Must-Knows About LTD Disability Insurance

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By: Bill Henry
PublishedAug 20, 2018
10 minute read

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A Guide to Short and Long-Term Disability Insurance

Disability Insurance Frequently Asked Questions, Answered

Q. What is Disability Insurance?

Disability insurance is used by workers as an income replacement when they are unable to work due to injury or illness. An injury or illness can be sustained on the job (such as a workplace accident) or it can be unrelated to a job’s activities (such as a cancer diagnosis). It is important to note that disability insurance only replaces some of the lost income, not all.

Q. Short term versus long term.

Short-term is usually anything under 24 months, while long term is anything over 24 months. Depending on the insurance, a worker can either buy a plan for short-term or long-term insurance. Sometimes a plan may pay benefits for 24 months and then the worker must prove that their disability is unchanged to qualify for long-term disability.

Sometimes a worker’s employer may offer short-term disability (like sick days), which should be factored in when a worker is deciding on what kind of coverage to buy, so that these benefits do not overlap.

Q. When do I need it?

Disability insurance is not just for those who have high-risk, physical jobs like construction. Anyone can sustain an injury on the job (yes, even desk jobs) or can become ill. Statistics show that 1 in 4 workers will become disabled before reaching retirement age (according to Social Security Administration).

Q. How much do I need?

Different plans offer different reimbursement amounts. A typical plan will reimburse about 60 percent or your pre-disability income. To decide what kind of plan to buy, a person should calculate the minimum amount of income they would need to get by, such as the money needed to cover basic living expenses (housing, food, car and other living expenses). From that baseline, a worker may decide to purchase a larger plan if they feel the need to.

Q. Who Pays for Disability Insurance?

Disability insurance is either provided by your employer, or can be purchased privately by the worker. According to the Bureau of Labor, only one-third of private industry workers have access to employer-sponsored disability insurance. For the lucky 33 percent, employer offered disability insurance can range in coverage where the employer may pay 100 percent of the premiums, or pay 0 percent and offer it as a voluntary benefit.

For the other 66 percent whose employers don’t offer disability insurance, or who are self-employed, they will need to find a private insurance plan on their own.

Q. Where can I find it?

A worker can either find an agreeable plan by searching online, or they can use an insurance broker who can locate a specific plan based on the worker’s needs. When comparing different plans and insurance companies an individual should ask questions like:

  • Does the plan pay benefits when a worker is unable to do their own job or any job?
  • What is the elimination period (waiting period before benefits kick in)?
  • Does the plan pay for partial and/or total disability?
  • Does it have cost-of-living adjustments?
  • What is the benefit amount and length?
  • Does it cover reoccurring disability?

Q. Is it required in Colorado?

Unlike other states, an employer is not required to offer disability insurance in Colorado. Nor is a worker obligated to purchase disability insurance.

Q. How does it differ from workers’ compensation?

Unlike disability insurance, workers’ compensation only applies to those who sustain a job-related injury. According to Forbes, 90 percent of disability claims are due to illnesses or injuries sustained while not on the job. Hence disability insurance is far more utilized than workers’ compensation.

About this Guide

This guide covers frequently asked questions about short and long-term disability insurance, the applications process, claim denial appeals, benefit termination and how a disability attorney can help.

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This legal guide is intended for general informational purposes only and should be used only as a starting point for addressing your legal issues. This legal guide is not legal advice, and does not create an attorney-client relationship between you and Robinson & Henry, P.C., or you and any lawyer. It is not a substitute for an assessment with a lawyer licensed to practice in your jurisdiction about your specific legal issue, and you should not rely on this legal guide.

Application Process – Things to Know

Excluded conditions

Depending on your insurance company and your type of coverage, some policies have disqualifying conditions. This means that some pre-existing medical conditions may have a harder time getting insured and/or keeping their long-term disability benefits.

When initially applying for a policy. When applying for a disability insurance policy, the insurer will conduct a “look back period” in which they review the last 30 days (or some other period) for any medical episodes. A medical episode such as a cancer diagnosis or a car accident may either hamper your ability to get coverage, or the insurer may say that they will not cover any future disability that arises from those medical episodes.

Additionally, some medical conditions are not covered at all. Depending on the policy, typical excluded conditions are: drug abuse, alcoholism, attempted suicide or injuries sustained due to crime or acts of war.

Limiting benefits to 24-month period for certain disabilities. Additionally, disqualifying conditions come into play after a worker has successfully submitted a disability claim and has been receiving benefits for a period of 24 months. After this period, the insurer may say that they will no longer cover benefits for those who are disabled due to: mental, neuromusculoskeletal or soft tissue disorders.

