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ERISA Long Term Disability Policies 101

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ERISA Long Term Disability Policies 101

This course, presented by Jennifer L. Hess, an attorney and lecturer on long term disability law topics, provides an overview of long term disability insurance policies subject to the Employee Retirement Income Security Act of 1974 (“ERISA”). This is an introductory course is designed to benefit any attorney who is currently handling long term disability matters or interested in handling these matters. In two parts, this course: (I) reviews the basics of ERISA law; and (II) discusses the 9 fundamental policy terms critical to long term disability claims. In doing so, this course will cover the rights and protections that ERISA offers to claimants, provide useful practice tips, and share strategies to maximize a claimant’s disability benefit income under the policy.

Presenters

Jennifer Hess
Partner
Riemer Hess LLC

Transcript

Jennifer Hess - Hi everyone, thank you for joining me today. My name is Jennifer Hess and I'm a partner at the law firm Riemer Hess. We're a plaintiff's law firm headquartered in Midtown Manhattan that focuses almost exclusively on handling long-term disability insurance claims, and litigations that are subject to ERISA. The Employee Retirement Income Security Act of 1974. I've been at Riemer Hess helping people secure long-term disability benefits for about six years now. And prior to joining the firm, I had assisted claimants in securing social security disability benefits throughout the state of New York. This course, which is entitled ERISA long-term disability policy 101 is an introductory course. It's to designed to benefit any attorney who's currently handling long-term disability matters or who might be interested in handling these matters in the future. Let's talk about our learning objectives. In this course, we're going to provide a foundational understanding of ERISA long-term disability law. We're going to identify the key policy terms that govern ERISA long term disability claims. We're going to analyze the terms and predict how an insurer might apply them to your client's claim. And we're gonna learn how to proactively maximize your client's fixed disability income under the policy while avoiding common pitfalls and misapplication of the policy terms that could harm your client.

 

We're gonna cover the material in two parts. In part one, we're going to review the basics of long term disability law under ERISA. And it's my strong belief that knowing the basics is necessary before trying to understand the policy terms. And then in part two, we're going to teach you the nine fundamental terms in group long-term disability policies subject to ERISA, and in doing so you're gonna learn how to increase your client's financial security by maximizing the benefits that are available to them under these policies. All right, let's get into it. Part one, the basics of ERISA long-term disability law. So what is group long-term disability insurance? It's essentially an employee benefit. Some employers offer group long term disability coverage, which we often call LTD as part of the employee benefits package. It's a benefit that's intended to provide income protection in the event of illness or injury resulting in a disability, unlike workers' compensation, the disability doesn't to be work related in order to collect benefits. A question that we often get asked is, whether long term disability benefits provide total income replacement. A lot of people are surprised that it does not. It never provides total income replacement. Typically the benefit only provides an employee with maybe 60% income replacement, and that means 60% of the income that they earned prior to becoming disabled.

 

So how do you know if ERISA applies? Generally, a group LTD plan will be subject to ERISA but there are gonna be some exemptions. These exemptions include government plans, church plans, plans maintained solely to comply with state workers compensation law, unemployment law, or other disability insurance laws. Plans that are maintained outside of the U.S for non-resident aliens, plans maintained solely to provide benefits or contributions in excess of those allowable for tax qualified plans, and also plans covering only partners or owners. Otherwise, if it's an employee benefit you can usually assume that ERISA is going to apply. So what should you expect when filing a group long-term disability claim for a client? We need to thoroughly interview your perspective client and carefully review the plan documents, which we're going to discuss an extensive detail as we move on to the second part of the course.

 

You need to send a notice of claim, a notice of representation to both the administrator and the employer as soon as possible. In our office, we do this often the same day that we retain the client. We let everybody know that we are on board and that there's a claim coming. We direct that all communication come to us. So when you retain a client that needs a disability claim, you should send a letter immediately to the insurance company and to the employer indicating that all communications relating to the disability claim should come to you. You wanna request copies of the application forms and the plan documents. Again, this is something that we usually do very early in the process. You wanna make sure that you're not just relying strictly on planned documents that the client has provided you. The client may have given you something that's outdated, incomplete, not applicable. You wanna get it directly from the source and so make that request yourself.

 

You also wanna record a deadline to submit proof of loss, and you can find that in the plan document, we'll discuss later, if you miss that deadline, you may not be able to have a viable claim here. So it's very important to set that deadline immediately. And you also wanna gather and submit supportive evidence by the deadline to submit proof of loss. You're going to have to send in a big package to the insurance company, demonstrating why your client is disabled. So you're gonna have to gather supportive medical evidence, vocational evidence, earnings evidence, a number of things to demonstrate that your client no longer work under the definition provided in the plan for disability. How will the ERISA LTD administrator review the claim? Well, in reviewing the claim, the ERISA LTD administrator is gonna act as a fiduciary. That fiduciary owes certain rights to the claimant. The LTD plan is gonna set forth a lot of those rights, but ERISA and the claims procedure regulations issued by the department of labor provide additional rights and protections for your client. You need to have a basic understanding of those most important regulations before diving into the rights that are provided by the plan.

