Compliance Assistance 
Group Health and Disability Plans 
Benefit Claims Procedure Regulation
(29 CFR 2560.503-1)
The claims procedure regulation (29 CFR 2560.503-1) provides minimum
procedural requirements for the processing of benefit claims for all employee
benefit plans covered under the Employee Retirement Income Security Act of 1974
(ERISA). While the regulation applies to the claims procedures for retirement, group
health, disability and other welfare plans, the standards are different for the various
plans. This publication answers frequently asked questions about the application of
the regulation to group health and disability benefit plans.
Note: The Affordable Care Act (ACA) provides additional health protections. This
publication does not reflect the provisions of the Affordable Care Act. For more
information, visit the Employee Benefits Security Administrations ACA web page
at www.dol.gov/ebsa/healthreform.
A. Scope of the Regulation
The following questions and answers generally relate to whether, and under what
circumstances, the rules governing the processing of group health and disability
claims apply to a specific type of benefit or arrangement.
Q-A1: Does the regulation apply to benefit claims filed by enrollees
in Federal programs, such as Medicare and Medicaid, or to Federal
employees and their families covered under the Federal Employees
Health Benefits Program (FEHBP)?
A: No. The regulation establishes requirements only for employee benefit plans
that are covered under ERISA. (See ERISA sections 3(1) and 3(2).) Such plans are
typically benefit programs provided by private-sector employers for their employees
(or by unions, acting either independently or jointly with employers, for their
members). Government programs, whether Federal, State, or local, that are not
related to employment, such as Medicaid and Medicare, are not covered by these
claims procedure rules; neither are government-sponsored benefit programs for
governmental employees, such as the FEHBP or benefit plans provided by State
or local governments to their own employees. Such plans have their own specific
rules for claims procedures, which may derive from other Federal law (for Federal
programs) or from State or local law.
U.S. Department of Labor, Employee Benefits Security Administration (EBSA) Q-A2: Does the regulation apply to benefit claims filed by persons who are both
enrollees in Medicare + Choice programs and participants in an ERISA plan?
A: The regulation applies only to benefits provided under an ERISA plan that are outside the
scope of what is regulated by the Medicare program. Benefits provided under ERISA plans
vary from plan to plan based on plan design. When a benefit is provided under an ERISA plan
pursuant to a separate group arrangement between the Medicare + Choice organization and the
employer (or employee organization), even though the benefit is only available to enrollees in
a Medicare + Choice program, we have been advised by the Department of Health and Human
Services that the benefit would be outside the scope of what is regulated by the Medicare
program. Claims for such benefits would be subject to the provisions of the regulation. The
primary source of information about these ERISA benefits is the summary plan description for
the plan, which is available on request from the plan administrator. On the other hand, benefits
that are covered under a Medicare + Choice contract (whether they are Medicare benefits,
additional benefits paid for by Medicare, or supplemental benefits paid for through a
premium charged to all enrollees) are subject to the Medicare + Choice rules for organization
determinations, appeals, and grievances under 42 CFR 422 and not the provisions of the
regulation. (See Q-A1.) A person who is covered by a Medicare + Choice program and wants
more information on how these Medicare + Choice rules apply to his or her coverage should
call 1-800-Medicare. He or she may also want to consult his or her Medicare Regional Office,
and 1-800-Medicare can assist him or her in contacting the appropriate office.
Q-A3: Does the regulation apply to a request for a determination whether an
individual is eligible for coverage under a plan?
A: The regulation applies to coverage determinations only if they are part of a claim for
benefits. The regulation, at  2560.503-1(e), defines a claim for benefits, in part, as
a request for a plan benefit or benefits made by a claimant in accordance with a plans
reasonable procedure for filing benefit claims. A claim for group health benefits includes
preservice claims ( 2560.503-1(m)(2)) and postservice claims ( 2560.503-1(m)(3)).
If an individual asks a question concerning eligibility for coverage under a plan without
making a claim for benefits, the eligibility determination is not governed by the claims
procedure rules. If, on the other hand, the individual files a claim for benefits in accordance
with the plans reasonable procedures, and that claim is denied because the individual is not
eligible for coverage under the plan, the coverage determination is part of a claim and must
be handled in accordance with the claims procedures of the plan and the requirements of
the regulation. (See 65 FR at 70255.)
Q-A4: Does the regulation apply to a request for prior approval of a benefit or
service when such prior approval is not required under the terms of the plan?
A: No. If the plan does not require prior approval for the benefit or service with respect
to which the approval is being requested, the request is not a claim for benefits ( 2560.503-
1(e)) governed by the regulation. The regulation defines preservice claim by reference to
2 the plans requirements, not the claimants decision to seek the medical care, nor the doctors
decision to provide care. Thus, in the absence of any plan requirement for prior approval,
mere requests for advance information on the plans possible coverage of items or services
or advance approval of covered items or services do not constitute preservice claims under
the regulation. (See  2560.503-1(m)(2).)
Q-A5: Is a plan required to treat all questions regarding benefits as claims for
benefits under the plan?
A: No. The regulation does not govern casual inquiries about benefits or the circumstances
under which benefits might be paid under the terms of a plan. On the other hand, a group
health plan that requires the submission of preservice claims, such as requests for pre-
authorization, is not entirely free to ignore preservice inquiries where there is a basis for
concluding that the inquirer is attempting to file or further a claim for benefits, although not
acting in compliance with the plans claim filing procedures. In such a case, the regulation
requires the plan to inform the individual of his or her failure to file a claim and the proper
procedures to be followed. Specifically, this type of notification is required where there is a
communication by a claimant or authorized representative (e.g., attending physician) that is
received by a person or organizational unit customarily responsible for handling benefit matters
(e.g., personnel office) and that communication names the specific claimant, specific medical
condition or symptom, and a specific treatment, service, or product for which approval is
requested. Under the regulation, notice must be furnished as soon as possible, but not later
than 24 hours in the case of urgent care claims or 5 days in the case of nonurgent claims.
Notice may be oral, unless a written notification is requested. (See  2560.503-1(c)(1).)
Q-A6: Do the requirements applicable to group health plans apply to dental
benefits offered as a stand-alone plan or as part of a group health plan?
A: Yes, in both cases. The regulation defines group health plan as an employee welfare
benefit plan within the meaning of ERISA section 3(1) to the extent that such plan provides
medical care within the meaning of section 733(a) of ERISA. (See  2560.503-1(m)(6).)
Section 733(a)(2) defines medical care, in part, to mean the diagnosis, cure, mitigation,
treatment, or prevention of disease, or amounts paid for the purpose of affecting any structure
or function of the body. Accordingly, for purposes of the claims procedure rules, the provision
of dental benefits, either as part of a larger welfare plan, or as a stand-alone plan, would be
subject to the requirements of the regulation applicable to group health plans.
Q-A7: Do the requirements applicable to group health plans apply to prescription
drug benefit programs offered as a stand-alone plan or as part of a group health
plan?
