Long term disability claims are based on an insurance contract between an insurance company and an employee. Most of these arise out of employment situations in large factories where one is part of a group plan. Some of the group plans are furnished completely by the employer. Some are furnished by the employer with premium contribution payments made by the insured employee. Although there are also disability policies which can be privately purchased to furnish long term disability benefits, the discussion below is based upon typical group plans most commonly provided by large employers.
Under the typical group plan there will usually be a short term disability plan, sometimes called accident and sickness pay. These benefits run for a period of 26 weeks (6 months). The employee will be paid a portion of their normal wages while they are unable to do their normal work. If the disability continues beyond the 26 weeks of benefits, then the employee would be eligible for long term disability. Some employees are only provided with short term disability, and some receive both. It is important to read the materials provided by the employer and ask the benefits coordinator to explain the ins and outs of the policy so that an employee knows what it does and what it covers.
Most long term disability policies break down coverage into two different categories: (a) specific occupation, and (b) any occupation.
Under the specific occupation coverage, an employee will receive benefits for months 7 through 24 (after the first 6 months of short term have expired) if that employee is unable to do their regular occupation. If the employee is a tire builder at a tire building factory, and he or she can no longer build tires, then they would be entitled benefits from being disabled from their “specific occupation” up to 24 months after the disability began.
After the 24 month period the usual policy then converts to an “any occupation” policy. This means the disability of the employee is re-evaluated to determine if they are disabled from not only their own occupation, but ANY occupation in the open labor market. In the above example, if the tire builder cannot return to working as a tire builder, but could work as a fork lift driver, then the disability benefits are terminated at that time as he or she can perform lighter duty types of work.
Most Long Term Disability policies require the employee to file for Social Security Disability. The standards for Long Term Disability are similar to that of Social Security, but a Long Term Disability policy is often more restrictive than social security. Social Security will allow an individual to make up to $1,000.00 a month and still be considered disabled. Long Term Disability policies may allow for some wages as a percentage of what they were previously making or they may not. Under some Long Term Disability policies any ability to perform any type of work, no matter how little one could earn from it, can disqualify someone from benefits.
Most Long Term Disability policies seek a reimbursement and offset of benefits received from Social Security Disability. If a disabled person receives $1,600 a month from their Long Term Disability policy, and later receives an award from Social Security Disability of $800 a month, then the disabled person would receive $800 from Social Security and $800 from Long Term Disability each month.
A difficult and frustrating situation occurs where a person receives Long Term Disability payments for 2 years while waiting for a Social Security appeal. When the Social Security is finally granted, there may be a substantial back pay award which will be completely offset by the Long Term Disability carrier. The Long Term Disability carrier may simply request that the entire back pay award from Social Security be turned over to the Long Term Disability carrier.
In the alternative, the Long Term Disability carrier may simply cut off benefits until they have “offset” the money owed. Unfortunately, the Long Term Disability carrier will often try to offset the Social Security before the Social Security Administration completes their months of paperwork and waiting periods before they finally cut a check. Disabled persons pursuing these claims need to be aware of this possibility and prepare accordingly for the bumpy transition periods. Most policies for Long Term Disability have a minimum payment of $50 per month that they will make even with an offset that would otherwise take the entire monthly benefit.
Long Term Disability benefits can also make an individual ineligible for SSI benefits. Regular Social Security Disability does not consider Long Term Disability benefits as income. But for SSI, these benefits are an asset that often prevents an individual from meeting the income requirements of SSI.
Workers’ compensation benefits may be offset against Long Term Disability and Social Security Disability. The offset issues have to be looked at closely and determined on a case by case basis. For Long Term Disability cases, offsets depend on the wording of the policy and the circumstances of who has paid for the policy together with other factors concerning the type of workers’ compensation benefit.
If a claim for Long Term Disability is denied, it is important to build a strong case by building the claim file in your favor. This will increase your chances of winning an appeal of the denial. Read any letters of denial carefully for time limitations on appeals. Once all of the internal appeals are done within the framework of the policy, then suit is filed in Federal Court. A Federal Magistrate or Judge will only review the documents in the claim file to determine whether there was “substantial evidence” for the denial of the claim. This is a non-jury proceeding and the only issue is whether the denial is supported by the information that was available to the insurance carrier. It is crucial to provide as much medical evidence as is possible to support the claim.
Attorney D. Russell Thomas has over 32 years of experience in pursuing long term disability actions on behalf of injured workers. If you have been injured while in the course and scope of your usual employment, please contact us for a free case evaluation.