Disability Insurance FAQs
By the attorneys of the Disability Insurance Law Group
The following information is provided in order to help you understand some of the general concepts and common concerns that arise in relation to an insurance claim for disability benefits. For specific answers from an experienced disability insurance lawyer, please contact the offices of Disability Insurance Law Group to schedule a free consultation. We serve clients nationwide.
Q: What are the different types of disability insurance policies?
A: There are five basic types of disability insurance policies:
- Individual Disability Policies — These policies are procured by the insured (or his/her agent), paid for by the insured directly and are not an employee benefit or business expense. Thus, in most cases the disability benefits are not taxable. Benefits can be payable to age 65, beyond age 65 or for life. Should the claim be denied, the insured can either file an appeal of the denial or proceed straight to litigation.
- Group Disability Policies — These policies are provided through an employer and often fall under the jurisdiction of the Employee Retirement Income Security Act of 1974 (ERISA). Under ERISA the insured presents the disability claim to the disability plan’s administrator along with evidence of disability. If the plan administrator denies the claim, the insured must first appeal the denial; he or she may not proceed directly to litigation. What most insureds do not understand is how important it is to present the claim properly from the beginning. If the claim is denied, then the importance of filing a complete appeal with all proof of loss and evidence of disability cannot be overstated.
- Short-Term Disability Policies (STD) — These policies pay benefits for a very limited time period. The waiting period on these policies range between 0 and 14 days with a maximum benefit period of up to 24 months.
- Long-Term Disability Policies (LTD) — These policies can be secured on an individual basis, through an employer or as part of a group, like the American Dental Association. The waiting period can range from several weeks to 24 months, and the maximum benefit period is usually up to age 65. These policies provide the insured with a percentage of his employment income should he become disabled due to sickness or injury.
- Business Overhead Expense Policies (BOE) — These policies provide reimbursement for the expenses of operating a business if the insured is disabled and cannot work. The expenses may include rent or mortgage payments, electricity, telephone, heat, water, laundry and other fixed costs necessary to operate a business. Some policies pay additional costs, including nonprofessional employee salaries (such as the receptionist, nurses, assistants) and may cover at least part of the salary of a professional temporary replacement – such as a doctor retained to fill in during the insured doctor’s period of total disability. Business Overhead Expense Policies are supposed to pay the expenses of your business while you are recovering from a serious illness or injury and cannot work. However, these policies are often written with ambiguous and confusing policy language. Insurance companies often challenge certain expenses as not covered under the policy and refuse to provide the full monthly benefit. The attorneys at Disability Insurance Law Group thoroughly examine our clients’ policies and monthly business expenses and aggressively fight to assert our clients’ rights under their policies. – top –
Q: What is meant by the term “total disability”?
A: Usually, policies define total disability as the inability to perform the material duties of the claimant’s occupation. Therefore, it is the claimant’s responsibility to thoroughly explain why his/her condition prevents the claimant from engaging in those duties. Many disability applications require that the claimant clearly set forth all of his/her occupational duties, specifically breaking down each duty into categories equating to time spent performing each. If the claimant’s occupational duties are not clearly identified and specifically broken down, it can result in either a denial of the claim or a decrease in benefits. A generic occupational duties list allows the insurance carrier the ability to define the physical or mental demands of the claimant’s occupation. As such, the carrier is free to suggest that the material duties of the claimant’s job may be performed despite the claimant’s noted limitations. Moreover, the carrier may attempt to assert that certain duties are not “material” to the claimant’s occupation, rendering the claimant partially rather than totally disabled, typically lowering the claimant’s benefit. – top –
Q: What is meant by the term “residual or partial disability”?
A: Policies that incorporate a residual or partial disability definition, or in which a residual disability rider was purchased, define residual/partial disability as:
- The inability to perform one or more of the substantial and material (major, primary) duties of your occupation.
- The inability to perform all of these duties for as much time as you could before the disability.
- You have suffered at least a 20 percent loss of monthly income.