A: Yes, in both cases. Prescription drug benefits would, like dental benefits, constitute
medical care within the meaning of Section 733(a)(2). (See Q-A6.) Accordingly,
the provision of prescription drug benefits, either as a stand-alone plan, or as part of a group
3 health plan, would be subject to the requirements of the regulation applicable to group health
plans. Whether, and under what circumstances, specific practices permitted under the plan,
such as the submission of a prescription to a pharmacy or pharmacist, will constitute a claim
for benefits governed by the claims procedure rules will depend on the terms of the plan.
Q-A8: Do the requirements applicable to group health plans apply to contractual
disputes between health care providers (e.g., physicians, hospitals) and insurers or
managed care organizations (e.g., HMOs)?
A: No, provided that the contractual dispute will have no effect on a claimants right to
benefits under a plan. The regulation applies only to claims for benefits. (See Q-A3, Q-A4, and
Q-A5.) The regulation does not apply to requests by health care providers for payments due
them  rather than due the claimant  in accordance with contractual arrangements between
the provider and an insurer or managed care organization, where the provider has no recourse
against the claimant for amounts, in whole or in part, not paid by the insurer or managed care
organization.
The following example illustrates this principle. Under the terms of a group health plan,
participants are required to pay only a $10 copayment for each office visit to a preferred
provider doctor listed by a managed care organization that contracts with such doctors. Under
the preferred provider agreement between the doctors and the managed care organization,
the doctor has no recourse against a claimant for amounts in excess of the copayment. Any
request by the doctor to the managed care organization for payment or reimbursement for
services rendered to a participant is a request made under the contract with the managed care
organization, not the group health plan; accordingly, the doctors request is not a claim for
benefits governed by the regulation.
On the other hand, where a claimant may request payments for medical services from a plan,
but the medical provider will continue to have recourse against the claimant for amounts
unpaid by the plan, the request, whether made by the claimant or by the medical provider (e.g.,
in the case of an assignment of benefits by the claimant) would constitute a claim for benefits
by the claimant. For information on authorized representatives of claimants, see Q-B1, Q-B2,
and Q-B3.
Q-A9: What benefits are disability benefits subject to the special rules applicable
under the regulation for disability claims?
A: A benefit is a disability benefit under the regulation, subject to the special rules for
disability claims, if the plan conditions its availability to the claimant upon a showing of
disability. It does not matter how the benefit is characterized by the plan or whether the
plan as a whole is a pension 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 regulation. As the Department stated in the preamble
to the regulation, 65 FR at 70247, n.4, where a single plan provides more than one type
4 of benefit, it is the Departments intention that the nature of the benefit should determine
which procedural standards apply to a specific claim, rather than the manner in which the
plan itself is characterized. Accordingly, plans, including pension plans, that provide
benefits conditioned upon a determination of disability must maintain procedures for claims
involving such benefits that comply with the requirements of the regulation applicable to
disability claims, including the requirements for de novo review, the consultation require-
ment for medical judgments, the limit on appeal levels, the time limits for deciding disability
claims, and the disclosure requirements in connection with extensions of time.
However, if a plan provides a benefit the availability of which is conditioned on a finding
of disability, and that finding is made by a party other than the plan for purposes other than
making a benefit determination under the plan, then the special rules for disability claims
need not be applied to a claim for such benefits. For example, if a pension plan provides
that pension benefits shall be paid to a person who has been determined to be disabled by
the Social Security Administration or under the employers long-term disability plan, a claim
for pension benefits based on the prior determination that the claimant is disabled would be
subject to the regulations procedural rules for pension claims, not disability claims.
Q-A10: Do the timeframes in these rules govern the time within which claims must
be paid?
A: No. While the regulation establishes timeframes within which claims must be decided, the
regulation does not address the periods within which payments that have been granted must be
actually paid or services that have been approved must be actually rendered. Failure to provide
services or benefit payments within reasonable periods of time following plan approval,
however, may present fiduciary responsibility issues under Part 4 of title I of ERISA.
Q-A11: When a group health plan participant presents a prescription to a pharmacy
to be filled at a cost to the participant determined by reference to a formula or
schedule established in accordance with the terms of such plan and with respect
to which the pharmacy exercises no discretion on behalf of the plan, does the
regulation require that the presentation of the prescription be treated as a claim for
benefits?
A: No. As indicated in Q-A7, whether, and under what circumstances, specific practices
permitted under a plan, such as the presentation of a prescription to a pharmacy, will constitute
a claim for benefits governed by the claims procedure rules will depend on the terms of the
plan. In this regard, a claim for benefits is defined in  2560.503-1(e) to mean a request for
a plan benefit or benefits made by a claimant in accordance with a plans reasonable procedure
for filing benefit claims. Accordingly, whether, and to what extent, the presentation of a
prescription to a pharmacy which exercises no discretion on behalf of the plan will constitute
a request for a plan benefit will be determined by reference to the plans procedure for filing
benefit claims.
5 It is not uncommon for group health plans to have arrangements with preferred or network
providers (e.g., doctors, physical therapists, pharmacies, optometrists) to provide medical
care-related services or products at a predetermined cost to covered plan participants and with
respect to which the providers exercise no discretion on behalf of the plan. It is the view of the
Department that neither the statute nor the claims procedure regulation requires that a plan treat
interactions between participants and preferred or network providers under such circumstances
as a claim for benefits governed by the regulation. Moreover, if the pharmacy refuses to fill
the prescription absent payment of the entire cost by the participant, the regulation does not
require that this refusal be treated as an adverse benefit determination under the regulation.
It should be noted, however, that where a plan provides such benefits the plan must maintain a
reasonable procedure, in accordance with the regulation, for processing claims of participants
relating to such benefits.
Q-A12: Does the regulation apply to benefit claims filed by participants in top
hat plans, e.g., plans that are unfunded and maintained primarily for the purpose
of providing deferred compensation for a select group of management or highly
compensated employees?
A: Yes. The regulation establishes requirements for all employee benefit plans that are covered
under Part 5 of ERISA, which would include top hat plans. Certain top hat plans are
specifically excluded from parts of ERISA (see, e.g., sections 201(2); 301(a)(3); 401(a)(1)),
but that exclusion does not apply to section 503, under which the regulation was promulgated.
In this regard, paragraph (b)(2) of the regulation requires that a description of the plans
claims procedures must be included as part of the plans summary plan description meeting
the requirements of 29 CFR  2520.102-3. Where a top hat plan is not required to furnish
summary plan descriptions, pursuant to 29 CFR  2520.104-23 or 2520.104-24, such plan
may satisfy the requirements of paragraph (b)(2) of the regulation by taking steps reasonably
designed to ensure that participants in such plans are made aware of the existence of the plans
claims procedures in conjunction with enrollment in the plan and how to obtain such pro-
cedures upon request.
Q-A13: Would a determination of disability for purposes of receiving a premium
waiver under a contributory life insurance plan be governed by the special rules
applicable to disability benefits under the claims procedure regulation?
A: Yes. A benefit is a disability benefit under the regulation, subject to the special rules
for disability claims, if the plan conditions availability of the benefit on a showing of
disability. As noted in Q-A9, however, if a plan provides a benefit the availability of which is
conditioned on a finding of disability, and that finding is made by a party other than the plan
for purposes other than making a benefit determination under the plan, then the special rules
for disability claims need not be applied to a claim for such benefits. The Department notes
that the inclusion of a premium waiver in a plan that is not otherwise covered by ERISA would
not, in and of itself, cause the plan to become subject to the regulation.
