When a person becomes disabled, there are several options that may be available to restore some income to his/her household. Some of these include, but are not limited to:
- Federal Disability benefits. Social Security Disability Insurance through the Social Security Administration. This is the most well-known and widely utilized disability program available to sick and injured Americans. ERISA governed insurance policies usually require the claimant to apply for SSDI benefits and also allow the insurance company to “offset” the claimants LTD benefits by the amount received through SSDI. However, disability insurance companies are not bound by the Social Security Administration’s determination of disability. LTD insurance companies routinely “assist” clients with securing SSDI benefits, only to deny LTD benefits after receiving reimbursement for what they deem to be an “overpayment” of benefits (which typically amounts to the entire amount the claimant receives in SSDI back pay).
- State Disability Benefits. Currently, only California, Hawaii, New Jersey, Rhode Island and New York have statutory disability plans. These plans are typically funded by mandatory contributions from either employers or employees and offer temporary, short term disability benefits to residents suffering from sickness or injury. Because these programs are state specific, the rules, requirements, and eligibility vary significantly.
- Federal/State/County employee retirement and disability systems. These benefits are often available to federal, state, and local government employees when they become disabled. They are usually part of the employee retirement system and have their own specific rules, regulations, and eligibility requirements.
- Veterans Administration disability. This tax-free monthly benefit is available to Veterans who are at least 10% disabled because of injuries or diseases connected to their military service. This can include physical and mental health conditions.
- Short Term Disability (STD) insurance. These benefits are designed to provide temporary, short-term, partial income replacement and are usually obtained through employer-based group benefits or individually purchased insurance policies.
- Long Term Disability (LTD) insurance. Many employees are covered by Group LTD insurance as part of their employment benefits package. LTD benefits can provide a disabled person with additional monthly income above Social Security Disability benefits, as well as bridge the gap between the onset of disability and approval of the person’s SSDI claim.
- Individual Disability insurance (IDI). IDI policies are typically obtained outside of an employment relationship with premiums paid via after tax personal income. IDI policies are typically much more expensive than employer sponsored Group LTD policies. However, these policies typically offer much better protection than employer-based group policies. The terms governing group and individual disability policies can vary greatly. Whereas most Group LTD policies are governed by ERISA, an Individual Disability Insurance policy is governed by state contract law, meaning that the playing field is fair, and the claimant has a right to have a jury decide whether he or she is disabled. While the terms of individual disability policies vary greatly, these policies don’t always offset for other income (such a Social Security Disability) and are sometimes “own occupation” throughout the entire benefit period. Most IDI policies do not distinguish between physical disabilities and mental disabilities and have far fewer limitations on benefits than Group LTD policies. Most importantly, the insurance companies handling these IDI claims are subject to state law and can be sued for bad faith and violations of the Unfair Settlement Practices Act in states that have such legislation.
Abell & Capitan Law is devoted to assisting people with Long Term Disability claims. While it is best to consult with an attorney from the start, we can get involved at any stage from application to litigation. A typical Long Term Disability claim follows the following general path:
- Notice of Claim. The first step to any Long Term Disability claim is to notify the plan administrator or insurance company of your intent to file a claim. This usually requires a phone call to the insurance company or plan administrator and completion of an initial application for disability benefits. Most disability policies have strict notice requirements that must be followed (i.e. within 30 days of initial date of disability). The specific notice requirements will likely be described in your disability insurance policy or plan document. If possible, it is always advisable to obtain and review a copy of the governing plan and insurance policy prior to going out on disability or as soon as possible.
- Proof of Claim. Most disability policies require a claimant to submit proof of disability (usually referred to as proof of claim or proof of loss) within a certain time period after the event or illness triggering disability. Generally, the clock starts ticking the day after your last day worked (which is usually considered your date of disability). The prescribed period can vary, but a claimant is often given 90 days to submit proof of loss, with this period extended up to a year if extenuating circumstances are present. If proof of claim is not given within the prescribed time limit, the claimant may be contractually barred from recovery. At this point, it is often up to the discretion of the administrator as to whether they will review the claim.
- Initial Claim Decision. Once the initial claim is filed, ERISA requires the plan administrator to issue a decision within 45 days after it receives the claim. Like most other regulations, this one is not without exception. A plan administrator may extend its decision deadline by an additional 60 days (total of 105 days) if it provides proper notice to the claimant before the original deadline and the extension is necessary for matters beyond the administrators control. See 29 C.F.R. § 2560.503-1(f).
- Appeals. If the claim is denied and governed by ERISA, a claimant is required to file at least one mandatory internal administrative appeal before pursing litigation. The plan cannot not require more than two mandatory appeals. In practice, some administrators only offer one level of appeal, some offer one mandatory and one voluntary level of appeal, and others require two mandatory levels of appeal. ERISA requires that claimants be afforded a minimum of 180 days following receipt of the denial letter to file an appeal. See 29 C.F.R. § 2560.503 (h)(3)(i). If the claim is not governed by ERISA, state contract and insurance laws govern. The terms and conditions of the insurance policy may have different requirements and time limitations than ERISA claims. With these claims, it is possible for a claimant to have the option of either pursuing an internal appeal process or bypassing this step to immediately pursue litigation. As with any claim, it is crucial that you carefully review the governing insurance policy as early as possible to understand your rights.
- Final Administrative Decision. Once the plan administrator issues a final denial, it is unlikely that it will review any additional documentation submitted in support of disability. The denial letter should clearly indicate whether you have any mandatory or voluntary appeals remaining. If not, it should clearly indicate that you have exhausted your administrative remedies and no additional information will be reviewed. The final denial must advise you of your right to pursue litigation under ERISA and provide a description of any contractual limitations period limiting your right to pursue litigation.
- Litigation. Once a final denial has been issued in your Long Term Disability claim, the only option left is usually to pursue litigation in federal court. If a settlement cannot be reached, your claim will most likely be decided by a federal court on cross motions for summary judgment.