Many insurance carriers incorrectly interpret their own policy language to mean that if the insured is capable of performing at least one of the duties of her occupation, she is residually disabled and only a partial benefit is due. However, there are many instances where, despite the fact that the insured can perform one or more of her previous duties, those are not the “main” or “substantial” duties. Thus, where an insured continues to work in a limited or wholly different capacity (for example, a dentist who no longer practices dentistry but now handles all the administrative responsibilities for the practice) that insured is still totally disabled, not partially disabled, and entitled to his/her full disability benefit. – top –
Q: What is the difference between partial and total disability insurance benefits?
A: Under many policies you may recover benefits for either total or partial disability. Total disability typically means the inability to perform the substantial and material duties of your occupation. Often, if you are unable to perform one or more of your substantial and material duties, you are totally disabled.
Partial disability usually entails an individual who continues to work and perform the duties of his or her occupation, but due to a disability is unable to perform those duties for as much time or as often as he or she did in the past. Typically, you must suffer an income loss of at least 20 percent to collect a proportionate amount of benefits.
Under many policies you may qualify under both the total and partial disability provisions, though you can only collect benefits under one. Partial disability is often defined as the inability to perform at least one of the substantial and material duties of your occupation. If you are unable to perform your substantial and material duties for as much time as you were able to perform them previously, you may also be considered disabled.
Often, insurance companies will attempt to assert that since you fall under the partial disability provision, you are not totally disabled. In most cases, your total and partial disability provisions are separate and distinct, for which you likely paid additional premiums. As such, it is inappropriate to deny coverage under the total disability provisions, because you also qualify for partial disability.
One provision typically cannot be used to define the other. Your insurance company has a duty to act in your best interest. Unfortunately, this is not always the case. Read your contract carefully. If there is at least one material and substantial duty you cannot perform, you may very well be entitled to total disability benefits. – top –
Q: Does it matter whether my disability is the result of an injury or an illness?
A: Under most disability policies there is a distinction between disabilities caused by a sickness or illness and one caused by an accident or injury. Sickness is often defined as an illness or disease that first manifested itself while the insured is covered under the disability plan. Injury means a bodily injury that is the direct result of an accident and not related to any other cause. The injury must become disabling while the insured is covered under the disability policy.
This distinction can be quite important. Some policies will provide lifetime benefits if the disabling condition is the result of an injury. Thus, many insurance companies will try and attribute a back injury to degenerative disk disease, rather than to the specific accident that may have been the cause.
Additionally, many policies only provide 24 months of benefits for mental/nervous illnesses such as depression, panic disorder or post-traumatic stress disorder. However, some illnesses are not truly mental/nervous, but the result of an organic injury to the brain.
Other conditions such as Parkinson’s or Alzheimer’s disease are physical disorders that a company will mistakenly label mental/nervous. More common, however, is the case where the insurer will deem a secondary illness (such as the depression that may result from a serious injury or illness) as the primary disabling condition and try to limit benefits to only 24 months. – top –
Q: How severe must my disability be in order to collect under my policy?
A: The answer to this question depends on your definition of total and partial disability. If you have a pure “own occupation” definition of disability, you typically may collect your full total disability benefit if there is at least one material and substantial duty of your occupation that you are unable to perform due to your disability.
Basically, total disability does not require complete incapacitation. In fact, in many cases you may be able to work in an alternative capacity within your profession, though you are unable to perform the duties of your actual predisability occupation, and still collect benefits.
Partial disability usually means that you are performing all of the duties of your occupation, but for less time, and you suffer a loss of earned income. If this is the case, you will be eligible to collect a proportionate amount of your monthly disability benefit. If your loss of earned income is substantial enough, you will likely be eligible to collect your full benefit, even though you are still earning income in your occupation. – top –
Q: What is a pre-existing condition and when will it prevent coverage?
A: While the definition of pre-existing condition varies from policy to policy, such conditions usually come into play only if the insured claims disability within the first 12 to 24 months after becoming eligible under the policy. In that case, coverage may be denied for any condition in which the insured received medical treatment, consultation, care or services, including diagnostic tests, or took prescribed drugs or medicines within the (up to six) months just prior to the effective date of coverage and the disability began in the first 12 (up to 24) months after your effective date of coverage.
