Long Term Disability (ERISA) Policies and Provisions Explained
Oftentimes, I am contacted by individuals who have been denied long term disability benefits. When questioned further, they are often unaware of the individual policy provisions. While many ERISA based (employer based) policies often delineate the terms providing little room for input from the employee, in some instances, parties have purchased individual policies which gives them a myriad of options to choose from. The following are some important policy distinctions that a person should consider when purchasing a policy and should be familiar with when making a claim.
Call the Pennsylvania disability lawyers at Young, Marr, Mallis & Associates for a free consultation if you are applying for long-term disability in Pennsylvania or New Jersey. You may reach our Pennsylvania law offices at (215) 515-2954 or our New Jersey law offices at (609) 557-3081.
What Qualifies as Disabled?
Usually “own occupation” would be defined as the job the person was performing at the time they were disabled. Under such a definition, a disability would exist when due to illness, accident or injury, the person is unable to perform the material and substantial duties of their regular occupation. Therefore, you are disabled under this definition if you are unable to carry out the duties of your specific job. Some policies are own occupation throughout while others have a defined period in which own occupation applies, i.e. one year or two years. Unlike own occupation, “any occupation” policy is more difficult as you must demonstrate that you are unable to perform any job for which you are reasonably qualified based on your education, training or experience. As previously mentioned, many own occupation policies become any occupation policies after 12 or 24 months which often result in a suggested termination because of the change in the policy definition for disability.
Portability of Disability Benefits
If you purchased your disability through your employer, it is important to know whether you can maintain that policy upon leaving the company. Obviously, this is not an issue if it is a privately purchased policy. The majority of ERISA based policies are not portable but it is something you should be aware of. If it is not portable, it is that much more of a reason to consider purchasing an additional policy outside of employment.
Long-Term Disability Policy Exclusions
In addition to the definition of disability, many policies include certain conditions that are excluded either because of pre-existing conditions or because it is simply not covered. For example, mental health conditions often are either not covered or covered for a limited period of time. It is important that you be aware of these exclusionary provisions when making a claim.
Policy Coverage and Maximum Benefit Period
Each policy is unique whether ERISA or privately purchased. Some long-term disability insurance policies will have a cap as to payment amounts while others will pay a percentage of your pre-disability gross income such as 60 or 70%. It is our experience that it is rare for a policy to pay higher than 70% of pre-disability earnings as they wish to incentivize your return to employment. It is important to know this dollar amount as you may need to supplement an employer based policy with a private policy to cover basic living expenses.
Every policy comes with a maximum benefit period, usually until age 65 or 67. Furthermore, all policies have an elimination period before beginning paying benefits. While each policy is different, in general, you will usually see employer based policies with a minimum elimination periods of 90 days. It is also important to recognize that whether your Long Term Disability benefits are taxable or not will depend on whether they were paid with before or after tax dollars. If your employer paid premiums with before tax dollars, your benefits will be taxed where if it is a private policy or paid for with after tax dollars, the benefits will be paid tax free.
What Should I Do If I Was Denied Long-Term Disability Benefits?
If you were denied long term disability benefits, it is important to contact qualified counsel to examine both your policy as well as the internal rules concerning the appeal process. You must exhaust your insurance internal appeals process before you can proceed to federal court. Under ERISA policy, court judges are limited to reviewing the record that was presented to the insurer to determine whether their decision was “arbitrary and capricious”. Therefore, it is critical that you supplement the administrative record with as much prohibitive evidence as possible prior to it being closed. While some companies will allow a second appeal, others only have one appeal and failure to provide these records can be fatal.
Our Pennsylvania and New Jersey Social Security Lawyers Can Help
The issues discussed above along with many others are often contained within extensive and very technical disability contracts. Oftentimes, it is wise decision to have the policy reviewed with counsel prior to presenting a claim. Most importantly, if a claim is made and denied, it is essential that the file be reviewed with experienced counsel as failing to do so may result in financial disaster.
If you are applying for long-term disability benefits, our Pennsylvania disability benefits lawyers at Young, Marr, Mallis & Associates can help. Call our Pennsylvania law offices at (215) 515-2954 or our New Jersey law offices at (609) 557-3081 today for a free consultation.