Physical factors that influence insurance costs

Additionally, workers also must be aware that there are physical factors that may influence the cost of their premiums. Such factors may include but are not limited to:

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Submitting a disability insurance claim

Every application process can vary depending on the insurer, the claimant and the particular case. The below process is a generalized overview of what a worker can expect when submitting a claim. Please review your own policy for specific details.

While every policy is different, a worker usually needs to submit a claim about 20-30 days from the date of the disabling event – this may be the date you were injured or received a diagnosis from you doctor. Once this deadline is met, make sure you keep an eye open for further correspondence from your insurer who may be requesting additionally information. An insurer may also ask that the worker attend a medical exam.

Gathering Evidence

When you start the claim process, you will need to gather proof of your disability. A note from your doctor saying you are disabled is not enough evidence! Here is a list of things a person should consider when obtaining evidence for their disability insurance application.

graphic showing the timeline of an LTD claim and appeal

Types of Evidence

Making subjective evidence credible. When compiling evidence, it’s important to realize that there are two forms of medical evidence, subjective and objective. Objective evidence are things like x-rays, MRIs, blood tests and clinical observations of a medical professional, such as documenting a rash, fever or swollen glands.

Subjective evidence are things like pain and fatigue which are hard to verify. Thus, it is extremely important to support subjective statements with objective testing and clinical observations. For example, a worker who claims of extreme back pain would have stronger evidence if it was supported by objective evidence like x-rays of the herniated disc.

Own Occupation VS Any Occupation. Depending on a person’s policy, an insurance company will require that an individual prove they are unable to continuing working in either their own job or any job. This is an important distinction. If you provide evidence that you cannot continuing working in your own job, but your policy is an “any” policy, then your claim will probably be denied. Depending on your policy, building evidence to show an inability to work in one’s own occupation may not be enough.

Refuting Job Accommodations. An insurer may also look at whether or not the employer can make accommodations that may allow the disabled employee to work. For example, if a disabled person claims they cannot sit for long time periods, then the insurer may deny disability coverage if they determine that the employer can provide an ergonomic workstation. So, it is important to document that any accommodation by the employer is insufficient, or that the worker’s disability is beyond accommodation.

Occupational analysis. When determining a worker’s ability or inability to work, it’s important to include a detailed analysis of what your job duties are to accurately provide evidence of why you cannot do them. Evidence such as workplace photos, job descriptions and job analysis’ by a vocational expert are useful. Otherwise an insurer will use generalized definitions which may not accurately reflect your work environment and can lead to the insurer denying disability benefits.

Functional capacity evaluation (FCE). Basically, a FCE is a physical evaluation of a worker’s ability to carry out their job functions. Over two days, a FCE tests a worker’s ability to perform functions necessary to their job, such as lifting, carrying, pushing, sitting and standing. This type of report is useful for demonstrating how a disability affects a person’s ability to perform on the job. A validity test can also be used in conjunction with a FCE, to ensure maximum physical effort is being used. Otherwise an insurer may dispute a FCE by claiming the worker exaggerated their symptoms.

As it takes place over two days, a FCE can provide objective evidence of those whose disability involves fatigue. Without it, subjective claims of fatigue are hard to prove. Some FCEs can be completed in a day, but if the worker suffers from fatigue, then it is suggested that they inquire about a two-day evaluation.

Additionally, for those who suffer from mental disabilities, there is a corresponding test call a Neuropsychological Evaluation. This type of evaluation looks for cognitive defects that may affect a person’s ability to carry out their job by performing a series of psychological tests on the individual. This evaluation should also be accompanied by a validity test.

Vocational expert. For insurers to determine a person’s ability to perform their job duties, they first must determine what duties are associated with that job. Most insurance companies use DOT (Dictionary of Occupational Titles) to define job roles. Problems arise when blanket job descriptions do not take into account the numerous variabilities each job has.

A vocational expert can help strengthen a disability claim by determining a worker’s occupational duties and whether or not the worker can perform those duties. Additionally, a vocational expert can assist workers who have the “any” occupation policy (as discussed in the previous section). By conducting a Transferable Skills Analysis (TSA) and a Labor Market Survey (LMS), a vocational expert can determine what professional qualifications a worker may have and if they can be transferable to another available occupation.

If a vocational expert can determine if a worker lacks the needed skills for an available job, or if there are no current available jobs in the local area (that meet the minimum earnings requirement), then this lends great creditably to a disability claim.

Appealing a denial of a disability insurance claim

The initial application and appeal process is extremely important and here’s why – any evidence not submitted during this process is generally not admissible in future litigation. Hence, if you miss critical evidence while the administrative record is open, you cannot use it later should you need to take your case to court. So thoroughly documenting all the information related to your disability is crucial.

