedGroup is Doing
ReedGroup’s operations leaders are working to ensure ERISA governed claims are provided the required extensions as outlined by the Final Rule.
If you’re looking for assistance managing claims or to ensure compliance across your organization, ReedGroup has solutions for you. Check out our offerings here.
Information provided on this blog is intended for general educational use. It is not intended to provide legal advice. ReedGroup does not provide legal services. Consult an attorney for legal advice on this or any other topic.