6 B. Reasonable Procedures   2560.503-1(b)
The regulation requires that every employee benefit plan establish and maintain reasonable
procedures governing the claims process. Procedures will be deemed reasonable only if
they satisfy certain requirements. The following questions and answers relate to some of the
requirements for a reasonable claims procedure.
Q-B1: May a plan require that a claimant complete and file a form identifying any
person authorized to act on his or her behalf with respect to a claim?
A: Yes, with one exception. The regulation provides that a reasonable claims procedure may
not preclude an authorized representative of a claimant from acting on behalf of a claimant
with respect to a benefit claim or appeal of an adverse benefit determination. The regulation
also provides, however, that a plan may establish reasonable procedures for determining
whether an individual has been authorized to act on behalf of the claimant. Completion of
a form by the claimant identifying the authorized representative would be one method for
making such a determination.
The one exception is where a claim involves urgent care. In such instances, a plan must,
without regard to the plans procedures for identifying authorized representatives, permit a
health care professional with knowledge of the claimants medical condition (e.g., a treating
physician) to act as the authorized representative of the claimant. This exception is intended to
enable a health care professional to pursue a claim on behalf of a claimant under circumstances
where, for example, the claimant is unable to act on his or her own behalf. (See  2560.503-
1(b)(4).)
Q-B2: Does an assignment of benefits by a claimant to a health care provider
constitute the designation of an authorized representative?
A: No. An assignment of benefits by a claimant is generally limited to assignment of the
claimants right to receive a benefit payment under the terms of the plan. Typically, assign-
ments are not a grant of authority to act on a claimants behalf in pursuing and appealing a
benefit determination under a plan. In addition, the validity of a designation of an authorized
representative will depend on whether the designation has been made in accordance with the
procedures established by the plan, if any.
Q-B3: When a claimant has properly authorized a representative to act on his
or her behalf, is the plan required to provide benefit determinations and other
notifications to the authorized representative, the claimant, or both?
A: Nothing in the regulation precludes a plan from communicating with both the claimant
and the claimants authorized representative. However, it is the view of the Department that,
for purposes of the claims procedure rules, when a claimant clearly designates an authorized
7 representative to act and receive notices on his or her behalf with respect to a claim, the plan
should, in the absence of a contrary direction from the claimant, direct all information and
notifications to which the claimant is otherwise entitled to the representative authorized to act
on the claimants behalf with respect to that aspect of the claim (e.g., initial determination,
request for documents, appeal, etc.). In this regard, it is important that both claimants and plans
understand and make clear the extent to which an authorized representative will be acting on
behalf of the claimant.
Q-B4: What kind of administrative processes and safeguards must a plan have
in place to ensure and verify appropriately consistent decisionmaking?
A: The Department did not intend to prescribe any particular process(es) or safeguard(s)
to ensure and verify consistent decisionmaking by plans. To the contrary, the Department
intended to preserve the greatest flexibility possible for designing and operating claims
processing systems consistent with the prudent administration of a plan. The Department
believes that prudent plan administration requires ensuring that similarly situated claims
are, under similar circumstances, decided in a consistent manner. Consistency in the benefit
claims determinations might be ensured by applying protocols, guidelines, criteria, rate tables,
fee schedules, etc. Consistent decisionmaking might be ensured and verified by periodic
examinations, reviews, or audits of benefit claims to determine whether the appropriate
protocols, guidelines, criteria, rate tables, fee schedules, etc. were applied in the claims
determination process. (See  2560.503-1(b)(5).)
Q-B5: For purposes of furnishing relevant documents to a claimant, what kind
of disclosure is required to demonstrate compliance with the administrative
processes and safeguards required to ensure and verify appropriately consistent
decisionmaking in making the benefit determination?
A: The documents required to be disclosed will depend on the particular processes and
safeguards that a plan has established and maintains to ensure and verify appropriately
consistent decisionmaking. (See 65 FR at 70252.) The Department does not anticipate new
documents being developed solely to comply with this disclosure requirement. Rather, the
Department anticipates that claimants who request this disclosure will be provided with what
the plan actually used, in the case of the specific claim denial, to satisfy this requirement. The
plan could, for example, provide the specific plan rules or guidelines governing the application
of specific protocols, criteria, rate tables, fee schedules, etc. to claims like the claim at issue,
or the specific checklist or cross-checking document that served to affirm that the plan rules or
guidelines were appropriately applied to the claimants claim. Plans are not required to disclose
other claimants individual records or information specific to the resolution of other claims in
order to comply with this requirement. (See  2560.503-1(m)(8)(iii). Also see question
Q-D12.)
8 Q-B6: Do the regulations limits on the use of predispute arbitration extend to other
actions that a participant or beneficiary might pursue with regard to a health care
provider or other person or entity?
A: No. The regulation is intended to regulate predispute arbitration only with respect to group
health and disability benefits provided under ERISA-covered plans. The regulation is not
intended to affect the enforceability of a predispute arbitration agreement with respect to any
other claims or disputes. Accordingly, the regulation should not be read to affect the obligation
of a participant or beneficiary to arbitrate such other claims and disputes within the scope of
the arbitration agreement. (See 29 CFR  2560.503-1(c)(3)(iii).)
C. Initial Benefit Determinations   2560.503-1(f) and (g)
The following questions relate to the timing and notification requirements applicable to the
initial (or first-level) determination of a benefit claim.
Q-C1: When does the time period for making an initial decision on a claim begin
to run?
A: The time for making an initial claims decision begins to run when the claim is filed in
accordance with a plans reasonable filing procedures, regardless of whether the plan has
all of the information necessary to decide the claim at the time of the filing.
For purposes of calculating the time period within which a claim must be decided, a plan
cannot extend the time period by treating as filed only those claims with respect to which
all the information necessary to make a decision has been submitted (often referred to as
clean claims). (See  2560.503-1(f)(4).)
Q-C2: May a plans claims procedures require claimants to submit relevant medical
information or information relating to coordination of benefits prior to the plans
making a decision on a claim?
A: Plans have considerable flexibility in defining the procedures to be followed for the
initiation, processing, and appeal of benefit claims. However, while plans may require the
submission of specific information necessary to a benefit determination under the terms of the
plan, including medical and coordination of benefit information, the plan may nonetheless
have to make a decision on the claim before receiving such information. As noted in Q-C1,
the time periods applicable to deciding claims begin to run on the date a claim is filed
in accordance with reasonable procedures of the plan, without regard to whether all the
information necessary to make a benefit determination accompanies the filing.
(See  2560.503-1(f)(4).)
9 Q-C3: If the period within which a group health claim must be decided is ending
and the claimant has yet to furnish all the information necessary to decide the
claim, may the plan extend the time period for deciding the claim and, if so, for
how long?
A: In general, a group health plan may unilaterally extend the decisionmaking on both pre-
service and postservice claims for 15 days after the expiration of the initial period if the
administrator determines that such an extension is necessary for reasons beyond the control
of the plan. There is no provision for extensions in the case of claims involving urgent care.