Too often, however, an insurance company will mistakenly interpret a medical record, prescription or diagnostic test as a sign of a pre-existing condition, when in fact it is not. Thus, coverage may be wrongly denied under this provision. – top –
Q: Do I have to submit to an Independent Medical Examination (IME)?
A: Typically, Yes. In most policies, there is a requirement that you submit to an independent medical examination. Also, you are required to provide sufficient proof of your condition, and many insurance carriers will deny a claim based on a refusal to submit to such an examination.
However, it is essential that the evaluation requested by your insurance carrier is actually relevant to your condition and the appropriate specialist is chosen. Moreover, it is important to remember that your insurance carrier has chosen and paid the medical examiner. An independent medical examination that is not truly independent can be extremely detrimental to your claim. For this reason, we often request that such evaluations are videotaped and assert our clients’ right to an examination by a physician appropriate for their particular conditions. We also often run background checks on the medical examiners chosen by the insurance companies to determine their actual independence.
Most disability insurance policies expressly reserve the right to have the insured examined by a physician of the company’s choice, at the insurance company’s own expense. Often the policies include language allowing the insurer to request such examinations as often as may reasonably be required. – top –
Q: Will the insurance company put me under surveillance?
A: Undercover surveillance is utilized quite frequently by many insurance companies. While the investigator is not permitted to clandestinely videotape you inside your home, they can videotape you while you are out in public or even outside on your own property. Many of our clients are surprised that the investigator was able to enter their gated or protected community in order to obtain the footage. – top –
Q: Can the insurance company force me to undergo surgery or a particular medical procedure?
A: Under Florida law, and the laws of most states, the insurance policy’s requirement that the insured obtains “appropriate care” for his or her medical condition does not require the insured to undergo surgery. If conservative treatment is appropriate and/or there are risks involved with a particular surgery or procedure, then the insurance company cannot insist that its insured obtain that particular medical treatment. Disability Insurance Law Group serves clients nationwide. Our attorneys are familiar with the particular insurance laws in your state. – top –
Q: Am I able to work in another occupation while collecting benefits under my disability insurance policy?
A: Under most private disability insurance policies, the answer is yes. If your policy has a pure “own occupation” definition of disability, you can work in a different occupation while collecting disability income benefits. However, the duties of your new occupation must be substantially and materially different from your predisability occupation.
Some policies may appear to be “own occupation” policies but have an added provision that states, “you are not working in any occupation.” If this is the case, you will typically be unable to work in an alternative occupation. You should read your contract very carefully, because you may have purchased a rider that substantially alters your definition of total disability. In particular, your rider may eliminate the requirement that you do not engage in gainful employment, allowing you to work in another occupation. – top –
Q: Can my insurance company offset (reduce) my disability benefit?
A: Most group/ERISA disability policies, many long-term disability policies and some private disability policies will reduce the insured’s monthly benefit by the amount of benefits he or she receives from another source for that same disability.
For example, if the insured is awarded Social Security Disability (SSD) benefits (many group and long-term policies require the insured to apply for these benefits), then the insurance company will reduce that amount each month from the Insured’s benefit. However, most policies do not provide the insurance company the right to offset additional cost of living benefits provided to the Insured by the Social Security Administration. Other possible offsets are monies received in workers’ compensation claims and personal injury claims. – top –
Q: What is meant by the term “dual occupation”?
A: If the insurance company can show that you were engaging in two or more separate and distinct occupations, then it will be necessary for the insured to show that she is totally disabled from all of her occupations to be entitled to total disability. Raising the dual occupation defense may allow the company to deny liability all together.
At times, the insurer will attempt to show that secondary duties (such as a doctor taking over the administrative functions of the practice) were previously a part of the material and substantial duties of his “own occupation” and deny benefits. Thus, it is important to clearly define your pre- and postdate of disability duties. – top –
Q: What are some of the disability insurance policy options and riders that may be part of my policy?
A: Some of the options or riders that may be part of your policy include:
- Future Increase Option – This option protects future earnings by providing automatic increases to the monthly disability benefit for a certain period of time, regardless of any health changes.
