PSCA Plan Sponsor Council of America

Serving retirement plan sponsors for over 69 years
January 19, 2015

VIA EMAIL (c-ORI@dol.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

Attn: Attention: Claims Procedure Regulation
Amendment for Plans Providing Disability
Benefits

Re: Claims Procedure for Plans Providing Disability Benefits (RIN 1210-AB39)
Dear Sir or Madam:

The Plan Sponsor Council of America (“PSCA”) appreciates the opportunity to
comment on the Department of Labor’s (“DOL”) proposed amendments to claims procedure
regulations under the Employee Retirement Income Security Act of 1974 (“ERISA”) for plans
providing disability benefits (the “Proposed Regulation”). |

The PSCA was established in 1947 and is a leading consumer advocate for employers
offering defined contribution and non-qualified deferred compensation plans to their employees.
The PSCA is a diverse, collaborative community of employee benefit plan sponsors and related
service providers working together on behalf of millions of employees to ensure the success of
the voluntary employer-sponsored retirement system. Representing employers of all sizes and
industries throughout the country, we offer a unique and valuable perspective on issues regularly
confronted by that system. It is from this perspective that PSCA is providing its response to the
Proposed Regulation, and we very much appreciate the willingness of the DOL to consider our
views.

On November 18, 2015, the DOL published proposed amendments to claims procedure
regulations for plans providing disability benefits under ERISA. The amendments would revise

' $0 Fed. Reg. 72014 (Nov. 18, 2015).

1900 K Street, N.W. Suite 1110 Washington, D.C. 20006


current rules primarily by adopting some of the procedural protections and safeguards made
applicable to group health plans by the Affordable Care Act.

Normally the PSCA would not comment on regulatory activity that on its face seems to
apply only to welfare benefit programs—in this case, long term disability plans. However, an
issue has arisen that indicates that these regulations, once final, might impact certain retirement
plans, including defined contribution plans, in a way that might not be readily apparent. The
retirement plans at risk appear to include plans that condition the payment of benefits on account
of disability on a determination of disability status made by the plan itself.

In November of 2000 the DOL issued guidance in a question-and-answer format
(“Q&A’s”) related to the adoption of previous claims procedures rules. In those Q&A’s the
DOL expressed the view that a benefit is a “disability benefit” under applicable regulations if the
plan conditions its availability upon a showing of disability. The DOL went on to state that ifa
claims administrator must make a determination of disability to decide a claim then that claim
must be treated as a “disability claim” for purposes of the regulations. The DOL concluded that
plans, including retirement plans, that provide benefits conditioned upon such a determination of
disability must maintain procedures for claims involving such benefits that comply with the
requirements of the regulation applicable to disability claims—a position that if still valid seems
to expose these plans to these new claim procedure regulations.

The DOL noted in the above-referenced Q&A’s that special rules for disability claims
need not be applied in a situation in which a plan provides a benefit based on a finding of
disability where the determination of disability status is made by a party other than the plan.
With respect to retirement plans, examples cited by the DOL include plans that provide that
retirement benefits are available either when a participant has been determined to be disabled by
the Social Security Administration or when a participant has been determined to be disabled
under the employer’s separate long term disability plan. Both of the examples are common
design features for retirement plans, including defined contribution plans.

The standards set out by the DOL in the Q&As in 2000 seem equally applicable in the
context of the Proposed Regulations. However, the Proposed Regulations do not expressly
incorporate these standards to make it clear that the special rules for disability claims that are set
out in the Proposed Regulations need not be applied in a situation in which a plan provides a
benefit based on a finding of disability where the determination of disability status is made by a
party other than the plan. Accordingly, the PSCA requests that the Proposed Regulations be
revised to explicitly incorporate these standards to provide meaningful and needed clarification
for sponsors of retirement plans without in any way affecting the stated goals in the DOL in
issuing the Proposed Regulations.

As in other matters affecting the retirement industry, the PSCA wants to be a resource to

the DOL as we move toward the issuance of a final rule in this context. We appreciate the
opportunity to comment and look forward to working with the DOL as it considers these matters.

1900 K Street, N.W. Suite 1110 Washington, D.C. 20006


If you have any questions regarding this comment letter, please feel free to call me at
202-778-3006.

Respectfully submitted,
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i¢hard P. McHugh

Vice President of Washington Affairs

1900 K Street, N.W. Suite 1110 Washington, D.C. 20006