If the reason for taking the extension is the failure of the claimant to provide information
necessary to decide the claim, and the claimant is so notified of this fact, the time period for
making the decision is suspended (tolled) from the date of the notification to the claimant to
the earlier of: (1) the date on which a response from the claimant is received by the plan; or
(2) the date established by the plan for the furnishing of the requested information (at least 45
days).
The extension period (15 days)  within which a decision must be made by the plan 
will begin to run from the date on which the claimants response is received by the plan
(without regard to whether all of the requested information is provided) or, if earlier, the
due date established by the plan for furnishing the requested information (at least 45 days).
(See  2560.503-1(f)(2)(iii)(A) and (B); 2560.503-1(f)(4); 2560.503-1(i)(4). Also see 65 FR
at 70250, n.21.)
Q-C4: Many plans, including group health and disability plans, require claimants to
submit to examination by an expert or experts of the plans choosing in connection
with the plans consideration of the claimants claim. How do the regulations time
limits apply to the completion of such examinations?
A: The regulations time limits begin to run when a claim is filed in accordance with the
reasonable procedures of the plan for filing claims. (See Q-C1.) A plan that requires a physical
or other examination of the claimant to evaluate a claim must design a process that provides
for decisionmaking within the timeframes of the regulation.
If necessary, however, in the circumstances of a specific claim, a plan may take an extension
of time to enable the claimant to submit requested information (including the report of a
required examination). The regulations provisions on extensions of time and tolling, discussed
in Q-C3, would apply to these situations to determine when an extension is permitted and
when an extension would begin and end. Under those rules, when a plan takes an extension of
time because additional information must be obtained from a claimant, the claimant must be
provided at least 45 days within which to provide the information or submit to the requested
examination. Plans may, of course, provide claimants longer periods of time for this purpose.
10 Q-C5: May a claimant agree to an extension or further extension of the time period
within which a plan must decide a claim?
A: Yes. The only limits on extensions of time established by the regulation are imposed on
plans. Claimants may voluntarily agree to provide a plan additional time within which to make
a decision on a claim, even under circumstances where the plan could not unilaterally extend
the decisionmaking period, such as in the case of a claim involving urgent care or a claim on
appeal. (See  2560.503-1(f)(2)(i); 2560.503-1(i). Also see 65 FR at 70250, n.21.)
Q-C6: What responsibility does the plan have for determining whether any specific
claim involves urgent care and must, therefore, be decided on an expedited basis?
A: A plan has a duty to make this determination on the basis of the information provided by,
or on behalf of, the claimant. A claim involving urgent care is any claim for medical care or
treatment with respect to which the application of the time periods for making nonurgent care
determinations could seriously jeopardize the life or health of the claimant or the claimants
ability to regain maximum function, or  in the opinion of a physician with knowledge of
the claimants medical condition  would subject the claimant to severe pain that cannot be
adequately managed without the care or treatment that is the subject of the claim.
In determining whether a claim involves urgent care, the plan must apply the judgment of a
prudent layperson who possesses an average knowledge of health and medicine. However, if a
physician with knowledge of the claimants medical condition determines that a claim involves
urgent care, the claim must be treated as an urgent care claim. (See  2560.503-1(m)(1).)
Q-C7: Under the regulation, urgent care claims must be decided as soon as possible,
taking into account the medical exigencies, but not later than 72 hours after receipt,
and preservice claims must be decided within a reasonable period of time appro-
priate to the medical circumstances, but not later than 15 days after receipt. Can
a plans claims procedures require claimants to explain or describe whether, and
what, medical exigencies or medical circumstances exist?
A: Yes. While the Department has indicated that the time periods for decisionmaking are
generally maximum periods and not automatic entitlements, the Department recognizes that
assessments of the appropriate timeframe for making benefit determinations will, in large part,
be dependent on the information provided by the claimant. Requesting specific information
from the claimant regarding whether and what medical circumstances exist that may give rise
to a need for expedited processing of the claim would appear to facilitate claims processing
and, therefore, would not, in the view of the Department, be an unreasonable plan request.
If, on the other hand, the plan believes based on its own review of the claim that expedited
processing is required, it is the view of the Department that the claim must be processed on
an expedited basis without regard to the claimants failure to provide information relating to
whether expedited processing is necessary.
11 Q-C8: If a claimant requests a plan to extend a previously approved course of
treatment, by either increasing the number of treatments or the period of time for
treatments, and that request is determined by the claimants treating physician to
be a claim involving urgent care, within what period must the plan approve or
deny the claimants request?
A: Under the concurrent care provisions of the rule, any request that involves both
urgent care and the extension of a course of treatment beyond the period of time or number
of treatments previously approved by the plan must be decided as soon as possible, taking
into account the medical exigencies, and notification must be provided to the claimant within
24 hours after receipt of the claim, when the request is made at least 24 hours prior to the
expiration of the prescribed period of time or number of treatments. If such a request is not
made at least 24 hours prior to the expiration of the prescribed period of time or number of
treatments, the request must be treated as a claim involving urgent care and decided in accor-
dance with the urgent care claim timeframes, i.e., as soon as possible, taking into account the
medical exigencies, but not later than 72 hours after receipt. (See  2560.503-1(f)(2)(i) and
(ii)(B).)
If a request to extend a course of treatment beyond the period of time or number of treatments
previously approved by the plan does not involve urgent care, the request may be treated as a
new benefit claim and decided within the timeframe appropriate to the type of claim, i.e., as a
preservice claim or a postservice claim. (See  2560.503-1(f)(2)(iii).)
Q-C9: In the case of a group health plans decision to reduce or terminate a
previously approved course of treatment, must claimants be afforded at least 180
days to appeal the plans revised determination before the benefit can be reduced
or terminated?
A: No. Under the concurrent care provisions of the rule, any reduction or termination of a
course of treatment (other than by plan amendment) before the end of the previously approved
period or number of treatments is treated as an adverse benefit determination. In such cases
the rule requires that the plan administrator provide the claimant sufficient advance notice of
the reduction or termination to allow the claimant to appeal and obtain a determination before
the benefit is reduced or terminated. Generally, claimants must be afforded at least 180 days
following an adverse benefit determination to appeal that determination. If the 180 day
rule applied to appeals under concurrent care provisions of the regulations, notifications of
reductions or terminations would, in every instance, have to be given at least 6 months in
advance of the termination or reduction. This was not the intention of the Department. Accor-
dingly, while the Department is of the view that plans must afford claimants a reasonable
period of time within which to develop their appeal of a proposed reduction or termination,
plans are not required to assume that claimants will need the full 180 days to file such an
appeal before the benefit can be reduced or terminated under the special rules governing
concurrent care claims. (See  2560.503-1(f)(2)(ii)(A).)
12 Q-C10: In what circumstances, if any, would a postservice claim be a claim
involving urgent care?
A: Postservice claims are those claims with respect to which plan approval is not a
prerequisite to obtaining medical services and payment is being requested for medical care
already rendered to the claimant. Accordingly, a postservice claim would never constitute
a claim involving urgent care within the meaning of the regulation.
A postservice claim is defined in the regulation as any claim for a benefit under a group health
plan that is not a preservice claim. Preservice claims are those claims with respect to which the
terms of the plan condition receipt of the benefit, in whole or in part, on approval of the benefit
in advance of obtaining medical care. (See Q-C6,  2560.503-1(m)(1), (2), and (3).)
