Many employers provide group long-term disability (LTD) insurance as a benefit for their employees. Group LTD insurance can be an affordable alternative to an expensive individual policy. If you need it, and hopefully you never will, it can be a godsend. But you need to be aware of, and plan for, the limitations common to most group LTD plans.
• Just because you can’t do your job, doesn’t make you disabled.
The most important part of any disability policy is the definition of “disability.” Most group LTD policies define “disability” to mean an inability to perform the material and substantial duties of your “regular occupation.” The term “occupation” refers to how your job is performed in the national economy, not what you are required to do for a particular employer.
For instance, a small hospital might require all of its nurses to be able to lift 50 lbs., so that they can assist on patient floors when needed. A nurse who works in administration, and typically lifts nothing heavier than a coffee cup, might be disqualified from working for that particular employer (putting aside for now the employer’s duty to provide reasonable accommodations), but may not be considered disabled from performing his or her “regular occupation” as a nurse/administrator.
Some policies only provide benefits if you are totally disabled from any gainful occupation. Under one of these policies, a roofer who can no longer climb ladders would not be considered disabled if he or she could still, for instance, do interior painting.
Bottom line: Read and understand the definition of disability under your particular plan.
• There is almost always a waiting period.
Most group LTD policies do not start paying benefits until you satisfy the plan’s waiting or “elimination period,” typically anywhere from 60 to 180 days of disability before benefits begin. Some employers offer short-term disability to bridge the gap. If you are not one of those lucky ones, you’ll need to have something put aside to keep the lights on until your benefits begin.
Tip: Be sure to check your plan’s “elimination period” and plan accordingly.
• Just because your doctor says you can’t work doesn’t mean the insurance company will agree.
One of the biggest mistakes you can make is to assume that a diagnosis and blanket statement from your doctor that you are “disabled” will entitle you to benefits. Unless your diagnosis is a dire one, it almost never will.
Disability claims personnel want to know specifics. Your claim will be reviewed by a team of experts, physicians, nurses, psychologists and vocational consultants to determine whether your doctor’s statements about what you can and cannot do are reasonable and supported by objective evidence. It’s up to you to press your health care providers to be specific. A statement from your doctor that you “cannot lift” is not helpful. Your doctor should specify how much you can and cannot lift, with what frequency and the objective evidence supporting his or her conclusion.
Takeaway: Insist that your treating physicians provide specific information as to what you can and cannot do from an occupational standpoint.
• There are no free lunches.
Most group LTD plans include a dollar for dollar reduction for Social Security, Workers’ Compensation and other benefits. While this helps to keep the cost of insurance low, you aren’t going to get to double down on benefits. Similarly, if you have “free” coverage because your employer pays the premium, your benefits will be taxable as wages.
Revelation: People who claim they make more on disability than they did working are usually not telling the truth.
• There are limitations.
Group LTD policies include a number of limitations on benefits. Benefits for certain conditions, such as disabilities due to mental or nervous conditions, often have a limited payout, generally 24 months. Some policies have similar limitations for disabilities due to “self-reported symptoms,” in other words things that can’t be measured objectively, like headaches.
Most group LTD plans that start out paying benefits if you are disabled from your “regular occupation,” shift to an “any gainful occupation” definition of disability after 24 to 36 months. In short, you need to focus on what you can still do, or learn to do, not just on what you can no longer do. The vast majority of people on disability would rather be working. Maybe you can no longer drive a semi truck, but maybe, just maybe, you could sell truck parts, teach others to drive, or even learn a completely new skill.
Sage advice: Think of those two years of benefits as an opportunity to reinvent yourself.
• You don’t get a do-over.
Most employer sponsored plans are governed by ERISA, the federal law that regulates employee benefits. Most plans also give the claims administrator, many times an insurance company, discretionary authority to decide your claim for benefits. This is significant for two reasons. First, a court will review a denial of your disability claim under an “abuse of discretion” standard. That means that even if the judge does not agree with the decision, he or she must uphold it if it is reasonably supported. Second, it means that the court’s review of your claim is limited to the “administrative record,” basically the insurance company’s claim file. You generally don’t get to supplement the record with what you didn’t think to include. You don’t get to present your case to a jury. Rather, a judge reads the papers and decides whether the documents support the insurance company’s decision.
Bottom line: What you submit to the insurance company will determine whether you win or lose in court.
If all this seems a bit daunting, it is. If you have a potential disability claim, you may want to hire an attorney to assist you from the beginning. An attorney experienced in disability law knows what the insurance company needs in order to rule favorably on your claim, and has access to vocational and other experts who may be able to provide the necessary support. Insurance companies are not in business to deny claims, but they don’t pay claims that are lacking in necessary support. Sure, it costs money to hire an attorney, but it costs even more to lose in court on a claim that could have been approved with proper support.
For a confidential analysis of your disability or insurance issues, or questions about TRC’s insurance, disability, and employment practice areas, please contact Jim Rogers at (412) 316-8651 or [email protected] or Jerry Hogenmiller at (412) 316-8689 or [email protected].
Important Notice: This information is intended for general guidance only, and should not be used as a substitute for specific legal advice. For specific legal advice applicable to your situation, you should consult an attorney of your choice. Although believed to be accurate when written, no guarantee of completeness or accuracy to your particular circumstances should be implied. Laws, regulations, and court decisions in this area change frequently, and you should consult the attorney of your choice for up-to-date information.