If, however, the conclusion is that there is a disability-based distinction, the inquiry must move to the second step of the investigation. The second level of analysis requires the investigator to determine whether the disability-based distinction can be justified. That is, does the plan pay benefits, communicate those benefits to eligible employees and, if insured, is it consistent with state law. Typically, an insurance policy offered to employees in a state must be approved by the state's insurance commissioner. To show the bona fide status of the plan, the employer could produce the annual reports filed with the Internal Revenue Service on a Form 5500 and could provide a copy of its summary plan description.
Actuarial data used by the plan sponsor can support the disability-based distinction.
De- tailed information will be required, including the factual data used, the actuarial assumptions applied and the conclusions reached. If the distinction is justified by actual or reasonably anticipated claims experience, the sponsor must provide information about previous claims experience and previous plan modifications to control costs. If the change was to curb unacceptable changes in coverage or premiums, or to insure fiscal soundness, evidence of options to modify the plan which were not based on disability should be provided. This would include background data as to the options considered, and minutes of a committee which made the decision to change the plan design, including reasons considered by the committee for rejecting other options. In another case, a plan committee might have amended the plan to exclude a disability's specific treatment because it was of no medical value.