 

So what are the most important protections provided by ERISA's regulations? Well, the two most important ones that we're gonna talk about today are ERISA's fiduciary standards, and the full and fair review requirements under ERISA. So the first one, ERISA's fiduciary standards, in practice these administrators, the LTD administrators they wear two hats. One is the decider of claims and one is the payer of benefits. This obviously creates an inherent conflict of interest because every single penny that that administrator pays out in benefits reduces their profit, their for profit entity. They're interested in making more profits. So this inherent conflict of interest is really why ERISA imposes very high and strict fiduciary standards on administrators. So what are these fiduciary standards? There's three, acting in the sole best interest, a duty of prudence, and also acting in accordance with the planned terms. As far as the sole best interest ERISA provides that the administrator must discharge its duties solely in the interest of participants and beneficiaries. And for the exclusive purpose of providing benefits to participants and their beneficiaries. Prudence, the administrators are required to discharge their duties with the same skill and diligence as a prudent man would have under the same circumstances and in accordance with the plan terms. So the administrator must administer the plan in accordance with the written documents that are governing it.

 

This fiduciary standards are closely tied to the second most important protection that's provided by ERISA, which is the full, unfair review requirements. We'll talk about those now. ERISA essentially provides that every claimant is provided a quote full and fair review of their claim. There's three main categories of protections that fall under the scope of full and fair review, timely decisions, adequate communications, and the third is full unbiased and expert review. So let's talk about timely decisions. The administrator has to decide claims and appeals under ERISA in a timely manner. This for claims initial claim, a new application that you're submitting for disability benefits. Initially the administrator will get 45 days to make a decision, and then they can exercise up to two extensions, 30 days each, if they require them under certain circumstances.

 

So we call that the forty five thirty, thirty day rule. For appeals, the insurance company gets 45 days to make a decision after you've submitted your appeal. However, they can exercise another 45 day extension, but only if special circumstances exist. And also the administrator has to submit a notice, a written notice to you within the first 45 days, indicating what special circumstances exist, necessitating the extension, and explaining that they're going to exercise their right to take the extension. In practice a lot of times the carriers don't satisfy those requirements and practice very often, they just exercise the extension or send a notice that doesn't, thoroughly comply with the requirements. It might just say, we need an extension without actually articulating any special circumstances that would necessitate one. Okay, adequate communications. So the administrator also has to meet minimum standards of communication under ERISA, so that a meaningful dialogue can take place between the claimant and the administrator. So for example, any denial letter, like a benefit denial letter has to explain the rationale for the denial and articulate what information is necessary for the claimant to perfect the appeal. Full unbiased, and expert review as another one of the full and fair review requirements.

 

The administrator is acquired under ERISA to provide a full, unbiased, and expert review of the evidence that you and your client present. They have to review everything and they have to do so in a way that is really giving the client a fair shake. So for example, the administrator has to engage with an appropriately qualified neurologist to review all the evidence that a claimant provides for a disability due to say, epilepsy, a neurological condition. And steps also have to be taken by the administrator to make sure that that neurologist is unbiased. The administrator's failure to comply with the regulations gives rise to other rights and protections in litigation. So for example, a failure to comply with ERISA claims procedure regulations could trigger de novo review in the context of a litigation versus a say more difficult arbitrary and capricious standard for a plaintiff. It can also provide exemption from, ERISA requirement to exhaust administrative remedies before bringing an action in district court. So let's talk about this quickly, triggering de novo review first.

 

So in these ERISA cases, de novo was the default standard of review. And although de novo was the default standard of review a court can apply a more difficult standard called an arbitrary and capricious review. If the administrator demonstrates that the plan effectively grants discretionary authority to the administrator There'll be some trigger language in the policy that says, that the administrator has the discretion to determine eligibility under the plan and to interpret the plan terms. Now, the issue is that failure to follow ERISA's regulations means that the court could strip the administrator of any discretionary authority that was provided under the plan. This could result in a de novo review rather than an arbitrary and capricious review. This is huge, this is something that can really give your client a leg up and the litigation. Also, as I mentioned, a violation of ERISA's claims procedure regulations could results in no need to exhaust administrative remedies under ERISA before bringing an action. So normally a client has to exhaust all administrative remedies before filing an action in federal court.