The time a person has to gather this evidence and submit their appeal is generally 180 days after being denied. Not abiding by this deadline runs the risk of losing your ability to appeal your insurers decision.

Here is a summary of important things to keep in mind when appeal a denial:

Treat this as if you’re preparing for trial.

Most disability policies are subject to the federal law of ERISA (Employee Retirement Income Security Act), which rules that once a claimant has used all of their appeal opportunities, their case record is closed. So, while it’s open, it’s important to cram the administrative record with as much favorable evidence as you can. Determine what evidence is needed for the claim to win in litigation and add it to your appeal.

Start building your case by reviewing your denial letter.

With a fine-tooth comb, review your entire denial letter. Look for the insurers criticism of your evidence and notes on missing or lacking evidence. These points will become the skeleton of your appeal and point toward what information you will need to obtain. Depending on your denial, you may need to include a rebuttal from your treating doctor and get additional testing.

Contact the insurer for a copy of your claim file.

By law, an insurance company is required to provide you a copy of your claim file. It’s important to review this file (as you did the denial letter), due to additional criticism that may not have been present in the denial letter.

Abide by the 180-day deadline.

It’s important to send your appeal well in advance of the 6-month deadline, as well as acquire proof of receipt. Otherwise the insurer may cite a statute of limitations violation and the appeal may then be considered invalid.

Common Issues

A frequent problem in denials or terminations are that insurance companies fail to properly give credit to objective evidence. Common insurance mishaps are:

  • Failing to credit side effects from medications.
  • Reviewing insurance doctor did not consider worker’s occupation.
  • Failure to credit treating doctor’s opinion.
  • Not giving recognition to creditable claims of pain and/or fatigue.
  • Failing to apply the proper definition of disability.

Getting the insurance company to admit these failures can be incredibility difficult. **In steps the legal help.** A disability attorney will have a much easier time fighting with the insurer, as they are aware of previous cases in which the court ruled in favor of a disable person and use these case laws as legal precedents against the insurer. Additionally, an attorney can fight these oversights by arguing a case for an arbitrary and capricious standard or deficiencies.

Fighting benefit termination – Importance of continuing disability establishment

You’ve been approved to receive disability benefits, woo-hoo! Well, let’s not get ahead of ourselves just yet. Sadly, just because your claim has been approved, does not mean that the insurer will not find a reason to terminate those benefits, months or even years after paying them.

There are a variety of reasons an insurance company may use when sending you a termination of benefits letter. Below are some of the reasons why a person’s benefits may be terminated:

  1. Your disability falls under the policy’s 24-month time limitation.
  2. Policy’s definition of disability may shift after 24-months from “own” occupation to “any” occupation.
  3. You have aged out or reached the maximum benefit period.

Every policy is different, so it’s important to understand if your disability has a time limitation or if the definition of disability shifts from “the inability to perform one’s own job” to “any job.” If your benefits have been terminated due to reasons 1 or 2, it is recommended that you seek the advice of an attorney who can help you assess your case for appeal.

To avoid having your benefits terminated follow these guidelines:

  • Continue medical treatment and send periodic proof of your continuing disability. Even if your disability isn’t expected to change, those who do not continue to receive medical treatment may be seen by the insurer as proof that your condition has improved. Also, check if your policy requires proof (perhaps an annual recertification) and when it must be submitted.
  • Check to see if your policy requires you to apply for Social Security disability benefits. Many insurance companies do require this, as they can offset their payments, should you also receive a check from Social Security Administration. If they do require it and you do not apply, then your benefits may be terminated.
  • Typically, you should not work while receiving disability benefits. Should the insurer find out that you are working, they may terminate your benefits believing your condition has improved.

How a disability attorney can help

You can bet the insurance company has a host of medical and legal professionals to review every word of your claim, looking for flaws and holes in your evidence and statements. As such, it’s not uncommon for insurers to deny valid claims, delay payment or terminate current benefits. Therefore, it is highly recommended that a person retain legal help should they run into problems. Call (303) 688-0944 to schedule an assessment.

Finding and submitting the proper evidence of a disability is paramount to your case. A disability attorney is a learned professional in interpreting individual insurance policies and finding what insurance companies require to establish disability. And because most disability claims are governed by federal law (ERISA), workers have the option to hire attorneys out of state.

When it comes to attorney fees, contrary to popular belief, a disability attorney is an affordable option. Law dictates certain ethical standards for attorneys, one being that they must operate in their client’s best interest. Since most disabled persons cannot work, it would be unethical to charge them normal attorney fees. Hence most disability attorneys charge a “contingency fee.” According to the American Bar Association, this means you don’t pay any fees if your case is lost. If your case wins, then the fee (usually a fixed percentage) will be taken out of the money awarded to you.

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