- Cost of Living Adjustment (COLA) Rider – After an insured has been on claim for one year, the COLA increases your benefits each year based on the increased cost of living measured by the consumer price index.
- Residual or Partial Disability Rider – This provision allows the insured to return to work part time and collect a partial disability payment based on his or her loss of monthly income. If the insured is unable to perform all of his occupational duties or able to perform each duty, but for less time than he could prior to his date of disability and has suffered at least a 20 percent loss of income (compared to his average monthly income within the 12-26-month periods prior to his date of disability) then he is entitled to a portion of his disability benefit. Often, a 50 percent loss of income yields 50 percent of the total benefit; but this is not always the case.
- Waiver (Refund) of Premiums – The insured is not required to pay the premiums for the period he/she is disabled and following the waiting period and is reimbursed for any premiums paid during a period of disability.
- Social Security Disability Insurance (SSDI) – This option pays you some or all of the money you would receive from Social Security if you qualified for Social Security Disability benefits, if you fail to get Social Security Disability. – top –
Q: Can Disability Insurance Law Group help me negotiate a settlement or buyout?
A: Yes, we often engage in settlement discussions on behalf of our clients. To determine the value of an insured’s policy benefits and engage in a productive discussion with the carrier, the policy’s present value must be calculated and factors such as life expectancy, setoffs, cost of living options, automatic increases and the personal needs of the insured and his or her family must be carefully considered and factored into the negotiation.
Knowledge of the factors and tactics utilized by the insurance carriers, familiarity with the company’s negotiators and their “rules” of negotiation, and a solid understanding of the legal process are paramount to a successful buyout. – top –
Q: What are my options if my disability insurance claim is denied?
A: Navigating the appeal process when your claim is denied depends on whether or not your disability insurance policy is governed by the federal law, ERISA (Employee Retirement Income Security Act of 1974). If your policy is ERISA-governed then specific steps must be followed prior to filing a lawsuit. Many group and most employer-provided disability policies are governed by ERISA. However, please see the ERISA section of this website for additional information. Because of the complex nature of the ERISA rules, it is often wise to hire an attorney who is experienced in disability insurance and ERISA right from the beginning to guide you through this process in order to protect your rights.
If your disability policy is an individual policy not governed by ERISA (usually policies procured by the insured, managed by the insured and paid directly by the insured are not governed by ERISA), then you have the right to bring a civil lawsuit and are not obligated to file an appeal with the insurance company. However, before proceeding, it may be wise to consult with an experienced attorney to fully understand the policy’s procedures on internal appeals and make sure the steps that you have contractually agreed to have been performed.
Keep in mind that the insurance companies have lawyers with detailed knowledge of insurance benefit claims and are quite knowledgeable about the company’s internal procedures and how the court process works … in their favor. Also, some policies do provide for arbitration or further review steps prior to the commencement of a civil action. – top –
Q: What are some potential damages from a wrongful denial?
A: If the policy is an individual, non-ERISA policy, then the insured may be entitled to damages for breach of contract. This would include the amount of unpaid benefits due under the contract. Future benefits cannot be awarded, as they are evaluated and paid on a monthly basis. Additionally, the insured may be entitled to interest on contractual damages.
In cases where the action is based on the breach of implied covenant of good faith and fair dealing (“bad faith”), the insured may be entitled to recover punitive damages. Under both private and ERISA policies, the insured may be entitled to all or part of the attorney’s fees incurred in appealing a wrongful denial. – top –
Q: What are the remedies if my insurance company denies my claim?
A: Many disability income policies have an internal appeals process when an adverse decision has been made on your claim. Thus, you must appeal directly to your insurance carriers prior to filing a lawsuit for breach of contract. If this is the case, it is imperative that you submit an appeal, with the appropriate information. If you do not, you may be in breach of contract.
Also, be very careful in what information you provide and how you answer your insurance company’s questions during both the application and appeals process. Many insurance companies spend a great deal of money training their claims examiners and investigators on how to ask questions that illicit certain information. Many truly disabled claims have been denied simply due to statements taken out of context that are difficult to reconcile once a lawsuit is filed. Do not take any requests for information lightly, no matter how harmless the question may seem.
