DOL May Kill Major Group Disability Claim Regulation

Insurers say the new regs could increase 2018 premiums 8%

DOL Secretary Alexander Acosta (Photo: Senate) DOL Secretary Alexander Acosta (Photo: Senate)

An arm of the U.S. Department of Labor could end up revising, or even eliminating, major Obama-era change in group disability insurance claim procedure regulations.

The Employee Benefits Security Administration, the DOL agency that oversees benefits plans, says it wants to postpone the effective date of the regulations for at least 90 days, start a new public comment period, and, possibly, change the regulations in response to a review of the new public comments.

EBSA officials proposed the group disability claim regulation delay in a proposed rule that's set to appear in the Federal Register on Friday. 

(Related: Obama Administration Revamps Group Disability Claim Rules)

EBSA will be providing a 15-day public comment period for the proposed 90-day applicability date delay.

Officials are asking commenters to talk to it about whether a 90-day applicability delay is long enough.

The Claim Procedure Regulations

In December 2016, officials in former President Barack Obama's DOL completed work on an effort to revamp group disability standards.

Calendar (Image: Thinkstock)

Calendar (Image: Thinkstock)

The December 2016 regulations would require a disability plan to give a worker a complete explanation of any claim denials; give the claimant complete access to the claim file and other relevant documents; add new requirements designed to promote claim adjudicator independence; and speed up claimants' ability to file lawsuits.

Today, a claimant must wait until a plan has completed a full claim decision and review process before filing a lawsuit.

Under the December 2016 regulations, the DOL would hold that the claimant was "deemed to have exhausted the administrative remedies available" if a plan failed to comply with DOL claim-processing rules.

Obama administration officials have argued that the changes are necessary because the current rules give claimants little protection and have led to a flood of litigation.

Trump-Era Thinking

Officials in President Donald Trump's DOL and EBSA contend that DOL had too little information about the possible impact of the December 2016 regulations when it approved the regulations.

When a law firm conducted a confidential survey of group disability carriers, it found  that the December 2016 regulations could increase 2018 group disability premiums by 5% to 8%, officials say in a discussion of the proposed applicability data delay.

Insurers need more time to gather, process and provide data that EBSA can use to quantify the true effects of the regulations, officials say.

Officials note, for example, that some states now ban group disability "discretionary clauses," or provisions that give plan administrators the authority to interpret the meaning of plan terms and provisions.

EBSA would like to see information about whether, and how, changes like those have affected group disability premiums, officials say.

Alexander Acosta is now the DOL secretary.

The Trump administration has not yet nominated a new EBSA chief.

Timothy Hauser, a deputy assistant secretary for program operations at EBSA, signed the propose applicability delay regulation.

--- Read Labor’s Disability Claim Proposal Firestorm: Where the Explosions Are on ThinkAdvisor.


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