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 www.businessgrouphealth.org

 Creative Health Benefits Solutions for Today, Strong Policy for Tomorrow

 

December 11, 2017

Submitted electronically via: www.regulations.gov

Office of Regulations and Interpretations

Employee Benefits Security Administration

Room N-5655

U.S. Department of Labor

200 Constitution Avenue NW

Washington DC 20210

Re: RIN 1210-AB39 – Claims Procedure for Plans Providing Disability Benefits

Dear Sir or Madam:

The National Business Group on Health is pleased to respond to the Department of 

Labor’s proposed rule regarding claims procedure requirements applicable to ERISAcovered employee benefit plans that provide disability benefits.

The National Business Group on Health represents 416 primarily large employers, 

including 73 of the Fortune 100, who voluntarily provide group disability and health plan 

coverage to over 55 million American employees, retirees, and their families. Our 

members generally provide this coverage through a combination of insured and selfinsured arrangements.

As we discussed in our comment letter responding to the Department’s April 2015 notice 

of proposed rulemaking (https://www.businessgrouphealth.org/pub/?id=C31C4E61-

782B-CB6E-2763-B85F65F25037), we support the Department’s efforts to protect plan 

participants’ rights to adequate notice and full and fair reviews of disability claims. 

However, our members were and remain concerned that many of amendments in the 

2016 Final Rule will only increase participant confusion, plan costs, and litigation with 

little benefit to participants. We therefore welcome the Department’s efforts to solicit 

additional public input and recommend that the Department rescind the 2016 Final Rule.

As detailed in the above-noted comment letter, we urge the Department, as it considers 

the 2016 Final Rule, to consider the following:

• Our members are at the forefront of developing comprehensive health and 

productivity strategies designed to improve workforce health and safety, improve 

and maintain productivity, and remain employers of choice. Our members do not 

focus narrowly on containing costs by aggressively disputing individual disability 
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claims, as suggested by the Preamble to the April 2015 notice of proposed 

rulemaking. 

• Employers also must consider the costs of employees’ time away from work and 

replacement costs when an employee is not working due to a disability. Therefore, 

our members have a substantial incentive to design and administer benefit 

programs with the aim of improving employees’ health, safety, and ability to 

return to work.

• To further these aims, regulations governing disability claims procedures should 

maintain plan sponsors’ flexibility to establish plan terms and administer benefits 

accordingly. Minimizing plans’ administrative and cost burdens also would 

permit plan sponsors to devote more resources toward maintaining and improving 

benefits for their employees.

• Our members devote substantial administrative and financial resources to 

complying with current claims and appeals procedure requirements and have 

found that these procedures provide ample opportunity for claimants to review 

relevant information and pursue appeals. The additional requirements in the 2016 

Final Rule would only increase administrative and cost burdens without providing 

useful information or meaningful protections for participants.

We provide further discussion below.

I. Large Disability Plans

As an initial matter, we encourage the Department to consider the benefit structures of 

large employers and their disability plans, which often consist of both self-insured and 

insured coverage. Our members’ disability plans generally are part of a carefully 

designed suite benefits that include but are not limited to the following:

• Short-term disability coverage

• Long-term disability coverage

• Workers’ compensation

• Group health coverage

• Leave and paid time off programs

• Return-to-work and stay-at-work programs

• Employee assistance programs

• Health risk assessments

• On-site clinics

Each of these benefits will be tailored to the unique features of the employee population, 

industry, and line of business, and employers will adapt plan designs over time to meet 

the needs of their businesses and employees. For example, when designing and budgeting 
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for disability coverage, large plan sponsors must consider the variation in disability 

claims and costs by industry:1

Within this context, there may be little elasticity of demand for employer-sponsored

disability coverage but substantial elasticity of demand for voluntary supplemental 

 1 National Business Group on Health & Truven Health Analytics, EMPAQ Insights 2016: Harnessing Data 

to Help Employers Effectively Manage Their Workforce 14, 18 (2016).
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disability coverage among employees.2 In addition, increases in administrative costs may 

not decrease demand for employer-sponsored coverage itself but will cause employers to 

reevaluate disability plan features such as elimination periods, maximum benefit periods, 

and wage replacement rates. We encourage the Department to consider the effects that 

administrative and cost burdens have on the design (in addition to availability) of 

employer-sponsored disability coverage.

Furthermore, employers must balance disability coverage with costs and benefits of 

related programs such as return-to-work programs and group health coverage.

3

As the health care system becomes more complex and costly for both plan sponsors and 

participants, there will be an even greater need to minimize compliance costs, including 

those related to disability coverage. For 2017, our members estimate that health care 

costs on a per employee per year basis will be $11,279, approximately $2,752 of which 

will be borne by employees. In addition, median annual deductibles for 2017 will be 

approximately $1,300 for employee-only coverage and $3,000 for family coverage. Our 

members expect overall health care costs to increase by approximately 5% in 2018.4

These rising costs place ever-increasing pressure on all employer-sponsored benefit 

plans.

 2 A Bureau of Labor Statistics analysis showed that uptake of long-term disability coverage was 

significantly lower when plans required employee contributions (77 percent versus 98 percent when plans 

did not require employee contributions in 2013). Bureau of Labor Statistics, An Analysis of Private LongTerm Disability Insurance Access, Cost, and Trends (Mar. 2017), available at

https://www.bls.gov/opub/mlr/2017/article/an-analysis-of-long-term-disability-insurance-access-cost-andtrends.htm. 3 National Business Group on Health & Truven Health Analytics, EMPAQ Insights 2016: Harnessing Data 

to Help Employers Effectively Manage Their Workforce 23 (2016). 4 National Business Group on Health, 2018 Large Employers’ Health Care Strategy and Plan Design 

Survey 7, 10 (2017).
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In this environment, rising administrative and cost burdens for disability plans will result 

in fewer resources being available for coverage and other benefits for employees.

II. 2016 Final Rule

The 2016Final Rule is unlikely to provide useful information or meaningful 

protections for plan participants. 

We also urge the Department to weigh the 2016 Final Rule’s administrative and cost 

burdens against the fact that the rule is unlikely to provide meaningful information, 

protections, or additional disability coverage for plan participants. As detailed in our 

2016 comment letter (https://www.businessgrouphealth.org/pub/?id=C31C4E61-782BCB6E-2763-B85F65F25037), the rule:

• Would not provide useful information to plan participants regarding the definition 

of “disability” or participants’ benefits under the terms of the plan at issue;
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• Would likely result in claimants receive large amounts of additional information 

that is confusing and not helpful in evaluating claims—with additional risks 

involved with handling and delivering sensitive medical information; and

• Would likely increase time and costs involved with litigation without providing a 

more full or fair claim review.

III. Effective Date for Amended Regulations

Finally, we recommend that the Department delay the applicability of any amended 

disability claims procedures. For plan sponsors, amending claims and appeals procedures 

to conform with any amendments to the 2016 Final Rule will require time to: 

• Amend relevant plan documents, policies, and procedures;

• Train benefits personnel on the new policies and procedures;

• Coordinate and potentially amend agreements with third-party administrators and 

carriers; and

• Communicate plan amendments to plan participants.

We therefore we recommend delaying the effective date to the first day of the first plan 

year beginning 12 months after the issuance of any amended final regulations.

Thank you for considering our comments and recommendations. Please contact me or 

Debbie Harrison, the National Business Group on Health’s Assistant Director of Public 

Policy, at (202) 558-3004 if you would like to discuss our comments in more detail.

Sincerely,

Brian Marcotte

President