Q-C11: If a claim is determined to involve urgent care when it is initially filed,
must it automatically continue to be treated as urgent if it is denied and the
claimant files an appeal, regardless of whether, at that time, medical services have
actually been provided and the only question to be resolved is who will pay for
such services?
A: No. The nature of a claim or a request for review of an adverse benefit determination
should be judged as of the time the claim or review is being processed. If requested services
have already been provided between the time the claim was denied and a request for review is
filed, the claim no longer involves urgent care because use of the postservice timeframes for
deciding the appeal could not jeopardize the claimants life, health, or ability to regain max-
imum function, or subject the claimant to severe pain. (See  2560.503-1(m)(1).)
Q-C12: If a claimant submits medical bills to a plan for reimbursement or payment,
and the plan, applying the plans limits on copayment, deductibles, etc., pays less
than 100 percent of the medical bills, must the plan treat its decision as an adverse
benefit determination?
A: Under the regulation, an adverse benefit determination generally includes any denial,
reduction, or termination of, or a failure to provide or make payment (in whole or in part) for,
a benefit. In any instance where the plan pays less than the total amount of expenses submitted
with regard to a claim, while the plan is paying out the benefits to which the claimant is
entitled under its terms, the claimant is nonetheless receiving less than full reimbursement
of the submitted expenses. Therefore, in order to permit the claimant to challenge the plans
calculation of how much it is required to pay, the decision is treated as an adverse benefit
determination under the regulation. Providing the claimant with the required notification of
adverse benefit determination will give the claimant the information necessary to understand
why the plan has not paid the unpaid portion of the expenses and to decide whether to
challenge the denial, e.g., the failure to pay in full. This approach permits claimants to
challenge whether, for example, the plan applied the wrong copayment requirement or
13 deductible amount. The fact that the plan believes that a claimants appeal will prove to be
without merit does not mean that the claimant is not entitled to the procedural protections of
the rule. This approach to informing claimants of their benefit entitlements with respect to
specific claims, further, is consistent with current practice, in which Explanation of Benefits
forms routinely describe both payable and nonpayable portions of claim-related expenses.
(See  2560.503-1(m)(4).)
Q-C13: Under what circumstances is a plan required to notify a claimant of
a benefit determination that is not an adverse benefit determination, i.e.,
a complete grant of a claim?
A: In the case of urgent care claims and preservice claims, the regulation requires that
claimants be apprised of the plans benefit determination, whether the determination is
adverse or a complete grant. The rules require that this notification be furnished in accordance
with the timeframes generally applicable to urgent care and preservice claims. There is no
specific notification requirement applicable to postservice claims that are fully granted.
(See  2560.503-1(f)(2)(i) and (iii).)
Q-C14: What information is a plan required to provide when giving notice of a
claim determination that is not adverse (that has been completely granted), in
the case of an urgent care or preservice claim?
A: The regulation does not specify the information that must be provided in notices of benefit
determinations that are not adverse. However, in accordance with the regulations general
requirement of reasonableness, the Department anticipates that such notices will contain
sufficient information to fully apprise the claimant of the plans decision to approve the
requested benefit(s). (See  2560.503-1(f)(2)(i) and (iii)(A).)
Q-C15: When a plan has approved a benefit that will be provided over a period of
time, such as a series of chemotherapy treatments, must the plan notify the claimant
when the benefits end?
A: No. Provided that the plan complied with the regulation in adequately notifying the claimant
regarding the scope of the benefit that was originally approved (e.g., for how long, how many
treatments, etc.) and further provided that the plan has not decided to reduce or terminate
early the course of treatment that was previously approved, the regulation does not require the
plan to provide a formal notification that the course of treatment is coming to an end. (See 
2560.503-1(f)(2)(ii).)
Q-C16: May a notice of an adverse benefit determination generally state that
a rule, guideline or protocol may have been relied upon in making the benefit
determination and satisfy the requirements of the regulation?
A: No. The regulation provides that if an internal rule, guideline, protocol, or similar criterion
was relied upon in making an adverse benefit determination, the notification of the adverse
14 benefit determination must either set forth the rule, guideline, protocol, or criterion or indicate
that such was relied upon and will be provided free of charge to the claimant upon request. It
would be sufficient, in the view of the Department, in such a case, to indicate that an internal
rule, etc., had been relied upon without specifying the identity of the specific rule and that
the specific rule, etc. would be furnished to the claimant upon request. A notice that merely
indicates, however, that a rule, guideline, protocol, or similar criterion may have been relied
upon does not provide the claimant any specific information about the basis on which his or
her claim was decided. Inasmuch as plans will know in every instance what rules, protocols,
guidelines, etc. were relied upon in making a determination, providing an indication whether
such was relied upon should not be difficult. Moreover, the Department is concerned that
the routine inclusion of such statement in all adverse benefit determination notifications may
undermine the significance of the required disclosure. (See  2560.503-1(g)(1)(v)(A).) For
similar reasons, a general statement in an adverse benefit determination notice would not be
considered as satisfying the requirements of  2560.503-1(g)(1)(v)(B). (Also see  2560.503-
1(j)(5)(i) and (ii).)
Q-C17: Is a plan required to provide a copy of an internal rule, guideline, protocol,
or similar criterion when the applicable rule, guideline, protocol, or criterion was
developed by a third party which, for proprietary reasons, limits the disclosure of
that information?
A: Yes. It is the view of the Department that where a rule, guideline, protocol, or similar
criterion serves as a basis for making a benefit determination, either at the initial level or upon
review, the rule, guideline, protocol, or criterion must be set forth in the notice of adverse
benefit determination or, following disclosure of reliance and availability, provided to the
claimant upon request. However, the underlying data or information used to develop any such
rule, guideline, protocol, or similar criterion would not be required to be provided in order
to satisfy this requirement. The Department also has taken the position that internal rules,
guidelines, protocols, or similar criteria would constitute instruments under which a plan is
established or operated within the meaning of section 104(b)(4) of ERISA and, as such, must
be disclosed to participants and beneficiaries. (See  2560.503-1(g)(v)(A) and (j)(5)(i);
65 FR at 70251. Also see  2560.503-1(h)(2)(iii) and 2560.503-1(m)(8)(i); Advisory Opinion
96-14A (July 31, 1996).)
Q-C18: If a plan conditions continuation of disability benefit payments on a
periodic confirmation of the claimants disability and, in conjunction with such a
confirmation, determines that the claimant is no longer disabled and, accordingly,
terminates payment of benefits, must the plan treat the termination as an adverse
benefit determination under the regulation?
A: Yes. Under the regulation, an adverse benefit determination includes any denial,
reduction, or termination of a benefit. Accordingly, where a plan terminates the payment
of disability benefits under such circumstances, the plan is required to provide the claimant
a notification of adverse benefit determination and the right to appeal that determination
consistent with the regulation. (See 29 CFR  2560.503-1(m)(4), (g) and (h).) If, on the other
15 hand, a plan provides for the payment of disability benefits for a predetermined, fixed period
(e.g., a specified number of weeks or months or until a specified date), the termination of
benefits at the end of the specified period would not constitute an adverse benefit determin-
ation under the regulation. Any request by a claimant for payment of disability benefits beyond
the specified period, therefore, would constitute a new claim. (See 29 CFR  2560.503-1(f)(3).
