If you cannot work for whatever reason, you may have insurance coverage that can help keep you afloat. In some cases, you may return to work after a certain period. Then, your benefits will be short-term with a limited duration. In other cases, your absence from work can be for an extended period, or it might even be permanent.
You can get coverage to protect you in various circumstances. However, the language of your policy that guarantees you this coverage is not as airtight as you may think. Insurers look for every possible reason to deny you benefits.
You have the right to challenge the benefit denial. The type of appeals process you go through depends on your policy.
Here are some disability policies and protections that can pay you if you can’t work and some considerations you need to make regarding each type of coverage.
When you have a disability claim, you will benefit from the help of an experienced attorney. Nationwide Disability Lawyer has helped thousands of clients as they seek the disability benefits they critically need.
Here are some disability coverage options available to you if you cannot work for an extended period.
When handling disability claims, our law firm does not hesitate to take on the largest insurance providers across the nation, including:
Even though these insurers have deep pockets, they want to avoid sharing these funds with disabled policyholders. We do what it takes to obtain benefits for our clients, including settlements and verdicts upwards of $500,000, $1 million, and even $2 million when the case warrants such amounts. Insurers know that we fight for our clients, and they often respond by providing the benefits our clients need and deserve.
If you are self-employed or your company does not offer the benefit as part of your compensation package, you may purchase a long-term disability policy on your own. You pay the premiums in exchange for income protection if you cannot work. Your contract is direct with the insurance company instead of your employer purchasing the coverage for you.
Individual policies may take better care of you, and there is often a better chance of your condition having coverage under the terms of your policy. The ERISA plans that employers purchase are group plans, and they may be spending less money on them. Individual long-term plans can be more tailored to your needs. However, these policies will usually be expensive, and you will need to pay for the more extensive coverage.
When you purchase an individual policy, that policy is yours. It stays with you no matter where you go, so long as you make all the premium payments on time. You do not lose your policy if you leave your job.
When you purchase a long-term disability plan privately, it is paid for by your post-tax dollars. While this represents a bigger upfront financial hit for you, there are some benefits. When you receive disability payments, they will be tax-free.
In addition, you have a broader right to take action against the insurance company if they try to deny your benefits under your policy. Your privately purchased long-term disability policy is a contract between you and the insurance company.
If they do not pay you benefits, you may sue them for breach of contract claims under state law. There is no requirement to go through the insurance company appeals process first, and you have a much broader right to build a record for a state court to hear. There is no requirement to go to a federal court.
You may even have the right to file a lawsuit against the insurance company for bad faith, depending on the circumstances of your policy denial. If you are successful, the insurance company may have to pay punitive damages for its conduct.
While it may not be correct to say that insurance companies treat private paying customers better, it is right to say that the insurance company can face more significant legal ramifications if they improperly deny your claim. You have more options and the ability to take more forceful action if the insurance company breaks the law in refusing your benefits.
In some cases, your long-term disability comes through your job as an employee benefit. Because it is an employee benefit, different regulations apply to it than to a long-term disability insurance policy that you buy on your own. A separate law called the Employee Retirement Investment Security Act (ERISA) applies when dealing with an employee benefit. ERISA establishes the procedures that apply to your claim, giving the insurance company a lot of power.
Employers provide long-term disability policies as a fringe benefit to attract employees and give them a more appealing compensation package. Some employees know the problems they can face when they cannot work for an extended period. Therefore, a long-term disability policy that does not cost them any extra can be a significant inducement for an employee.
You must go through an insurance company to get your benefits like any insurance claim. Insurance companies go through your claim with a fine-tooth comb, looking for any plausible reason to deny you benefits. They stringently review all your documentation, often giving no deference to the opinion of your treating physician.
The difference between an ERISA long-term disability claim and a standard long-term disability claim is the appeals process you must undergo if the company rejects your claim.
In an ERISA claim, the insurance company exercises a lot of power. They have the first level right to review your appeal. Their employees will determine whether their co-workers made a mistake by denying you benefits. Only after the insurance company denies your claim can you take your case to court.
Nonetheless, you must fully participate in the insurance company appeals process because you cannot add to the record if your case goes to federal court.
In addition, the federal court may use an insurance company-friendly standard of review when reviewing the denial. The federal court will look to see if the insurance company “abused its discretion.” Still, the judge will closely examine what the insurance company did and their reasoning for denying your claim.
