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New ERISA rules raise standards for insurer LTD claim processing

Are you an employee or professional in Northern California who is covered by an employer-sponsored long-term disability insurance plan? 

If so, you might reasonably harbor some concerns regarding your benefits program administered, in theory, in compliance with the federal law known as ERISA. ERISA imposes procedural requirements on insurers and claims administrators when they process LTD claims. ERISA standards are intended to make the process fairer for claimants.

Worries about how your LTD plan is administered are understandable. Perhaps a co-worker battling a long-term disability is facing stark challenges from your plan's fiduciary or insurance provider that strike you as being unfair and even in bad faith. 

Alternatively, maybe you yourself recently suffered the denial of LTD benefits on a basis that seems unreasonable or even so unclearly expressed that you do not know how to respond. 

Many employees covered by ERISA plans are overwhelmed by both LTD policy language that is hyper-technical and claim outcomes that seem unjust. In many instances, a hide-the-ball mentality and anti-worker bias seem clear. 

Good news. New regulations issued by the U.S. Department of Labor raise the standards and tighten the procedures with which insurers and claims administrators must comply when processing LTD claims in ERISA-governed plans. Workers who are suffering with disabling conditions at the same time as they are fighting with claims administrators now effectively have more rights and remedies throughout the process. 

Moreover, they can now more easily spotlight wrongful behavior that undermines their rights and reasonable expectations regarding insurer behavior. 

What has changed concerning employer-sponsored disability plans? 

For starters, April 1 ushered in a host of claimant-friendly procedures that the LTD insurer or claims administrator must scrupulously follow in processing every LTD claim, particularly if issuing a denial. Importantly, a claimant will now have the benefit of a vastly sped-up court review process in instances where the new rules are ignored or not followed precisely. 

What new procedural protections now exist for denied LTD claims? 

U.S. Department of Labor rules going forward offer enhanced safeguards to affected individuals, including protections that: 

  • Ensure claims are adjudicated by individuals who are independent and impartial
  • Improve disclosure requirements, including a claimant’s right to receive upon request the insurance company’s entire file it created for the claim
  • Require the plan to notify the claimant of any new or additional information that the claims administrator will rely upon to deny a claim on appeal 

This notification must be done prior to the actual denial in order to give the claimant a reasonable time to respond to any new evidence before the denial is issued. 

If the plan administrator fails to comply with the new rules for any disability claim filed on or after April 1, it will be deemed that the claimant has already exhausted all administrative remedies under the plan — meaning they can go straight to court and file a lawsuit. 

Claimants in insurance matters often face stark challenges as they pursue legitimate claims, a reality that can be especially trying for injured or ill workers. 

It should be heartening for LTD claimants under ERISA plans to know that beefed-up safeguards now exist to help protect them when they encounter rejection. The improved regulations are meant to bring more fundamental fairness to the LTD claims process.

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