 

This usually means, filing an appeal at a minimum and getting a decision before going and knocking on the court store. But under certain circumstances, an administrator's failure to follow the regulations, permits the claimant to initiate in action without exhausting all administrative remedies. This is a area of law that is constantly changing. And you should definitely check the case law in the district where you're filing the circuit, where you're filing to make sure that the circumstances in your case, would not require exhaustion. Let's talk about part two. So part two is the basics of the long term disability plan, really the meat of it. So once you have a basic understanding of the law and the protections that are provided to your client under ERISA, you have to carefully review the LTD plan document. That disability plan document is what's going to provide the rules, standards, and deadlines that your client has to satisfy in order to qualify for benefits and failure to satisfy the plan's terms will result in denial.

 

So we're gonna talk about the nine key ERISA LTD terms that you need to know in the plan. The following nine terms are just critical to almost every single ERISA LTD claim. Includes discretionary language, the definition of disability, the elimination period, benefit limitations and exclusions, notice and proof of claim, benefit calculation, other income offsets, benefit duration, and residual and partial disabilities. So we're gonna talk about each of these nine in detail. All right, key term number one, discretionary language. So, as I mentioned, many of these ERISA LTD plans, they contain language that tries to grant the administrator discretionary authority to interpret the terms of the plan and determine eligibility. A sample would be that we have, "we have full discretion and authority to determine eligibility for benefits and to construe and interpret all terms and provisions under the policy." In the context of a litigation disputes involving ERISA LTD claims are viewed de novo as I mentioned, unless the court determines that the administrator has discretionary authority. If the court determines that the administrator has discretionary authority, then the matter will be reviewed under that arbitrary and capricious standard, where as a plaintiff, you would need to show that the administrator's decision was unreasonable or erroneous as a of law in order to prevail, it's much harder than it is under a de novo standard to win that type of case.

 

So there are common arguments against discretion. This is an area of law that is constantly being litigated, constantly changing. So do make sure that you check, the case law in your circuit before making any of these are arguments. So if the easiest one is, if there the discretionary language doesn't exist in the plan, you don't see any discretionary language, then no discretion applies, and you're just gonna have the matter reviewed de novo, the default standard. If discretionary language exists in the plan, but the client bans enforcement, say for example California, bans enforcement, discretion's not gonna apply under those circumstances. And the matter will be reviewed de novo, even if there is discretionary language in the planned document.

 

Another one is if discretionary language exists, but the wrong entity exercised discretion in under those circumstances, the discretion should not apply, and the matter will be reviewed de novo. Another one is if the discretionary language exists, but the exercise of discretion fell outside the scope of the grant, again, discretion is not going to apply the matter will be reviewed de novo. An example of that might be where discretionary language says, that they can determine eligibility under the terms of the plan. But the disputed issue was really an interpretation of a specific plan term. Arguably if they didn't reserve discretion to interpret the terms of the plan, perhaps, discretion wouldn't apply. Again, this is a very circuit specific issue, so definitely check.

 

Another one, if discretionary language exists in the plan document, but the administrator violated ERISA's procedural regulations, the discretion will not apply and the matter's gonna be reviewed de novo. This is something that the department of labor added into ERISA's procedural regulations in April of 2018. It's relatively new, but it's a very, very powerful tool and protection for claimants and plaintiffs in the context of ERISA. All right, number two key term is the definition of disability. So LTD policy is always define disabled or disability. Always, you're always gonna find that, every single policy. Your client has to meet that definition in order to be eligible for benefits. There are three types of definitions that exist. The first is in any occupation definition, an own occupation definition, and a hybrid definition. We'll talk about own occupation first. Okay, so under an own occupation definition, which is sometimes called regular occupation, you may see that in the plan, your client has to demonstrate that they cannot perform the material or essential duties of their own occupation. This is the easiest standard to meet out of all of them. This is a good policy if you see it, the claimant really only needs to demonstrate that they can't continue performing the work that they were doing before becoming disabled. The next one is in any occupation definition, this is a little bit more difficult, it's narrow.

 

So generally, under in any occupation definition, your client has demonstrate that they can't perform any occupation for which they could be qualified based on their education, training, and experience. This is harder. It means that your client has to demonstrate not only that they can't perform their own occupation, but also that they can't perform the duties of a lot of other occupations that may be reasonable on their background. A hybrid definition of disability is probably the most common in long term disability claims. It's a mix of the own occupation and any occupation policies. So under a hybrid definition, your client usually must initially establish that they're disabled from their own occupation for a specified period, typically 24 months, but it could be a little more, it could be a little less. And then your client has to establish disability from any occupation after that triggering period, again, usually 24 months. So the first 24 months are usually an easier standard and then the bar is raised.

 

The burden is raised and your client then needs to establish at that triggering point that they are disabled from any occupation in order to continue receiving benefits. So usually as that triggering point comes up, which again is usually 24 months, the administrator will conduct a very thorough investigation to determine whether benefits will remain payable beyond that change and definition trigger point. The investigation could involve surveillance, they may want updated medical records from your client's doctor, they may want new diagnostic testing, at this point in time it's usually advisable to also consult with a vocational expert.

