Hello,

Is there a requirement that a retirement plan SPD must have a separate "claims procedure" for any disability benefits? Isn't it enough to use general language in terms of "benefits" if the same claims procedures apply to all types of benefits? I thought the disability language for claims procedures only applied to H&W SPDs.

Thank you!

Astute question. From a brief review, there does not appear to be an exception to the special disability benefit claim procedures for pension plans (nor circumscription of the requirement to just welfare benefit plans). 29 CFR § 2560.503-1(a) and (d). It would appear that a pension plan that provides a disability benefit would need to outline in the SPD the special disability benefit claims procedures.

That was my conclusions as well. However, it doesn't make sense in the case of a 401(k) plan that has no special disability benefits other than the right to receive a distribution upon disability, death, termination of employment, etc. I would have thought the disability claims procedure language would only apply to a retirement plan that had an actual "disability benefit" separate from the other benefits.

In any event, I very much appreciate your response and have concluded that the disability claims procedure language is required in ALL SPDs.

The DOL's position is that you look at the type of the benefit, not the type of plan, to determine the type of claims procedures (most significantly, the deadlines). So, if a retirement plan has a payout in case of disability, you need to address the disability rules.

I recall that in a retirement plan, if the disability determination is not made by the plan but by some outside entity (e.g., Social Security; long term disability insurance), then the retirement plan can rely on that determination and not add in the extra disability procedure provisions. (Sorry, don't have a cite for this offhand).

So, when I am drafting retirement/executive comp agreements that have payouts in case of disability, I first try to define disability as determined by SSA or an outside insurance policy (keeping in mind the need to satisfy the 409A definition if you are dealing with a nonqualified plan). If we don't do that, then I add the special rules for disability claims as necessary. E.g.:

"If a claim is wholly or partially denied, the Plan Administrator shall notify the Claimant of the Plan's Adverse Benefit Determination in writing within a reasonable period of time, but not later than 90 days (the immediately preceding "90 days" shall be replaced with "45 days" in case of a claim related to disability)..."


Note also that the claims procedures technically apply to the plan, not just the SPD: "Every employee benefit plan shall establish and maintain reasonable procedures governing the filing of benefit claims..." DOL Reg. § 2560.503-1(b). I generally include the claims procedures in both the plan and the SPD.

I think that even if the 401k benefits, not extra benefits, are payable on disability, there has to be a determination of that disability (or not) by the plan when claimed. In that sense, those special disability claims procedures would have some applicability. Of course, if a 401k plan did not allow payout by reason of disability, then that would not be an issue for the SPD. Some employers like to have disability as a distribution trigger in addition to termination of employment so that the disabled employee can begin drawing 401k benefits out in lieu of the lost earnings, but also remain an 'employee' for purposes of health insurance coverage.

The following is from EBSA's FAQs About The Benefit Claims Procedure Regulation, available here: http://www.dol.gov/ebsa/faqs/faq_claims_proc_reg.html

A-9: What benefits are disability benefits subject to the special rules applicable under the regulation for disability claims?

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 of benefit, it is the department’s 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 requirement 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 employer’s long term disability plan, a claim for pension benefits based on the prior determination that the claimant is disabled would be subject to the regulation’s procedural rules for pension claims, not disability claims.