Are You a Salesperson Whose Disability Insurance Policy or Plan Has Occupational Classes That Can Impact Your Disability Insurance Benefits?
A disability insurance company can offer to an employer disability insurance benefits for its employees that lumps occupations into classes.
Why? Disability carriers will lump jobs into specific occupational classes based on risk. These classes take into consideration the hazards of the job, the length one may be disabled and the odds that a disabled policy holder won’t return to work.
In other words, the disability carrier will use an occupational class to determine the premium you will have to pay, what benefits the policy will provide and the maximum benefit you can get.
It is common for sales-based employers to offer a disability policy based on classes of salespersons. This is called “occupational classes” and can be a disaster as I will explain.
What are the Occupational Classes for Salesperson?
While each company has their own unique way of lumping sales occupations into various classes, the standard categories are:
Generally, the higher the class number will result in a higher premium.
Where you might fall will depend on the following factors:
– Nature of the sales,
– Length of employment,
– Number of leads.
How Does Occupational Class Impact Your Benefits?
As a salesperson, the occupational class can impact your benefits in two ways.
The amount of your coverage will depend on what is called your “before monthly income” or “covered earnings.”
Some occupational classes will not include in the base calculations monies you have earned like a bonus, commissions, incentives, or sales promotion money. That is where you probably make the most money, yet it is not included in the calculation of your benefits. You may have insured 60% of what you thought included your base pay and every dime you earned only to learn that your disability benefits are calculated only on your base earnings.
There is also another surprise that might be lurking in the occupational class which is a limitation on the length of time benefits will be paid for certain medical conditions. It is not uncommon for disability insurance policies to limit coverage for medical conditions like mental or nervous conditions or subjective medical conditions, like migraines or fibromyalgia, to just two years of benefits. However, different occupational classifications may have shorter or longer period of coverage.
What are the Games That Disability Carrier Play with Occupational Classifications for Salesperson?
Another carrier game is the misclassification of a policy holder’s occupation for the sole purpose of reducing the policy holder’s benefits.
That is particularly true for salespersons whose earnings can include not only base pay but bonuses, targeted incentive compensation bonuses, commissions, overtime and other extra compensation.
Every salesperson who is disabled should get out the policy and determine how the policy defines his or her occupation and what the covered earnings are for that occupation before they stop working!
In the case of Hodges v. Life Insurance Company of North America, No. 14-CV- 00958-WYD-NYW, 2018 WL 2753077 (D. Colo. June 7, 2018), there was a huge fight about Hodges’s occupation and what was covered earnings. Hodges’s ability to rebut what his employer told the disability carrier was key to winning benefits at a higher rate.
The issue was whether Hodges should be properly classified as “Sales Personnel” which would entitle him to a higher benefit because the definition for covered earnings for Class 2 Sales personnel included wages and salaries reported by ER for work performed and earnings received from bonuses or targeted incentive compensation bonus, but not commissions, overtime or other extra compensation.
For Class 1 employees, covered earnings did not include amounts paid as bonus, commissions, overtime pay or other extra compensation.
As a Class 2 employee, Hodge’s bonus would add an additional 902 per month to the calculation and increase his monthly benefit to $3072.00.
The court originally found that LINA did not conduct a full and fair review and took “an advocacy position” and told LINA to try again.
On remand, Hodges submitted the 2010, 2011 and 2012 Incentive Compensation Plans. One-month later Cigna contacted the Senior VP and Associate Counsel for the employer and confirmed that the employer considered Hodges to be a Cyro-Therapy Technician II which was non-sales and a Class 1 EE, even though Hodge had participated in a Target Physician Incentive Compensation Plan.
Even Hodge’s employer was trying to cheat him out of benefits.
Cigna reviewed the policy, the job description and its discussion with employer’s attorney in upholding the denial of Class 2, claiming that Hodges had to be classified as sales personnel and the job description of a Cyro-Therapy Technician II did not have any sales responsibilities.
Hodge’s pay was not tied to the sales but number of procedures. He was asked to provide one lead per month to sales and no requirement that the lead result in a sale. The denial was upheld.
Hodges did not give up and appealed again. He claimed that LINA disregarded what he submitted and failed to follow the remand instructions. He clarified that his job description included responsibilities for assisting in the growth and development of existing and new business lines, developing relationships with physician offices and facilities and marketing the employer’s clinical offerings. His monthly performance reviews and bonuses were based on those activities.
Cigna, of course, never investigated this information and never discussed them in the denial.
The court, who finally had enough, found that Hodges met the requirements for Sales Personnel and awarded classification as Class 2 employee, together with the payment of past-due benefits.
The lesson learned is to be prepared for a fight over the proper classification before a salesperson stops working and to submit all appropriate documentation in support of that classification as part of the application process. Don’t count on your employer to have your back!
What Must You Do if Your Disability Carrier is Playing Games with Your Disability Benefits?
At the Law Office of Nancy Cavey, we aren’t afraid to take on occupational misclassifications of salespersons that can steal money from your pocket. Don’t wait as you will only have 180 days to file an appeal of a wrongful claim denial, termination, or misclassification of your occupation.
Call today at 727-894-3188 for a no-obligation consultation.