Claiming Disability Benefits – How to Avoid Falling into Insurance Company’s Traps
Claiming Disability Benefits – How to Avoid Falling into Insurance Company’s Traps
Mistake # 1 – Choosing the Wrong Date of Disability
The insurance company’s own definition of disability is contained within each policy, and is different in just about every case. Usually, it is a combination of the inability to work, and the inability to earn wages. It may be important if you have to reduce the hours you work due to your disability, but your employer continues to pay your full salary. If you have a substantial impairment, but are still paid a salary, you may not be considered disabled under your policy’s definition of disability.
To avoid mistakenly choosing the wrong date of disability, it is important to identify a date on which you were unable to work which is also supported by your physicians. Once you have confirmed your date of disability with your doctor, you can choose the correct date of disability. Remember: YOUR BENEFITS CAN BE DENIED IF YOU, OR YOUR EMPLOYER, CHOOSE THE WRONG DATE OF DISABILITY.
Mistake # 2 – Not Knowing What is in Your Doctors’ Records Before Making Your Claim
Disability insurance companies will only pay disability benefits if they are convinced that your medical records contain sufficient objective proof that you are disabled. Immediately after you file your claim, the disability insurance company will request records from your doctors (and any doctor mentioned in your doctors’ records) and carefully review them.
In another case, a disability insurance company denied benefits because the records of another person were accidentally included in the records sent by the doctor! Those records said all was well, and the insurance company relied on those records. Great investigation wasn’t it? The claims adjuster was responsible for so many files, she failed to notice she was reading the wrong medical records. The injured employee never knew that his doctor had mistakenly sent someone else’s records in, because he didn’t get the doctor’s records first. It was only after she hired a lawyer and sued the insurance company that she found this out.
All of that expense and hassle was 100% avoidable by requesting the medical records before filing any claim with the disability insurance company.
To avoid the mistake of not knowing what is in your doctors records before making your claim, obtain your medical records from your doctor before you file your claim and review them yourself! Are they accurate? Are they complete? Has the doctor recorded all of your complaints? Is there an objective basis for the doctor’s diagnosis and his opinion that you are disabled? Has your doctor documented the proper date of disability?
Mistake #3 – Stopping Work on the Wrong Day
To a disability insurance company, the last day of work, or LDW, is a very important day. Much of the investigation of your claim will revolve around the medical, vocational, and financial facts in effect as of the LDW. Unfortunately, many people stop working based on the well-meaning, but legally incorrect, advice of doctors, supervisors, co-workers, and even family or friends.
I recently ran into a situation where a client quit work and applied for benefits, even though his doctor’s records did not say he was disabled. Not only did he lose his job and his health insurance, but he was also denied the disability benefits, which he rightfully deserved.
It is therefore vitally important that you obtain as much documented evidence as possible by your LDW, as all insurance companies will undoubtedly ask the following questions:
1. Why did you stop working; when you worked eight hours the day before, and 40 hours the week before that?
2. What does the medical evidence show? Is there any objective medical evidence, proving that a change in your condition took place between the LDW and some later arbitrary date.
3. Even if you have some horribly paralyzing disease and you have worked for many years, the insurance companies have been known to say, “Well, yes, you do have a terrible disease, but most people in your situation would have stopped working long ago – BUT YOU DIDN’T – SO WHY ARE YOU STOPPING NOW?”
To avoid stopping work on the wrong day, make sure all of the answers to these questions are found in your medical records BEFORE you file your claim. Make sure your physician supports your claim for disability BEFORE you stop working!
Of course, you may have excellent answers to all of these questions; but why try to fill in the blanks later, after your claim has been denied? Why not take care of these issues now?
Mistake #4 – Assuming that since Your Employer said you are too Sick to Work, the Insurance company will share the same opinion
Whether you or your employer purchased your insurance policy, in almost all cases the disability benefits you may be paid comes from an insurance company. Make no mistake, it is the insurance company, not your employer, that determines when, and if, you meet the legal definition of disability under the terms of your policy. I have seen cases in which the employer refused to allow the employee to return to work without approval from the doctor, and even agreed with the doctor that the employee was unable to return to work, but the insurance company would still not pay any disability benefits!
How can this be? The answer is that most insurance policies insure your occupation, not the job you hold. In other words, while you may not be able to perform all of your own job’s requirements which your employer expects you to perform, you may still be able to perform the substantial and material duties of your occupation.