Also see 29 CFR  2560.503-1(f)(2)(ii).)
Q-C19: Does the regulation limit a plans ability to establish a maximum period for
the filing of initial claims for benefits?
A: No. The regulation does not contain any specific rules governing the period of time that
must be given to claimants to file their claims. However, a plans claim procedure nonetheless
must be reasonable and not contain any provision, or be administered in any way, that unduly
inhibits or hampers the initiation or processing of claims for benefits. Adoption of a period
of time for filing claims that serves to unduly limit claimants reasonable, good faith efforts
to make claims for and obtain benefits under the plan would violate this requirement. (See 29
CFR  2560.503-1(b)(3).)
Q-C20: What timeframes apply when an extension of time is required by a plan in
connection with an initial disability benefit determination?
A: The regulation addresses two situations in which a plan may have an extension of time
for making a disability benefit determination. The first situation is when a decision cannot
be rendered due to any matter beyond the control of the administrator other than the need
for additional information from the claimant. In this situation, the extension period is added
to the period within which the determination is required to be made.
For example, if prior to the end of the initial 45-day period, the administrator determines
that, for reasons beyond its control, a decision cannot be rendered, the plan may take up to an
additional 30 days (i.e., 30 days in addition to the initial 45-day period). Similarly, if a decision
cannot, for similar reasons, be rendered within the initial extension period, the plan may take
up to an additional 30 days (i.e., 30 days in addition to the initial 30-day extension period) or
up to a total of 105 days to decide the pending claim. (See 29 CFR  2560.503-1(f)(3).) The
second situation is when the plan requires additional information from the claimant to make a
benefit determination. This situation is governed by the principles in Q-C3.
Q-C21: If a plan determines that a claim does not provide sufficient information,
must the plan take an extension of time and request additional information from
the claimant?
A: No. The provisions governing extensions of time are permissive and not mandatory. As
such, plans may provide for taking extensions of time or not, and plan administrators may be
given the discretion to decide whether to take an extension of time in connection with any
individual claim. Consequently, as a general matter, a plan may deny claims at any point in
the administrative process on the basis that it does not have sufficient information; such a
decision would allow the claimant to advance to the next stage of the claims process.
16 Q-C22: If a group health plan determines that an extension of time is necessary in
order to obtain additional information from a claimant, may the administrator as
part of the notice to the claimant of the need for the extension of time also include
a notice of adverse benefit determination applicable if the claimant fails to provide
any information within the period prescribed by the plan (i.e., at least 45 days)?
A: Yes. If the notice clearly states that the claim will be denied if the claimant fails to submit
any information in response to the plans request, it is the view of the Department that the
furnishing of a combined notice would not be contrary to the regulation, provided that the
combined notice satisfied the content requirements applicable to both the extension notice
and the notice of adverse benefit determination. In this regard, the notice of adverse benefit
determination should make clear that the period for appealing the denied claim begins to run at
the end of the period prescribed in the notice for submitting the requested information (or such
later date as may be provided under the terms of the plan). (See 29 CFR  2560.503-1(f)(2)
and (3).)
D. Benefit Appeals   2560.503-1(h), (i) and (j)
The following questions generally relate to the standards, timing, and notification requirements
applicable to the review of denied group health plan claims.
Q-D1: May a plan require that requests for review of adverse benefit
determinations be made in writing?
A: Yes, with one exception. The regulation provides that a plans claims procedure must
provide a claimant with a reasonable opportunity for a full and fair review of a denied claim.
A claims procedure that requires requests for reviews of adverse benefit determinations to
be made in writing would not be unreasonable in that regard, except with respect to claims
involving urgent care. In the case of urgent care claims, the regulation requires that a plans
procedures permit requests for expedited appeals to be submitted orally or in writing by the
claimant. (See  2560.503-1(h)(2) and (3)(vi).)
Q-D2: May the direct supervisor of the person(s) who makes initial claim
determinations serve as the appropriate named fiduciary for purposes of reviewing
those claims on appeal?
A: Yes. The only limitation that the rule imposes on who can serve as the named fiduciary for
purposes of reviewing adverse benefit determinations is that the named fiduciary cannot be
either the individual who made the initial benefit determination that is the subject of the appeal
or a subordinate of that individual. The rule further requires that the reviewer, whoever that
individual is, may not afford deference to the initial determination. That is, the reviewer must
consider the full record of the claim and make an independent decision on whether it should be
granted. (See  2560.503-1(h)(3)(ii).)
17 Q-D3: If a group health plan provides for two levels of review, rather than one,
following an adverse benefit determination, what standards, if any, govern the
second level of review?
A: Where a plan provides for two levels of review on appeal, it is the view of the Department
that the second level of review is subject to the same standards that apply to the first level of
review. For example, the second level reviewer may not afford deference to the decision at the
first level of review, and the reviewer must not be the same person who made the first level
review decision on the claim or a subordinate of that person. (See  2560.503-1(c)(2) and
2560.503-1(h)(3)(ii).)
Q-D4: If a group health plan provides for two levels of review following an adverse
benefit determination, within what period must a determination be made at each
level?
A: In the case of preservice claims, a maximum of 15 days is provided for a benefit
determination at each level. In the case of postservice claims, a maximum of 30 days is
provided for a determination at each level. (See  2560.503-1(i)(2)(ii) and (iii).)
For example, if a claimant appeals a preservice adverse benefit determination, and the plan
provides for two levels of review at the appeal level, the plan must make a determination
within a reasonable period of time, taking into account the medical circumstances, but no later
than 15 days after receipt of the appeal. If that claim is again denied at the first level of appeal
and the claimant appeals that denial to the second level review stage, the plan must again make
a determination within a reasonable period of time, taking into account the medical circum-
stances, but not later than 15 days after the plans receipt of the claimants second level appeal
request.
In the case of urgent care claims, the regulation does not prescribe any specific period within
which a determination must be made at each level of a two-level review process for such
claims. Given the principles underlying the provisions governing preservice and postservice
claims, however, it is the view of the Department that each level of review of an urgent
care claim would have to be completed in sufficient time to ensure that the total period for
completing the reviews would not exceed the maximum period otherwise applicable to a
process with only one level of review  as soon as possible, taking into account the medical
exigencies, but not longer than 72 hours. (See  2560.503-1(i)(2)(i).)
Q-D5: If a group health plan provides for two levels of review following an adverse
benefit determination, how much time must a claimant be afforded to appeal the
first-level review determination to the second level review?
A: Under the regulation, claimants must be afforded at least 180 days following receipt of
an adverse benefit determination to appeal that determination. In the case of a plan with a
18 two-level review process, the 180-day rule applies to the period to be afforded claimants to
appeal to the first review level. While the regulation does not specifically address the period of
time to be afforded claimants to pursue the second level of review, the regulation requires that
a plans procedures must nonetheless be reasonable and, therefore, it is the view of the Depart-
ment that plans must afford claimants a reasonable opportunity to pursue a full and fair review
at the second review level. (See  2560.503-1(h)(1) and (3)(i).)
