America’s Health:
Insurance Plans

601 Pennsylvania Avenue, NW
South Building

Suite Five Hundred
Washington, DC 20004

202 778.3200

wwe ahip.019 AHIP

May 10, 2017

The Honorable R. Alexander Acosta
Sceretary of Labor

U.S. Department of Labor

200 Constitution Avenue, NW
Washington, DC 20210

Dear Secretary Acosta: —

America’s Health Insurance Plans (AHIP) is the national association whose members provide
coverage for health care and related services, including disability income protection insurance
coverage. Through these offerings, we improve and protect the health and financial security of
consumers, families, businesses, communities and the nation. We are committed to market-
based solutions and public-private partnerships that improve affordability, value, access and
well-being for consumers.

On behalf of AHIP and our members, | would like to congratulate you on your recent Senate
confirmation. AHIP and our members very much look forward to working with you and your
staff at the Department of Labor on issues of mutual importance to the Administration, our
members, and the American people.

We write to express serious concerns regarding the U.S. Department of Labor (Department) final
rule (Rule) amending disability claim procedures (81 Fed Reg. 92316 (Dec. 16, 2016)) under the
Employee Retirement Income Security Act of 1974 (ERISA). While purporting to improve the
claim review process for private disability income insurance claimants, the Rule will instead, if
allowed to take full effect, drive up the cost of private disability income protection without real
benefit to working Americans.

AHIP urges you to take quick action to delay the Rule’s full effectiveness to give your
Department adequate time and opportunity to review it thoroughly and to remove or revise
its flawed provisions. Although the Rule takes full effect for claims made on or after January 1,
2018, disability plan administrators are already beginning to undertake the extensive and
expensive steps necessary to comply with the Rule’s new requirements. Timely regulatory relief
is needed to avoid unnecessary disruption and expense. If implemented in its current form, we
believe the Rule would have important harmful effects, including:

1. Increased Litigation and Much Higher Legal Costs. Of major concern, the Rule’s
provisions would greatly increase disability income claim litigation and litigation costs.
The Rule provides for expedited recourse to the federal courts, and to de novo court
review, if a plan does not “strictly adhere” to its provisions. While adherence to the Rule


May 10, 2017

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is, of course, an appropriate policy goal, the effect of the Rule as promulgated would be
to give claimants and claimants’ attorneys inappropriate incentives to allege failure to
strictly adhere to its provisions even when no such failure occurs or when lack of strict
adherence is trivial. Inevitably, this would lead to a great deal more litigation and very
significant additional costs.

Greater Financial Risk to Families and Costs to Government, Because demand by
employees for private disability income protection is sensitive to the cost of coverage, the
Rule would drive down the number of working Americans with private disability income
protection, exposing more American families to the financial risk of disabling illness or
injury. Asa result, not only would more families face financial hardship, the federal
government, states, and taxpayers would also face higher costs because, lacking disability
income protection benefits, more disabled workers would be forced to rely on public
assistance programs.

Delayed Dispute Resolution. In addition, the Rule's new requirements for claimants’
right to review and respond to new information bearing on a claim appeal raises serious
concerns, These requirements would likely result in protracted exchanges between the
plan and the claimant that would impose delays and additional costs.

Inappropriate Application of SSA Standards to Private Plans. The Rule also requires
plans to discuss the basis for disagreeing with a Social Security Administration (SSA)
disability determination, despite that fact that SSA’s definitions, policies, and procedures
will never match those of a private disability income plan. Consequently, we believe the
application of SSA standards to private plans in inappropriate.

Given the totality of problems with the Rule and the significant costs that far outweigh any
potential benefits, we urge you to act as soon as possible to delay its implementation and start the
process of issuing an improved proposed rule. AHIP and our disability income plan members,
would welcome the opportunity to discuss our concerns with the Rule with you and/or members

of your team at your earliest convenience.

Sincerely,

Va tthece Even

Matthew Eyles
Executive Vice President
Policy and Regulatory Affairs