 

See if you can get a vocational expert to comment on what jobs may be available to your client, based on their restrictions and limitations. You can also use very often any determination of the social security administration. The social security administration will very often at the hearing level, have a vocational expert that testifies at the hearing. And you can use the transcript from that hearing and submit it to the insurance company in support of the claim at this point. If the social security administration found that, the person was totally disabled and that there were no jobs that existed in the national economy, that would be available to your client, which is the usual standard, depends on the circumstance, but you can always check the social security decision. All right, the third key term is the elimination period in the LTD plan.

 

So these LTD policies will almost always contain an elimination period. It's basically just a waiting period before the benefits become payable. It's how we always explain it to clients, it's just a waiting period. The elimination period is often 180 days, but it varies policy to policy. Each of these policies contain different terms. So sometimes it is 90 days or less, the elimination period though, could be as long as a year, 365 days, but 180 is the most often and frequent thing that you'll see. So an example, so say that your client becomes disabled on February 1st, 2022, and the policy contains a 90 day elimination period. You would just add 90 days to February 1st, 2022, and then after point, which would be May 2nd, 2022, the benefits would kick in, but in between your clients, just kind of sitting there with no income under the LTD policy. So practice tip, you're always gonna wanna check to see if short term disability coverage may be available to your client during the elimination period. There may be other benefits that your client could receive under the short term disability plan.

 

So if your client has short term disability coverage, you're definitely gonna wanna get a copy of that policy and check to see what the standards are, what the requirements are to get those benefits. You wanna get a claim in on time for the short term disabilities. Sometimes I'll tell you actually very often in practice the clients have no idea whether their short term disability benefits are available to them or not, they have no clue. It's usually a good practice to just contact the employer, ask for a copy of the policy, and state a notice of claim. And usually that will cover you. But I would say it's probably a bad practice to just rely on your client as to whether or not they have short-term disability coverage, because they often don't know. So if there is short-term disability coverage, make sure that you get that policy. It's a different policy than the long term disability plan. It's gonna have its own deadlines, it's gonna have its own requirements, it's gonna have its own definition of disability. You need to see that policy, you need to understand the standards and the terms in there. A lot of times there's a lot of crossover with the terms that are provided in the long term disability policy, but you need to get your hands on that short term policy and read it thoroughly just as you would hear with the long term disability plan.

 

All right, key term number four, benefit limit limitations, and exclusions. So all of these group LTD plans will contain benefit limitations and exclusions. You have to proactively predict which limitations and exclusions the administrator might apply to your client's claim. It's really important. Once you have predictions, you're gonna wanna begin building your client's case against application of those limitations and exclusions immediately from the onset. So the most common ones are mental illness limitations, subjective symptom limitations, preexisting condition limitations, and exclusions for disabilities caused by certain circumstances. We'll go over each of these in detail. So first we'll talk about mental illness limitations. So most group long term disability policies will limit benefits that are payable for disabilities that are due to mental conditions, such as a anxiety disorder or depression, maybe obsessive compulsive disorder. They sometimes will carve out exclusions and exemptions, what we'll talk about that, but other things that follow the mental illness limitation and usually fall under it are substance in alcohol abuse syndromes, will often explicitly fall under the scope of this limitation. The maximum payable period, if a mental illness limitation applies is usually only 24 months. A lot of clients are very surprised to see that the benefits can only be extended beyond that period typically, if your client's hospitalized due to mental illness, check the policy language on that one.

 

So these mental illness limitations contain certain exemptions, often in the policy, you have to check the specific policy. Sometimes they won't exempt any conditions, but common exemptions include organic brain disorders, schizophrenia, Alzheimer's disease, dementia, and sometimes bipolar disorder, which is increasingly becoming, more well recognized as a disorder of the brain versus a mental illness. But each of these common exemptions are usually things that medical community recognizes as being more organic and related to the brain versus something that's more just strictly behavioral and more of a mental illness in the eyes of the insurance company.

 

So there's two common circumstances where the administrator will try to apply a mental illness limitation, but the limitation really shouldn't apply. Obviously, these insurance companies are very heavily incentivized to apply the mental illness limitation if they can, because it's gonna limit, the liability and their exposure to just 24 months, instead of through the duration of the claim otherwise, which could be to retirement age. So these two most common circumstances where the administrator will try to apply a mental illness limitation include when your client has a mental and physical comorbidity. So they have a mental condition, but also a physical condition. If that happens, you could bet your dollar that they're probably going to try to apply the mental illness limitation. The other one is when your client is initially disabled, due to a mental illness, but then is subsequently diagnosed with a disabling physical condition. So we'll talk about both.