Q-D6: If a group health plan provides for two levels of review following an adverse
benefit determination, may the plan use nonbinding arbitration as a means for
deciding the appealed claim?
A: Yes. A plans procedures may provide for arbitration of benefit disputes at one of the two
levels of appeal, provided two conditions are met. First, the arbitration must be conducted in
a manner that will ensure that the timeframes and notice requirements otherwise applicable to
appeals will be satisfied. Second, the arbitration must be nonbinding  that is, the arbitration
may not limit the claimants ability to challenge the benefit determination in court.
(See  2560.503-1(c)(4).) The regulation also permits a plan to offer binding arbitration to
a claimant after completion of the plans appeal process. (See Q-E1 and Q-E2.)
Q-D7: May the board of trustees or committee of a multiemployer group health
plan or multiemployer disability benefit plan that generally reviews appealed
benefit claims at their quarterly meetings provide for two levels of appeal
consistent with the regulation? 
A: Yes, under limited circumstances. In general, the regulation permits plans to maintain
two levels of review for adverse benefit determinations and establishes special timing rules
for making benefit decisions at each level of the review process. (See  2560.503-1(c)(2),
2560.503-1(i)(2)(ii) and (iii), 2560.503-1(i)(3).) The regulation also provides special timing
rules applicable to boards of trustees or committees of multiemployer group health plans
and multiemployer disability benefit plans, pursuant to which such plans are excepted from
the otherwise applicable timing requirements. Under these rules, such boards or committees
generally are permitted to defer the decisions on adverse benefit determination appeals until
the next regularly scheduled meeting of the plans board or committee. (See  2560.503-1(i)
(2)(iii)(B), 2560.503-1(i)(3)(ii).) It is the view of the Department that a multiemployer group
health plan or a disability benefit plan could not, in a manner consistent with the regulation,
rely on both the special rules governing the maintenance of two appeal levels and the special
rules for regularly scheduled boards of trustees or committee meetings. On the other hand, the
Department does not believe a multiemployer plan is foreclosed by the regulation from electing
to make appeal determinations in accordance with the special rules governing two levels of
appeal, rather than in accordance with the quarterly meeting provisions of the regulation.
In addition, there is nothing in the regulation that would foreclose a multiemployer plan from
making benefit review determinations in accordance with the quarterly meeting provisions
and, following such determinations, providing claimants with an opportunity to voluntarily
pursue an additional (second) review of their claim. (See  2560.503-1(c)(3).)
19 Q-D8: Does the regulations requirement of consultation with appropriate health
care professionals limit the discretion of a plan fiduciary reviewing an adverse
benefit determination with respect to the advice the fiduciary may seek in resolving
the issues raised by the review?
A: The regulation requires that, for group health and disability claims, the fiduciary deciding
an appeal of an adverse benefit determination based in whole or in part on a medical judgment
consult with an appropriate health care professional. This requirement of consultation is
intended to ensure that the fiduciary deciding a claim involving medical issues is adequately
informed as to those issues. The consultation requirement, however, is not intended to
constrain the fiduciary from consulting any other experts the fiduciary considers appropriate
under the circumstances. For example, in connection with the appeal of a denied disability
claim, a fiduciary may consider it appropriate to consult with vocational or occupational
experts.
In all cases, a fiduciary must take appropriate steps to resolve the appeal in a prudent manner,
including acquiring necessary information and advice, weighing the advice and information so
obtained, and making an independent decision on the appeal. The regulations provision for
consultation with a health care professional is not intended to alter the fiduciary standards that
apply to claims adjudication.
Q-D9: Under what circumstances must a group health plan (or disability benefit
plan) disclose the identity of experts consulted in the course of deciding a benefit
claim?
A: The regulation provides that, in order to allow claimants a reasonable opportunity for a full
and fair review of their claim, a plans claims procedures must provide for the identification of
medical (or vocational) experts whose advice was obtained on behalf of the plan in connection
with an adverse benefit determination, without regard to whether the advice was relied upon
in making the determination. Under the rules, plans are not required to automatically provide,
as part of a notice of an adverse benefit determination or otherwise, the identity of experts
consulted during the claim determination process. Nor are plans required to disclose the name
of experts in the absence of an adverse benefit determination. On the other hand, consistent
with the procedural requirements of the regulation, the plan must provide the identity
of any such experts when requested by a claimant in connection with an adverse benefit
determination. (See  2560.503-1(h)(3)(iv) and (4).)
Q-D10: Upon receipt of a request from a claimant for the identity of experts
consulted by the plan in connection with an adverse benefit determination,
may a plan satisfy the requirements of the regulation by providing only the
name of the company employing the expert or the qualifications of the expert,
rather than the name of the expert?
A: No. The regulation expressly requires that plans provide for the identification of the medical
or vocational expert or experts whose advice was obtained on behalf of the plan in connection
20 with the claimants claim. Consequently, merely providing the name of the company
employing the expert or the qualifications of the expert would not, in the Departments view,
satisfy this requirement of the regulation. (See  2560.503-1(h)(3)(iv) and (4). Also see
Q-D7.)
Q-D11: Does the regulation require that a group health plan provide a claimant
with copies of the claimants medical records relating to his or her benefit claim?
A: Yes. The regulation requires a plan to provide claimants, upon request and free of charge,
reasonable access to, and copies of, all documents, records, and other information relevant to a
claimants claim for benefits. Under the regulation, relevant documents include, among other
things, documents or records relied upon in making a benefit determination and documents and
records submitted in the course of making the benefit determination. Inasmuch as a claimants
medical records relating to the benefit claim would be relevant documents, access to, and
copies of, the claimants medical records would have to be provided upon the claimants
request. The Department notes, however, that if a plan has reason to believe that a claimants
medical records contain information that should be explained or disclosed by the physician
(or other health professional) who developed the information, it would not be inconsistent
with the regulation to refer the claimant to the physician (or other health professional) for such
information prior to providing the requested documents directly to the claimant. However, if
the physician to whom the claimant was referred failed to provide the requested information
to the claimant in a reasonable period of time and without charge, the plan itself would be
required to honor the claimants request.
Q-D12: Does the regulation require that a plan provide claimants with access to or
copies of files of other claimants?
A: No. The regulation requires that a claimant have access to, and copies of, documents,
records and other information relevant to the claimants claim. For this purpose, the regulation
defines as relevant any document, record, or other information that: (i) was relied upon in
making the benefit determination; (ii) was submitted, considered, or generated in the course of
making the benefit determination, without regard to whether it was relied upon; (iii) demon-
strates compliance with the plans administrative processes and safeguards for ensuring
consistent decisionmaking (see Q-B5); or (iv) constitutes a statement of policy or guidance
with respect to the group health plan concerning the denied treatment option or benefit for
the claimants diagnosis, without regard to whether it was relied upon in making the benefit
determination. (See  2560.503-1(h)(2)(iii) and 2560.503-1(m)(8).)
