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Feds Officially Delay Obama-Era Group Disability Regs, a Little

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The Trump administration’s employee benefits team is taking a moderate approach toward reviewing major new group disability insurance claim regulations.

Officials at the Employee Benefits Security Administration announced today that they will postpone the effective date of the new regulations 90 days, to April 1, 2018, and only 90 days, to review information on the potential impact of the regulations on the group disability market.

EBSA completed work on the regulations in December 2016, as former President Barack Obama was about to leave office. The regulations, which were originally set to take effect Jan. 1, 2018, would impose new standards for group disability claim reviews. The new regulations would also give claimants quicker, easier access to the courts.

Insurers, employers and administrators have predicted that the new regulations would lead to enough new litigation to increase group disability premiums by 8%.

EBSA, an arm of the U.S. Department of Labor (DOL), proposed an effective date delay in October. EBSA asked for comments on the idea of pushing back the enforcement date.

(Related: DOL May Kill Major Group Disability Claim Regulation)

About 110 commenters responded to the proposal, EBSA officials write in an explanation of their 90-day delay decision.

Many insurers, employers and administrators asked EBSA to push the effective date back much more than 90 days, but the commenters who represent the claimants “equally strongly oppose any delay of any length,” officials write.

The claimants’ reps argued that the claimants obviously need help with getting their claims paid, because the claimants often have trouble getting benefits even when the Social Security Administration has decided that the claimants are eligible for Social Security Disability Insurance benefits.

Workers (Photo: Thinkstock)

(Photo: Thinkstock)

The claimants’ reps also argued that insurers have based their impact predictions on non-public data generated by the insurers themselves.

EBSA officials argue that it is appropriate for the agency to get more impact data, and to give itself 90 more days to review the impact data.

But EBSA officials say they think giving itself 90 more days should be enough to review the data and take reasonable next steps.

“It is premature, in the department’s view, to consider a delay of longer than 90 days pending receipt of reliable data and information that reasonably supports the commenters’ assertions that the final rule will lead to unwarranted cost increases and related diminution in disability coverage benefits,” officials write.

Officials’ decision to hold the review period to 90 days could be a sign that the DOL could still end up adopting some version of the Obama-era claim regulations.

EBSA is preparing to publish the official delay notice in the Federal Register on Wednesday. An preliminary version of the notice is available here

—Read Obama Administration Revamps Group Disability Claim Rules on ThinkAdvisor.

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