 

Let's talk about the physical and mental comorbidities first. So if your client has a combination of mental and physical conditions, say for example, maybe your client has a depression and fibromyalgia. Depression being the mental condition and fibromyalgia being the physical condition. Under those circumstances, the administrator will probably try to limit the benefits under the mental illness limitation. The insurance company is probably going to say, well, your client is disabled to do to the depression and not the fibromyalgia. So in order to continue benefits, you have to show that that physical illness here, the fibromyalgia is independently disabling. So your client would be disabled due to that physical illness, regardless of whether or not that mental illness existed. You basically have to show that your client would be disabled, not withstanding the mental health condition. To do this, you really do need the input of the client's doctors. You want to build all the evidence that you can under the sun to bolster the physical illness as being independently disabling. You might wanna get a functional capacity evaluation, you might wanna get the client's doctor to comment and say, the physical illness is independently disabling. You may wanna downplay the depression's impact. You may want maybe even a letter from the clients treating a psychiatrist saying that, the depression's really not that severe or that it's never really been disabling, it's always been the physical condition, but really any kind of evidence that you can to bolster physical issues, diagnostic testing, MRIs, clinical, abnormal findings, anything to bolster that physical illness is what you're gonna need to throw at the insurance company in order to get past the mental illness limitation.

 

The other very common circumstance you'll see insurance company tries to apply a mental illness limitation is where there's a subsequent physical diagnosis. So sometimes people become disabled due to a mental health condition such as depression, but then they later develop a physical condition that is disabling like lung cancer for example. Under those circumstances, the insurance company will really do everything that they can to say that the client is still disabled due to the mental condition and that the physical condition that is new is not disabling. They'll say that the physical condition that's new, doesn't rise to the severity, that it would be independently disabling. And in order to continue benefits, you need to demonstrate that the subsequent physical diagnosis is independently disabling. The approach under those circumstances would be very similar where what you want to do is, is really throw everything that you can at the insurance company to demonstrate that, the physical condition is disabling objective evidence, notes from doctors, narrative reports from doctors, any kind of evaluation that you can get physically like a functional capacity evaluation. All of that you're going to want to submit that to the insurance company.

 

Well let's talk about, subjective symptom limitations now. So some long term disability policies limit benefits, payable for disabilities due to subjective or self-reported symptoms. Sometimes these are called self-reported symptom limitation, sometimes they're called subjective symptom limitations, it's really the same thing. But this limits the benefits that are available to your client for conditions that are difficult, to prove or measure with objective evidence. The maximum payable period under this limitation is usually 24 months, but it may be a little bit longer, maybe a little bit less gotta check the policy. There are certain medical conditions that are very frequently targeted by the insurance companies as subject to the subjective symptom limitation. These medical conditions include fibromyalgia, depression, anxiety, or other mental illnesses, chronic pain disorders, dizziness, vertigo, migraines, headaches, chronic fatigue syndrome, also called ME. Unknown medical conditions causing subjective symptoms. Sometimes some people just like don't have a diagnosis, but they have a lot of subjective symptoms that they're being treated for and taking medications for yet the doctors don't know what's causing it. These are all medical conditions that the insurance company will say are strictly subjective. There's no objective medical evidence to measure and confirm these types of conditions. The science doesn't exist, there is no diagnostic test. And the insurance companies will try very hard to apply the limitation. From their perspective they are trying to eliminate symptom, exaggeration, fraud. They're trying to eliminate, claims that maybe really aren't, truthful because the client is just exaggerating a subjective symptom that can't be verified. That's the insurance company's perspective.

 

But in reality, there are a number of medical conditions where we just don't have the science to prove the diagnosis. The diagnosis is instead made based on, reports from the client. So a good practice tip if you're dealing with one of the conditions that I had mentioned, or another condition that you think, could possibly be subject to this limitation is to just get more testing. If there are any tests available that might reveal objective abnormalities, try to get them. Maybe it's not a definitive test, but perhaps there's something available. Usually what we do in our practice is, we'll contact the client's doctor and ask the doctor's the one that's gonna know, we're not doctors, we're attorneys.

 

So you can very easily contact the client's doctor and ask, are there any tests available that might reveal objective abnormalities relevant to this client's condition? Very often they'll recommend something. And very often it comes back abnormal. So that can be really helpful. It's a powerful thing that you can use. If you can establish relevant objective findings, you can argue that the subjective symptom limitation is just inapplicable. You also wanna check for state bans. So definitely verify whether your client's state prohibits or bans enforcement of subjective symptom limitations. Even if the limit appears in the policy, it really may not be enforceable depending on the state. So you have to look, you have to check.

