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This Checklist describes the claims and appeals procedures for disability claims under ERISA and the Department of Labor regulations. The Checklist explains the requirements for written claims procedures, the process for a disability claim, and the manner, timing and content of the initial and appeal decision notices.
Under Section 503 of the Employee Retirement Income Security Act of 1974 (ERISA) (www.practicallaw.com/0-382-3434), employee benefit plans (www.practicallaw.com/6-502-2678) must establish and follow reasonable claims procedures. Final regulations issued by the Department of Labor (www.practicallaw.com/2-501-6354) (DOL) set out the requirements that these procedures must satisfy to be deemed reasonable (see DOL Reg. § 2560.503-1). This checklist addresses the claims procedure requirements under the DOL claims regulations for disability claims, which generally include benefits or rights that are contingent on a finding of the claimant’s disability. A companion resource addresses the requirements for group health plans (see Claims Procedure Requirements for Group Health Plans Checklist (www.practicallaw.com/7-506-1834)).
The DOL claims procedure regulations do not define what is a disability claim subject to the regulations. However, the following rules govern whether disability benefits are subject to the claims regulations' requirements for disability claims:
A benefit is subject to the claims and appeals requirements for disability claims if:
the plan conditions the benefit's availability to the claimant on a showing of disability; and
the claims decisionmaker must make a determination of disability to decide a claim.
This is the case regardless of:
how the plan characterizes the benefit; and
whether the plan as a whole is an employee pension benefit plan (www.practicallaw.com/4-502-2740) or employee welfare benefit plan (www.practicallaw.com/0-502-2681) under ERISA.
If a single plan provides more than one type of benefit, the procedures that apply to a specific claim are determined by the nature of the benefit.
The rules for disability claims do not apply to a claim if:
a required finding of disability is made by a party other than the plan, such as the Social Security Administration; and
the disability finding is made for purposes other than making a benefit determination under the plan.
A plan's claims procedures must be reasonable, which requires that the procedures:
Be in writing.
Comply with the DOL claims regulations, as applicable.
Describe all claims procedures, including any timeframes, in the summary plan description (www.practicallaw.com/6-502-5337).
Not contain provisions or be administered in a way that unduly inhibits benefit claims.
Not prevent the claimant's authorized representative from acting on the claimant's behalf in pursuing a claim or appealing a denial.
Contain administrative procedures and safeguards for applying the procedures consistently and according to plan terms.
Not require the claimant to file more than two claim appeals before filing a lawsuit under Section 502(a) of ERISA, which permits participants to sue the plan to recover denied benefits or enforce rights under the plan.
Not require mandatory arbitration for claim appeals, unless:
the arbitration is one of the two claim appeals permitted under the claims regulations before the claimant can file a lawsuit under Section 502(a) of ERISA, and the arbitration proceedings follow the requirements for these appeals; and
the claimant can challenge the claim denial under Section 502(a) of ERISA or other applicable law.
Plans established and maintained under a collective bargaining agreement (www.practicallaw.com/4-504-1300) (CBA) can be deemed to comply with many provisions of the claims procedure requirements if the CBA pursuant to which the plan is established or maintained sets out or incorporates by reference specific types of claims procedures (see DOL Reg. § 2560.503-1(b)(6)).
Disability claims can generally be processed in four steps:
Filing of claim by claimant (see Timing of Initial Decision Notice).
Initial decision by plan.
Appeal by claimant (see Appeal Denials).
Decision on appeal by plan.
A plan must notify claimants of its claim decision within:
a reasonable period; and
at most 45 days after the plan receives the claim.
The deadline for making claims decisions is calculated starting when the claim was filed, even if all information needed to make a claims decision is not included with the filing.
A plan may have two extensions of up to 30 days each if:
matters beyond the plan's control occur (for example, a natural disaster); and
the claimant is notified of the extension before the original deadline.
The extension notice must specify:
the reason for the extension;
the date when the plan expects to make the initial decision;
the standards governing entitlement to a benefit;
any unresolved issues that prevent a decision on the claim; and
additional information the plan needs to resolve those issues. The claimant must be given at least 45 days to provide the information.
If a deadline is extended because the claimant did not submit the information necessary to decide the claim, the period for making the decision is tolled from the date the extension notice is sent until the claim responds with additional information (see Practice Note, DOL Safe Harbor for Electronic Disclosure of Plan Information (www.practicallaw.com/6-513-5468)).
Claim decisions must be in either written or electronic form.
A claim denial notice must be calculated to be understood by the claimant and must include:
Specific reason(s) for the denial.
A reference to the specific plan provisions on which the denial was based.
A description of:
additional information needed from the claimant; and
why the information is needed.
A description of the plan's appeal procedures and deadlines.
A statement of the claimant's right to sue under Section 502(a) of ERISA following a denial on appeal.
If an internal rule was relied on to make the decision, either a:
copy of the internal rule; or
statement that this information is available for free on request.
If the decision was based on medical necessity or experimental treatment, either:
an explanation of the scientific or clinical judgment relied on, applying the plan terms to the claimant's medical circumstances; or
a statement that this information is available for free on request.
A plan's claims procedures should specify how claimants will be notified of appeal decisions and what information the notice must contain.
Plans must provide claimants with a full and fair review of a claim denial that includes the following requirements:
After notice of denial, claimants must have at least 180 days to file an appeal.
An opportunity to submit written comments and documents on the claim.
