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IMA Wellness Blog

Claims and Appeals Procedures for Employee Benefit Plans

an excerpt from an original article by Horton Group

Horton Group is an IMA B2B Partner
GROUP HEALTH PLANS

  • Must comply with DOL regulations on benefit claims and appeals
  • Additional requirements apply to non-grandfathered health plans
  • Rules require that plans make claims and appeals decisions within specific time frames and provide certain information to claimants

HEALTH PLAN CLAIM DEADLINES

  • 72 hours for urgent care claims
  • 15 days for pre-service claims
  • 30 days for post-service claims

Links and Resources

  • DOL regulations on claims procedures
  • Final regulations under the Affordable Care Act (ACA) regarding claims procedures for non-grandfathered group health plans
  • Final regulations on claims procedures for disability benefits (effective April 2, 2018)

Department of Labor (DOL) regulations require employee benefit plans to establish and maintain reasonable procedures for filing benefit claims and appeals, making claims and appeals decisions, and notifying claimants of benefit decisions. These regulations govern all employee benefit plans covered by the Employee Retirement Income Security Act (ERISA), with special rules for group health plans and plans providing disability benefits.

What is a disability benefit?

A benefit is considered a “disability benefit” if the claimant has to be disabled in order to obtain the benefit. It does not matter how the benefit is characterized or whether the plan as a whole is a retirement plan or a welfare plan. If the claims adjudicator must make a determination of disability in order to decide a claim, the claim must be treated as a disability claim for purposes of the DOL’s claims procedures.

To be reasonable, an employee benefit plan’s claims procedures must satisfy specific requirements, including:

  • Complying with deadlines for issuing claims decisions and making appeals determinations;
  • Containing safeguards to ensure that claims decisions are made according to plan documents and that plan rules are applied consistently; and
  • Not interfering with the initiation or processing of claims.

This Compliance Overview summarizes key provisions of the claims and appeals procedures for employee benefit plans.

GENERAL RULES

Every employee benefit plan must establish and maintain reasonable claims and appeals procedures. To be reasonable, the procedures must comply with the deadlines and other requirements discussed below. In addition, the procedures must:

  • Be included in the plan’s summary plan description (SPD);
  • Not interfere with the initiation or processing of claims (for example, requiring payment of a fee for filing a claim or appeal would be prohibited);
  • Permit a claimant’s authorized representative to act on the claimant’s behalf in pursuing a claim or appeal (however, a plan can generally establish its own procedures for determining whether a person has been authorized to act on behalf of a claimant); and
  • Contain safeguards to ensure that claims decisions are made according to governing plan documents and that plan rules are applied consistently to similarly situated claimants.

If a plan does not establish or follow reasonable claims procedures, a claimant will be deemed to have exhausted the administrative remedies available under the plan and is entitled to bring suit against the plan under ERISA. As a general rule, if a non-grandfathered group health plan or issuer does not strictly comply with the plan’s claims and appeals procedures, a claimant may pursue other legal remedies without exhausting the plan’s administrative process. This strict compliance standard also applies to claims for disability benefits.

MAXIMUM TIME PERIOD TO ISSUE CLAIM DECISIONS

Group Health Plans

A group health plan must take into account any medical exigencies and/or the claimant’s medical circumstances when resolving claims. At the latest, a plan must render decisions within:

  • 72 hours for urgent care claims;
  • 15 calendar days* for pre-service claims (pre-authorizations);
  • 30 calendar days* for claims for services rendered;
  • 72 hours for urgent care claims on appeal;
  • 30 calendar days for pre-service claims on appeal; and • 60 calendar days for claims for services rendered on appeal.

New rules for disability benefits: Employee benefit plans must comply with new procedural requirements for disability benefit claims, effective for claims submitted after April 1, 2018. The new requirements are intended to make the procedural protections for disability benefit claims more consistent with those for group health plan claims.

*The regulations allow a group health plan one 15-day extension for initial claim determinations (not including urgent care). The extension may be used when reasons beyond the plan’s control require additional time to make a claim determination. 

Disability Benefits

A plan that provides disability benefits must resolve claims within:

  • 45 calendar days* for initial claims; and
  • 45 calendar days* for claims on appeal.

*When reasons beyond the plan’s control require an extension, the regulations allow a disability plan two 30-day extensions for initial claims, and one 45-day extension for claims on appeal. The plan is required to provide the claimant with notice that the extension is needed prior to the expiration of the initial time period. The notice must also contain details regarding the reason for the extension. 

All Other Plans

All other plans must notify claimants of a denial within:

  • 90 days* for initial claims; and
  • 60 days* for claims on appeal.

*If special circumstances require more time to process the claim, one extension is permitted (90 days for initial claims and 60 days for appeals). The claimant must be given written notice of the extension before the end of the first 60- or 90-day period. The notice must include an explanation of the special circumstances and the date a decision is expected to be made.

 

To view the original article in its entirety, click here.

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