 

All right, another benefit limitation and exclusion topic we need to cover is preexisting condition limitation. So most long-term disability policies will limit or exclude benefits that are payable for preexisting condition. And in order to determine whether that limitation applies or the exclusion applies, you have to review the policy for the look back period and the preexisting condition waiting period. We'll talk about each. So the look back period, most of these policies will look back for conditions or symptoms that existed within three months of coverage. If the condition or symptoms existed during that look back, period, again, usually three months, they're gonna be considered preexisting and either subject to the limitation or not covered at all. So a good practice chip is just to remember that, coverage usually begins on the first date of active employment or the date of enrollment. You need to check the policy to see how coverage is defined, and then verify when the client, the client first was actively employed or enrolled. And you're gonna set your look back period from that point.

 

The preexisting condition, waiting period, basically, it's just a term that specifies how long your client has to wait before the condition at issue becomes covered. So some of these policies will say, the waiting period is one year after coverage began. So if your client became disabled due to a preexisting condition, they're not going to be able to receive benefits for a full year until after the coverage began. So in practice, the long-term disability administrator is going to cling onto anything and everything that they can to apply the preexisting condition limitation they're incentivized to do so. If there's something that could limit their exposure, they're going to try to take advantage of it. This is a term that was inserted in the policy to benefit the insurer, the administrator, not the claimant, not your client. So I'll give an example, so an administrator may point to say medication that your client was taking for a condition like high blood pressure, other than a disabling condition, like an anxiety disorder.

 

So if that medication could be used to treat the disabling condition, the administrator may claim that the medication is proof that the disabling condition had preexisted. So they could just point to medications that your client was taking that could be used to treat two different conditions. It's anything, even the slightest thing they'll latch onto it. So practice tips to deal with preexisting condition, limitation or exclusion. You wanna get written statements from client's doctors confirming that there was no preexisting condition. You also wanna check enforcement in the state. So you wanna check to see whether enforcement's banned in whole or in part in your client state, for example, New York has very specific, like a sort of like a partial enforcement ban, but you definitely need to check the state, make sure that you carefully review the medical records as well. You need to make sure that you're seeing everything, the insurance company's gonna see. So we usually will request the medical record stating at least a year back from the date that coverage began and really very carefully comb through them to see if there's any evidence that the insurance company may latch onto to say that the disabling condition was preexisting and try to limit coverage. So there's common exclusions.

 

So all LTD policies will exclude disabilities that are caused by certain circumstances. These exclusions include war or acts of war, suicide attempts, or self harm, normal pregnancy work related injuries quite often, and intentional acts. These are all things that can be excluded. Okay, so let's talk about key term number five, notice and proof of claim. So all disability plans contain certain deadlines, specifying the timeframes by which your client must take certain actions and failure to take timely action may result in denial of the claim. It's very, very important, notice and proof of claim is critical. So the two most important deadlines in every ERISA LTD plan are notice of claim and proof of claim. Notice of claim basically has to be provided within a certain amount of time after your client's disability begins. Notice of claim really just means a letter, we always provide it in writing. We always send in a letter that says, very clearly notice of claim, usually in bold capital letters. And we send it into both the employer and the insurance company immediately.

 

The deadline to submit notice of claim will vary depending on the terms of the plan. So you need to check the specific terms of the plan, make sure that you're satisfying that deadline line. When we submit the letter notice of claim, we always make sure that we document the proof of the submission. So we either send it by fax with a fax confirmation, you can send it by certified mail, you can send it by email, but you wanna make sure that you have some kind of, proof of receipt is gonna be very important. We ask for them to acknowledge it in response as well. So a typical notice of claim provision will state. "We encourage you to notify us of your claim as soon as possible, so that a claim decision can be made in a timely manner. Written notice of a claim should be sent within 30 days after the date your disability begins." So typically 30 to 90 days is pretty typical for notice of claim deadline, but you always need to check. Sometimes it can be really short, especially for a short term disability claim. Sometimes it could be as short as a week. So the plan could set forth limited exceptions to the notice of claim requirement, usually legal incapacity is an acceptable excuse. So if your client's in a coma, for example, that could be an acceptable legal excuse.

 

Also proof of claim. Let's talk about that. So proof of claim means the evidence that your client must provide to prove disability. So proof of claim usually has to be provided within a certain timeframe following the onset of the disability or a certain number of days after the elimination period ends. So very often the proof of claim deadline can be as short as like 30 or 45 days. It's not a lot of time. You have to get all your ducks in a row, get all of your evidence together in a short period of time and submit it to the insurance company in support of the claim, otherwise you're gonna miss that deadline. Failure to provide timely proof of claim will almost always result in denial. You can ask for extensions, but be aware that the insurance companies sometimes don't give them, are not automatically entitled to them. And the insurance companies will readily use failure to submit timely proof of claim as excuse to deny it. The deadline for proof of claim really will only be extended in limited circumstances. Again, maybe lack of legal capacity, or if you have a reasonable excuse for delay, these insurance companies are really reluctant to extend the deadline, and so you're warned.