In the event that your appeal is also denied, you may proceed to the appropriate court having jurisdiction of your claim. Be aware, that many disability insurance policies have time limits, which govern when a legal proceeding may be commenced.
Many policies do not have a requirement to submit an appeal. Thus, if you are denied disability insurance benefits, you may file suit according to the time limits set forth in your policy. Often, insurance companies will not blatantly deny a claim for benefits. Instead, they consistently state that there is insufficient evidence to provide benefits and request additional information. While there may never be a written denial of benefit correspondence sent to you, your insurance company’s unreasonable delay of payment may be considered a de facto denial, and it may be appropriate to file suit for breach of contract.
In addition to the litigation process, many states, upon proper request, will investigate through their department of insurance an insurance carrier’s unreasonable claim denial. – top –
Q: Am I able to be compensated from my insurance company for my attorney’s fees?
A: In many instances, the insurance carrier may pay all or part of your attorney’s fees if a denial of benefits is determined to be wrongful by a court of competent jurisdiction. Many states have statutes that require an insurance carrier to pay a claimant’s reasonable attorney’s fees if a claimant is successfully in his or her first party action for benefits. In addition, many states have statutes that provide for punitive damages for bad faith denial of claims for disability benefits. – top –
Q: What are some mistakes that may be avoided by hiring a disability insurance attorney?
A: The application process can be complicated and involves preparing the written application, answering the claim adjuster’s questions, attending an interview with an insurance company representative, working with the attending physician and responding to surveillance as each significant aspects of the process. Without guidance, an insured person can inadvertently provide the insurance company with the means to delay or deny a claim.
The attending physician’s form, when not completed properly, is often used by the insurance company to deny claims. An attorney can work with the physician to help him or her understand what is meant by the term “disabled” under the particular policy and the specific information being sought by the carrier.
Insurance companies often rely on independent medical examinations (IMEs) or functional capacity evaluations (FCEs) to better understand the insured’s disability. The doctor or physical therapist performing the examination is hired by the insurance carrier and is not truly independent. An attorney can make sure that the insured has a solid understanding of what will occur at the examination and is properly represented there as well.
Successfully appealing a denied claim can be difficult or impossible without the help of an experienced lawyer. While the insurance carrier may promise a full and fair review of the claim, it is often up to the insured to provide them with the information, documents and medical support necessary to overturn a denial. For persons with policies governed by ERISA, failure to present a complete appeal may result in an irreversible claim denial. Those individuals with private, non-ERISA policies can also significantly impede their chance to successfully appeal a denial if they do not proceed in a timely fashion and fail to perform all of their contractually required duties. – top –
Other issues to discuss with Disability Insurance Law Group
- When must I file my claim for disability insurance benefits?
- What information should I provide my insurance carrier when applying for benefits?
- What role does my physician play in my claim for disability?
- Am I required to disclose all of my financial information?
- Under the terms of my policy, am I totally or partially disabled?
- Am I required to submit to a field interview or provide a statement to my disability insurance company?
- Must I submit to an independent medical examination chosen by my insurance company?
- How much information should I give my disability income carrier?
- Can I collect benefits while the carrier is investigating my claim?
- How much time should the carrier have to investigate my claim?
- Can I collect Social Security benefits or workers’ compensation while collecting disability income benefits?
- What if my claim is denied or unreasonably delayed by my disability insurance company?
- What are my rights and obligations under my policy in terms of submitting proof of my disability to my insurance company?
- Do I have to undergo surgery or a particular procedure to remain eligible for benefits under my policy?
- What does the “appropriate care” provision of my policy mean?
- What is the disability income carrier’s internal appeal procedure?
- In the event of a denial by my disability income company, how does the litigation process work?
- How are attorney’s fees charged?
- Under what circumstances will my disability income carrier pay my attorney’s fees?
You can discuss these and any other important issues in a free face-to-face or telephone consultation with an experienced insurance lawyer at any of our Florida offices serving clients nationwide. Contact us today for the answers and experienced legal help you need. – top –