While information and data from various claimants files may have been compiled for purposes
of developing a plans criteria, standards, guidelines, or policies to be used in ensuring and
demonstrating compliance with administrative processes and safeguards relating to consistent
decisionmaking, or evaluating or assessing treatment options for benefit determinations,
only the criteria, standards, guidelines, or policies themselves would have to be disclosed as
information relevant to an individual claimants claim, not the various claimants files on
which such criteria, standards, guidelines, or policies were based.
21 Q-D13: Must a plan include, in every notice of adverse benefit determination on
review, a statement apprising claimants that  You or your plan may have other
voluntary 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?
A: The regulation, at  2560.503-1(j)(5)(iii), provides for the inclusion of the statement
described above in all notices of adverse benefit determination on review involving group
health and disability claims. However, the Department recognizes that information on the
specific voluntary appeal procedures offered by the plan will be provided, consistent with
 2560.503-1(j)(4), in the notice of adverse benefit determination, along with a statement of
the claimants right to bring a civil action under section 502(a) of ERISA. Pending further
review, therefore, the Department will not seek to enforce compliance with the requirements
of  2560.503-1(j)(5)(iii).
E. Postappeal Level Reviews
Q-E1: Under what circumstances may a plan afford claimants the ability to appeal
their benefit claim beyond the review level required by the regulation?
A: While the regulation limits a plans claims procedure to a maximum of two mandatory
appeal levels, the regulation does permit plans to offer voluntary additional levels of appeal,
including arbitration or any other form of alternative dispute resolution, provided that certain
conditions are met. The conditions of the regulation focus on ensuring that the claimant elects
the additional appeal voluntarily. Specifically, the regulation provides that, in the case of such
voluntary levels of appeal, the plans claims procedure must provide: (i) the plan will not
assert a failure to exhaust administrative remedies where a claimant elects to pursue a claim
in court rather than through the voluntary level of appeal; (ii) the plan agrees that any statute
of limitations applicable to pursuing the claimants claim in court will be tolled during the
period of the voluntary appeal process (iii) the voluntary level of appeal is available only after
the claimant has pursued the appeal(s) required by the regulation; (iv) the plan provides the
claimant with sufficient information to make an informed judgment about whether to submit a
claim through the voluntary appeal process, including the specific information delineated in the
regulation; and (v) no fees or costs are imposed on the claimant as part of the voluntary appeal
process. (See  2560.503-1(c)(3).)
Q-E2: Can a plans voluntary level of appeal include binding arbitration as a form
of benefit dispute resolution?
A: Yes. Provided that a plans claims procedure otherwise complies with the conditions of the
regulation applicable to voluntary levels of appeal, there is nothing in the regulation that would
preclude a plan from using binding arbitration or any other method of dispute resolution.
(See  2560.503-1(c)(3). Also see 65 FR at 70253.)
22 Q-E3: Do the regulations special rules on voluntary additional levels of appeal,
including arbitration, apply to pension plans or welfare plans other than group
health plans or plans providing disability benefits?
A: No. The special rules on postappeal level reviews apply, under the regulation, only to group
health plans and plans that provide disability benefits. All other ERISA-covered plans are not
required by the regulation to comply with these rules. However, if such other plans elect to
establish voluntary additional levels of review, those levels would have to comport with the
general requirements for a reasonable procedure described in  2560.503-1(b).
F. Miscellaneous
Q-F1: What are the effective date and applicability dates of the claims
procedure rules?
A: The regulation became effective as of January 20, 2001. The effective date is the date the
regulations became legally effective as part of the Code of Federal Regulations.
The applicability dates are the dates on which the plans must begin to comply with the
regulation. The applicability date for claims other than group health claims is January 1, 2002.
This means that such plans must comply with the regulation beginning with new claims filed
on or after January 1, 2002.
As amended on July 9, 2001, the regulation contains separate applicability dates for group
health claims and all other claims. Under the regulation as amended on July 9, 2001, the
applicability date for group health claims was the first day of the first plan year that began on
or after July 1, 2002, but not later than January 1, 2003. This means that group health plans
were required to comply with the regulation beginning with new claims filed on or after the
first day of the first plan year beginning on or after July 1, 2002, but not later than January 1,
2003. For all calendar year group health plans, the applicability date was January 1, 2003.
Claims that were filed under a plan before the relevant applicability date, and that have not yet
been resolved as of the applicability date, may be handled in accordance with the plans old
benefit claims procedure, or, if the plan so chooses, in accordance with the new procedures.
Q-F2: What principles are likely to be applied when a claimant elects to abandon
the plans administrative claims process in favor of pursuing his or her benefit
claim in court?
A: Section 503 of ERISA requires plans to set up procedures to provide a full and fair review
of denied benefit claims. With limited exceptions, claimants must exhaust those internal pro-
cedures before filing a civil action for benefits under section 502(a)(1)(B). This requirement
reflects a legal presumption favoring exhaustion of internal procedures.
23 Paragraph (l) of  2560.503-1 provides that where a plan fails to establish or follow claims
procedures consistent with the requirements of the regulation, a claimant shall be deemed to
have exhausted the administrative remedies available under the plan. The claimant shall be
entitled to pursue any available remedies under section 502(a) on the basis that the plan has
failed to provide a reasonable claims procedure that would yield a decision on the merits.
However, the regulation does not undermine the principle that claimants bear the burden
of proving to the satisfaction of the court that the plan failed to establish or follow claims
procedures consistent with the requirements of the regulation. In addition, many of the
requirements in the regulation give a plan significant discretion in establishing and following
reasonable procedures. For example, paragraph (b)(3) of the regulation prohibits a plan from
establishing or administering its procedures so as to unduly inhibit or hamper the initiation or
processing of claims for benefits. Accordingly, a plan will be accorded significant deference
in evaluating whether it failed to follow a procedure consistent with those aspects of the
regulation.
Moreover, not every deviation by a plan from the requirements of the regulation justifies
proceeding directly to court. A plan that establishes procedures in full conformity with the
regulation might, in processing a particular claim, inadvertently deviate from its procedures.
If the plans procedures provide an opportunity to effectively remedy the inadvertent deviation
without prejudice to the claimant, then there ordinarily will not have been a failure to establish
or follow reasonable procedures as contemplated by  2560.503-1(l). Thus, for example, a
plan that issues a notice of adverse benefit determination fully advising the claimant of the
right to review and to request additional information from the plan may be able to correct
an inadvertent failure to include in the notice the specific plan provision on which the denial
was based. Ordinarily in that circumstance the plan will have provided access to a reasonable
claims procedure consistent with the regulations. On the other hand, systematic deviations
from the plan procedures, or deviations not susceptible to meaningful correction through
plan procedures, such as the failure to include a description of the plans review procedures
in a notice of an adverse benefit determination, would justify a court determination that the
plan failed to provide a reasonable procedure.
In addition, filing a lawsuit without exhausting plan procedures could limit claimants appeal
rights and cause claimants to lose benefits to which they otherwise might be entitled. This
could be the case when, during the time it takes for a court to dismiss a claimants suit, the
plans deadline for filing an appeal expires. In this regard, there is nothing in the regulation
that would serve to toll internal plan deadlines for filing or appealing claims when suit is
brought under section 502(a)(1)(B).
ThismaterialconstitutesasmallentitycomplianceguideforpurposesoftheSmallBusinessRegulatoryEnforcementFairness
Actof1996.
December2012
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