 

All right, so what could proof of claim involve? Proof of claim can really include anything that supports the claim. You can really think outside the box, but it could be anything that supports the date that that disability began, the cause of the disability, anything that demonstrates functional restrictions and limitations, precluding work. It can be anything that, really demonstrates treatment and regular care of a physician is happening. It can be maybe even just the treating providers, contact information, documentation of symptoms or medical conditions like medical records, objective testing, an MRI, an EMG, anything like that. It can include statements from your client, it can include witness statements from say coworkers or family members, friends, people who have observed the client and are aware of what the client's been going through. And it can also include documentation of relevant pre disability earnings or income, or post disability income.

 

A resume could be helpful as well. Anything that demonstrates, the client's occupational responsibilities that could be helpful, but really anything that you think could be helpful to support the claim, you are not limited, you can submit whatever you want. The burden to submit proof of claim is always on the claimant. The insurance company will not hunt down supportive evidence for your client, that burden is on you and your client, remember that. So let's talk about key term number six, which is benefit calculation. So total replacement for your salary under an LTD plan just doesn't exist. I mentioned this in the beginning, it does not exist. Usually the monthly LTD benefit will be a fixed percentage of gross monthly salary, less any offsets. Most of these group LTD plans provide a monthly benefit representing 50, 60% or even one third of the salary up to a monthly maximum say $15,000. So the most common formula for gross monthly, long term disability benefits that you'll see in these plans, you usually have to multiply the monthly earnings or the pre disability earnings sometimes are called, by the benefit percentage, say 60%. So multiplying the monthly earnings that the client had before disability, multiplying them by the percentage of the benefit that's permitted under the plan. And then you will wanna compare that answer with the maximum monthly benefit, which I had just mentioned 15,000. So the lower amount is the gross monthly LTD benefit. And you're gonna subtract the gross monthly LTD benefit from any other income benefits or deductible sources of income under the plan, which we'll talk about. But if your client hits that maximum, they're just gonna get the maximum, not 60%.

 

Practice tips, so you always wanna check the definition of monthly earnings or pre disability earnings in the policy. It can sometimes include compensation categories over and above salary, like bonuses, commission, other incentives, especially if your client was in sales or some other kind of occupation that was like really heavily incentivized by bonuses or hitting quotas, always check because they may be entitled to have a lot more income considered over and above their salary. It also can specify a timeframe for relevant earnings. So sometimes the relevant earnings will be calculated as of the day before the client became disabled but in some circumstances it could be the highest earnings that they had in the past three years based on W-2 or it depends on how it's framed in the plan, but you always need to check and make sure that you have that in your pocket because sometimes the insurance company will not calculate the benefits correctly. They default to the earnings that were in place just before your client became disabled and maybe there is a more beneficial way of calculating the earnings that's available to your client under that plan.

 

Don't trust that the insurance company will get it right. You need to have a for your client, make sure that the insurance company's getting it right. Again, the insurance company's incentivized not to. All right, key term number seven, other income offsets. So all ERISA LTD plans provide that the monthly benefit will be reduced or offset by certain other income that the client receives or maybe entitled to receive. So the plan is gonna specify the categories of income that will create a reduction or offset. This is in every single plan, you need to check this, it's very important. Common reductions in offsets will often include social security disability benefits, workers compensation benefits, other public or government provided disability benefits, disability benefits that are payable under other insurance plans, social security retirement, or other government publicly funded retirement benefits, pensions and other employer provided retirement benefits, earned income very often, like say for example, if the claimant has a capacity to work and they return to work in some capacity, that earned income could be an offset or reduction. Salary continuance, sick pay, bonuses, no fault payments, very often personal injuries settlements and severance pay. These are all very common reductions in offsets under the plan, always check. If your client receives other income, any of these categories that we just discussed, the LTD administrator will almost certainly seek reimbursement for any resulting overpayment of previously paid benefits. And then they might also reduce the benefits going forward to account for ongoing other income.

 

Many LTD insurers have the claimant sign, a reimbursement agreement that basically gives the insurance company even more rights to recoup those overpayments. You wanna read those very carefully. If the insurance company presents your client with a reimbursement agreement that allows the insurance company to just dip into an account and take money, you should be really cautious about having your client sign that. Let's talk about key term number eight, benefit duration. So all group LTD plans will contain an end date for monthly LTD benefits. We call it the maximum benefit period. Sometimes it'll be listed in the policy as maximum duration of benefits. Basically these plans do not pay benefits for forever more. It's usually not for the client's whole life. There's usually a period at which the benefits will end, and it's usually based on the claimant's age at the onset of disability.

