LONG-TERM AND SHORT-TERM DISABILITY INSURANCE
Long-term disability insurance (LTD) and short-term disability insurance (STD) are policies that protect an employee from loss of income in the event that he or she is unable to work due to illness, injury, or accident for a short or long period of time. Short-term policies protect employees who are unable to work for a short period of time, usually three to six months. Long term policies may protect employees for a number of years. Both policies are generally provided as an employee benefit by the employer, but they can also be purchased privately. This is not worker’s compensation insurance, but both type of policies will cover an employee in the event of an accident or illness.
SHORT-TERM DISABILITY INSURANCE
Short-term disability insurance is an insurance policy that protects an employee from loss of income in the case that he or she is temporarily unable to work due to illness, injury, or accident. Short-term disability insurance ensures that an employee will still receive a percentage of income if they cannot work due to sickness or a disabling injury.
Most short-term disability insurance plans include certain requirements regarding the employee’s eligibility to receive benefits. There may be a minimum service requirement or the minimum length of time that a worker must have been employed. The plan may require full-time employment. In addition to these requirements, some employers specify that an employee must use all of their sick leave and they may require a doctor’s note to confirm that an illness is preventing the employee from working for a period of time.
Short-term disability insurance plans usually offer a percentage of an employee’s pre-disability salary. Plans may provide benefits for as few as ten weeks or as many as 26 weeks. Benefits may also vary based on an employee’s position or the amount of time he or she has worked for the employer.
LONG-TERM DISABILITY INSURANCE PLAN
Long-term disability insurance (LTD) begins to assist the employee when short-term disability insurance (STD) benefits end. Once the employee’s short-term disability insurance benefits expire (generally after three to six months), the long-term disability insurance pays an employee a percentage of their salary, typically 50-70 percent.
Long-term disability payments to the employee, in some policies, have a defined period of time, for example, two-ten years. Others pay an employee until he or she is 65 years old. Most policies will pay disability benefits if the employee is unable to work in his or her current profession for a period of time, usually two years. The policy will then continue benefits if the employee is not capable of performing any type of employment. Most long-term disability policies require that you apply for Social Security Disability (SSDI) benefits when you apply for long-term disability insurance. Most policies will reduce their benefit payments by the amount of SSDI benefits you receive or are eligible to receive.
WHAT HAPPENS IF BENEFITS ARE DENIED
After completing the application process, the insurance company, who is usually the administrator of the plan, may still deny your claim for benefits. The company may say that you are still capable of performing the material duties of your current occupation or are still able to earn a certain percentage of your averaged earnings. They may state that your Doctor did not present sufficient medical evidence to support your disability claim.
Generally most denials occur when one is applying for or are receiving long-term disability benefits. In long-term policies, you may receive benefits if you are unable to perform the duties of your regular occupation. Most long-term policies have a provision that after paying benefits for a period of time, usually 24 months, they will continue to pay benefits if you are unable to perform the duties of any occupation that would provide you a certain percentage of your averaged earnings. Consequently, the insurance company may terminate your benefits if they have an opinion that you are capable of performing any job that would provide a certain percentage of your prior averaged earnings.
Most employer based disability insurance policies are governed by the Employee Retirement Security Act of 1974, otherwise known as (ERISA). ERISA requires an employee who has had their claim denied, or current benefits terminated, to go through the insurance company’s administrative appeal review process before you can take any legal action. Generally, the insurance company allows you a period of time, usually 180 days, to file an appeal of the decision. Filing an appeal requires a letter to the company explaining why you believe the decision was incorrect. You may also provide the company with additional medical records or information to support your claim.
After receiving your letter, the company may contact your Doctor(s) for additional information. The company may require you to undergo a physical examination. The company may require you to complete additional forms and questionnaires. Even if you do cooperate fully, the company may continue to deny your claim.
After denying your appeal, the company may require you to file another appeal with a different “unit” of the company. If that appeal is also denied, you may take your case to Court. Most ERISA cases are taken to Federal Court. If you decide to take legal action you must file your case before the applicable statute of limitations expires. ERISA does not have a specific statute of limitations period. The company insurance policy may have a limitations period. If it does, the company must tell you the deadline for filing your legal action. If there is no specific limitations period in the insurance policy, the Pennsylvania statute of limitations for contract actions is applied. If that is the case, you must initiate your legal action within four years from the first time the insurance company asked you for proof that you were disabled.
Here at Nikolaus & Hohenadel, LLP, we have successfully represented clients during the insurance company appeal’s process. We have helped clients get their benefits restored and past due benefits reinstated. We have successfully represented clients in our Federal Court system. We also have been successful in negotiating lump sum settlements for clients that have had their benefits denied.