Access to and copies of all relevant records for free on request. A record is relevant if it:
was relied on in making the claim decision;
was submitted, considered or generated in making the decision;
demonstrates compliance with the plan's procedural and administrative safeguards (see Requirements for Reasonable Claims Procedures); or
is a policy statement on how the plan handles treatment claims for the claimant's diagnosis.
A review that considers all submitted information.
A review that provides no deference to the initial decision.
An appropriate named fiduciary of the plan to conduct the appeal, who may not be:
the person who made the initial decision; or
the subordinate of that person.
For medical judgment cases, including decisions about whether a treatment or drug is experimental, investigational or not medically necessary, consultation with a health care professional who:
has appropriate training and experience in the area of medicine involved;
was not consulted during the initial denial; and
is not a subordinate of the person who made the initial denial.
The identity of the medical or other experts who were consulted when making the initial benefit denial.
A plan must notify claimants of its appeal decision within:
a reasonable period; or
at most 45 days after the plan receives the claim.
Unless the plan is a multiemployer plan (www.practicallaw.com/2-501-5694) (see Multiemployer Plan Exception), the plan may have one 45-day extension if:
there are special circumstances; and
written notice is provided to the claimant before the first 45-day deadline.
The extension notice must specify in writing:
the special circumstances requiring an extension; and
the date when the plan expects to make the appeal decision.
The deadline for making appeal decisions is calculated starting when the appeal was filed, even if all information needed to make an appeal decision is not included in the filing. If the deadline is extended because the claimant did not submit the information necessary to decide the claim, the period for making the decision is tolled from the date the extension notice is sent until the claimant responds with additional information (see Practice Note, DOL Safe Harbor for Electronic Disclosure of Plan Information (www.practicallaw.com/6-513-5468)).
The 45-day appeal denial notice deadline does not apply if the plan:
is a multiemployer plan;
designates a committee or board of trustees as the named fiduciary; and
the fiduciary holds meetings at least quarterly.
The multiemployer plan must:
make an appeal decision on the claimant's request for review no later than the next meeting after the plan receives the request for review; and
notify the claimant of the decision as soon as possible, but no later than five days after making the appeal decision.
The plan may make an appeal decision on the claimant's request for review after the next meeting if:
the review request is filed within 30 days before the meeting, in which case the deadline is the second meeting after the plan received the review request;
there are special circumstances, in which case the deadline is the third meeting following the plan's receipt of the review request; and
the plan notifies the claimant of the decision as soon as possible, but no later than five days after making the appeal decision.
In the case of an extension due to special circumstances, the plan administrator must notify the claimant of the extension before the extension begins. The extension notice must specify in writing:
the reason for the extension; and
the date when the plan expects to make the appeal decision.
Notice of appeal review decisions must be written or electronic in a manner that is designed to be understood by the claimant (see Practice Note, DOL Safe Harbor for Electronic Disclosure of Plan Information (www.practicallaw.com/6-513-5468)). An appeal denial notice must contain:
The specific reason(s) for the denial.
A reference to the specific plan provisions on which the appeal denial was based.
A statement that the claimant may receive on request all relevant records for free. A record is relevant if it:
was relied on in making the appeal decision;
was submitted, considered or generated in making the appeal decision;
demonstrates compliance with the plan's procedural and administrative safeguards (see Requirements for Reasonable Claims Procedures); or
is a policy statement on how the plan handles treatment claims for the claimant's diagnosis.
A description of the plan's voluntary procedures and deadlines, if any.
A statement of the claimant's right to sue under Section 502(a) of ERISA.
If an internal rule was relied on to make the decision, either a:
copy of the internal rule; or
statement that the information is available for free on request.
For cases involving medical necessity or experimental treatment, either:
an explanation of the scientific or clinical judgment for the decision, applying the plan's terms to the claimant's medical circumstances; or
a statement that the explanation will be provided for free on request.
The following statement: "You and your plan may have other voluntary alternative dispute resolution options, such as mediation. One way to find out what may be available is to contact your local U.S. Department of Labor Office and your State insurance regulatory agency."
Some plans allow claimants to file voluntary appeals after completing a plan's mandatory appeal procedures. If a plan offers voluntary appeals, the claims procedures must provide that:
The plan waives any right to assert that the claimant failed to exhaust administrative remedies if the claimant chooses not to submit the claim to the plan's voluntary appeal procedures.
Any statute of limitations that applies to the claimant's filing a court claim during the voluntary appeal process will be suspended.
Voluntary appeals are allowed only after the claimant has completed all the mandatory appeal levels.
Provide the claimant, on request, with sufficient information to make an informed judgment about whether to file a voluntary appeal, including:
a statement that the claimant's decision of whether to submit a claim to the voluntary level of appeal has no effect on the claimant's rights to other benefits under the plan;
information about the appeals rules;
the claimant's right to representation;
the process for selecting the decisionmaker; and
the circumstances, if any, that may affect the decisionmaker's impartiality.
Not require the claimant to pay fees or costs as part of the voluntary appeal process.
The claims regulations include a special preemption rule under which additional procedures under state insurance law can apply to insured plans.
The claims regulations do not supersede any additional, insurance-related procedures under state law, unless the state law prevents the plan from following the regulations.
State law may include review procedures to resolve claim denial disputes, However, these review procedures must not be conducted by the:
insurer;
plan;
plan fiduciary;
employer; or
employee or agent of any of the above.
Claimants do not need to exhaust insurance-related state law external review procedures before filing a claim under Section 502(a) of ERISA.