 

So if your client becomes disabled old before age 62, more likely than not, the benefits will be payable through at least age 65 or social security retirement age, usually 67. So what happens if your client becomes disabled after the age of 62, have to check the policy. The policy will very often can contain a schedule that'll detail the maximum benefit period if your client becomes disabled after age 62. It's different from the maximum period that might otherwise be provided. So for example, if your client becomes disabled at age 64, the policy may say that benefits are payable for 36 months. If your client becomes disabled at age 65, the benefits will be payable for 30 months. If your client becomes disabled between ages 66 and 76, benefits might be payable for say 24 months. The reason and that this schedule is in there is because they recognize that a lot of people work beyond retirement age and they want to put in, a specified period for people that are covered that are working beyond that point. All right, let's talk about key term number nine, residual or partial disability.

 

So most group long-term disability plans, subject to ERISA will permit a claimant to work while disabled and still get some benefits. It may only be for a period of time, it may have a lot of caps on it, but it may permit at least some work activity, while disabled. So these provisions are often called, residual disability benefits, partial disability benefits, work incentive disability benefits, or rehabilitation or rehab benefits. There's usually a cap on how much can be earned while working and receiving disability benefits. The cap is usually 60% or 80% of the claimant's pre ability earnings. And to determine that you wanna look at both the definition of disability in the plan, and also the provision discussing when benefits will end, which is called the termination of disability benefits or sometimes duration or end of disability benefits. So when claimants are receiving a residual or partial disability benefit, they're usually getting a reduced disability benefit. The benefit that they're receiving on a monthly basis will typically be a little bit less than they would otherwise receive if they were completely or totally disabled. So it may not be the full 60% that they would otherwise receive, it may be reduced based on a calculation provided in the policy.

 

It's very important to check the policy and make sure that you understand how the benefits will be reduced and calculated, and how the client's earnings will be treated. This is, could be a topic in and of itself. It's a big, a big thing that comes up in the context of disability claims. This presentation is more focused on total disability claims, but you should be aware of these terms in the event that you have a client who is either already working part-time while disabled or perhaps interested in doing so in the future. You wanna be able to counsel that client about what their options may be, if they do return to work in some capacity down the line. I can tell you that in practice, if your client is working in some capacity, the insurance carriers, the administrators tend to latch onto that and use it against your client as a ding on their credibility. So for example, the insurance company may say that, "well, if your client is capable of working "part-time why can't they work more?" "Why can't they perform more work "than they're already doing?" "The fact that they're working part-time "shows that they can work, hey have some capacity, "and so why don't they do more?" They very often will heavily investigate those claims. So they'll maybe be demanding evidence more frequently, or just more information from the client, more information from the doctor, about what the work entails and why they can't do more. The insurance company will also like to see well documented earnings during that period of part-time work. They wanna be able to accurately calculate any reductions that may be available to them under these provisions in the policy. Okay and that concludes our ninth key term to understanding disability plans.

 

So I hope that you enjoyed the presentation. I hope that you have a takeaway that a basic understanding of a claimant's rights and protections provided under ERISA is really necessary to effectively assist in a group long term disability claim. You need to use those rights and protections to your advantage and to the advantage of your client in order to hold the insurer accountable for any procedural failures. But the long term term disability plan document is just as critical. Understanding the long term disability plan document is necessary for a claimant to engage in an educated, financial planning and risk assessment process, as they file their claim. Understanding the requirements set forth in that plan document is also going to be necessary to avoid claim denial obviously, which can have a very devastating financial consequence for your client. I will tell you that in practice, it's very important to remember that these long term disability plan documents are drafted for the advantage of the administrator, the insurance company.

 

Although they're a fiduciary under ERISA, charged with the highest standards they do, try to apply the plan terms in a way that is going to help make the insurance company and the administrator money. And so you need to look very critically at the plan terms and try to anticipate insurance company might try to apply those terms to save it money. Doing so is really the thing that's going to make you a better advocate for your client. It's the thing that's going to increase your chances of success in the claim. And it's the thing that's really going to reduce your client's stress down the line by, sort of anticipating those hiccups that may come. You can proactively work to prevent them and to increase your chances of your client getting over those hurdles. If you're interested in learning more about disability plans and disability claims in general, that are subject to ERISA, I would encourage you to visit our website, riemerhess.com. We have a whole policy center that details a lot of the topics we covered today and more. We also have a book available on our website.

 

There's a link available to the publisher, which is James Publishing. The book is called "ERISA Disability Claims and Litigation". It was co-authored by my partner, Scott Riemer and myself in 2021. The book has a whole chapter about navigating disability insurance policies, in addition to other chapters that will help you handle long term disability claims with ease and with expertise. And so I really encourage you to take a peek at our website and use some of the resources there if you're interested in learning more. Again, thank you so much for being with me today, I hope that you enjoyed the presentation, thank you.

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