In addition, your ERISA long-term disability benefits will be taxable. Employers pay the premiums with before-tax dollars, but you pay taxes on the benefits as ordinary income.
In both types of long-term disability insurance, the insurance company may try to take away your benefits at a certain point in time. They can argue that you are capable of returning to work, or they might try to change the rules of the policy on the fly, forcing you to file a lawsuit to keep your benefits.
Short-term disability insurance will protect you for a limited period when you cannot work because of illness or injury. You will receive benefits for a set period, usually between three and 12 months.
Short-term disability covers severe injuries and illnesses that are not work-related. These injuries are more than a cold or flu but less than a major condition that will keep you from working again (long-term disability plans cover those).
Some eligible conditions can include:
The primary purpose of short-term disability is to replace a part of your income when you cannot work. The cause of your inability to work can be a workplace injury, an illness, or an injury outside of work.
For example, if you cannot work because of an injury in an accident in your home, you can still receive short-term disability benefits. However, you cannot receive workers’ compensation benefits and short-term disability insurance payments simultaneously.
If workers’ compensation denies your benefits, you may apply for short-term disability benefits. You must wait a certain period, called the elimination period, before you can begin to receive benefits.
If you receive short-term disability benefits but then later receive a personal injury settlement, you will have to reimburse the insurance company for the money that they have given you.
You can purchase private short-term disability insurance or obtain it as an employee benefit. If you get the policy through your work, the same ERISA rules apply. You may have to appeal the denial of STD benefits to the insurance company before going to federal court.
The Social Security taxes you pay can help provide you benefits if you cannot work. Social Security Disability Insurance provides some payments if you have a condition that will lead to death or last at least one year.
Note that the SSDI program has a stringent definition of disability. Many things that will qualify for short or long-term disability insurance coverage may not meet the Social Security definition of disability. The Social Security Administration (SSA) reserves these payments for people with significant disabilities.
In addition, SSDI payments are usually less than you will receive in long or short-term disability. Insurance coverage will provide you with up to 70 percent of your salary, while SSDI payments are most often less than $2,000 per month. Therefore, SSDI payments will usually not be your first option when you cannot work and need money. SSDI may be the last option that you will explore. In addition, the SSA denies a majority of SSDI applications initially, forcing you to go through an appeals process.
If you find yourself unable to work because of an accident or injury, you face a high-stakes application for disability benefits. You cannot afford to make a mistake because it can make an enormous difference in your ability to survive financially.
Especially if you have a sizable potential claim, you should look to an experienced attorney before filing a claim with the insurance company. You should certainly hire a lawyer if the insurance company denies your claim, and you need to file an appeal or a lawsuit against the insurance company.
Here are some questions that we commonly receive about disability law issues:
The rules are much more difficult when a group plan from work covers you. However, an insurance company will charge high premiums for a privately purchased disability insurance plan. Disability insurance may not be in your budget when you have other pressing financial needs. You should consider your own needs and situation in making your decision.
Simply stated, you do not have a choice. ERISA requires this procedure. The only way to get into a federal court to have an objective judge hear your case, rather than a conflicted insurance company, is to go through the insurance company’s process first. You cannot skip it and must take it seriously.
Disability insurance lawyers will work for you on a contingency basis. They will receive a percentage of the money you recover from the insurance company. You will not need to pay them upfront for your case, nor will you need to pay hourly bills. This contingency fee arrangement is how you can afford an attorney when you cannot work and are not receiving a salary.
When you cannot work and have a disability claim, you should consult with an experienced disability lawyer. The need becomes even more critical if the insurance company or SSA denies your initial claim and you need to sue or appeal.
This has been a very difficult time for myself and my family. Mr. Mcnamara did his best to be as empathetic and compassionate as possible. He is very knowledgeable and a man of great integrity.
Following graduation from Loyola Law School in New Orleans in 1990, Price McNamara served as a Federal Judicial Law Clerk to the Honorable John M Shaw, Chief Judge, United States District Court Western District of Louisiana.
Mr. McNamara founded the Law Offices of J. Price McNamara, and began putting his past experience to work for the injured and disabled clients he now represents against the insurance companies in personal injury and long term disability and other insurance disputes in both federal and state courts