My law firm represented a route driver who sustained a brain injury while delivering his company’s product. Since he was no longer able to deliver merchandise, he was instead placed inside the beer distributorship to count bottles. The long-term disability carrier denied his claim, in part because they maintained he was, in fact, able to perform the substantial and material duties of his occupation.
Avoid the mistake of assuming your insurance company will share your employer’s opinion of your condition. Read your policy and determine its legal definition of disability, which is what applies to you. Is it the inability to perform your specific job, your job as performed for your employer, your job as performed in the local or national economy, or your occupation as performed in the local or national economy?
Once you understand the standard of disability that applies to you, I suggest you find a copy of your job or occupational description. Is the standard of disability your inability to perform your specific job for your employer, or your occupation as performed in the local economy? If the standard of disability is your inability to perform your occupation as performed in the national economy, ask yourself if the way you perform your job differs from your occupation as performed in the national economy? What are the material and substantial duties of your occupation?
Once you understand the standard of disability which applies to you, you should then ask your doctor to address your ability to perform the physical or mental requirements of your job, or the material and substantial duties of your occupation.
Mistake #5 – Not Understanding Your Policy Before Filing Your Claim
Disability insurance policies are hard to understand. You need to understand when to file for benefits, how to file for them, the standard of disability you must prove, whether there are any limitations on the coverage provided by the policy, and important policy terms.
To avoid making mistakes because you did not understand your policy before you filed your claim, I recommend you obtain and review your policy immediately! If your policy is an employer-sponsored policy, you should obtain both the Summary Plan Description (SPD) and the insurance policy itself, before you ever file your claim.
Both of these documents should be available from your employer. ERISA requires that these documents be available to you upon written request to the Plan Administrator, who could be charged late fees of up to $125.00 per day, for failing to provide you with these written documents within 30 days of your written request.
If you have a private disability policy and cannot locate it, you should call your agent immediately. You can obtain a replacement policy (usually for a small fee) from your insurance company.
Whether you have an employer-sponsored plan or a private policy, make sure you obtain and read all amendments and endorsements to the policy before making your claim for benefits.
Warning: Doctors are no longer Safe from Insurance Companies…
A decision from the United States Court of Appeals for the Fourth Circuit warned all physicians to fully review their final diagnoses of all patients before filing any claims for disability benefits.
Several years ago, a case was brought before the United States Supreme Court involving a very well known and respected orthopedist. The orthopedist, who had been injured, decided to file a claim under his group disability policy. He believed that since he was still able to maintain his office practice, but was unable to work a full schedule (resulting in a significant loss of income), he should only file what is known as a “partial disability claim.”
Each month, the orthopedist received income from his group orthopedic practice. The policy had specifically been purchased by the doctor’s office to ensure that any physician whose income was reduced would have the reduction “made up to them” by the insurance policy. The policy further stated that if, in any month, the physician’s income was between 20% and 80% of what he was making before he was injured, benefits would be paid.
The orthopedist’s monthly income was therefore based on the income for the entire group. So when the doctor’s monthly income exceeded 80% of what he used to make (because the physician group as a whole had a good month), the orthopedist thought that his disability payments would be suspended for that month.
However, the insurance company had other plans. After being notified of the claim, the insurance company initially began to pay the doctor disability benefits. After hearing about the group’s “good month, the insurance company decided to permanently stop paying all of the doctor’s disability benefits, even though he still had the same injury which continued to prohibit his earning anywhere near 80% of his pre-disability income.
The orthopedist mistakenly believed that he still had several years of benefits available to him to make up for those months where he was unable to earn even close to what he had earned in the past.
In an opinion that shocked many, the Fourth Circuit Court of Appeals ruled that the “good month” for the doctor’s practice was actually grounds for allowing the insurance company to terminate the orthopedist’s long-term disability payments.
This case sends a clear message: Make sure you fully understand your policy. If you are working and still receiving partial disability benefits, then all other forms of income must be carefully managed to prevent termination of your disability benefits.
Mistake # 6 – Trusting the Advice of the “Human Resources” Department
Many times employees are instructed to take all questions regarding benefits, including long-term disability benefits, to the employer’s Human Resources department. This “well-meaning” advice WILL RUIN YOUR CLAIM if the Human Resource department gives you bad advice. I am in no way suggesting that your employer would ever deliberately mislead you, but my experience has shown that (1) most human resource personnel have not been legally trained to read and give advice regarding insurance policies and, (2) individuals working in human resource departments generally have no influence whatsoever on insurance companies.
Unless the employer actually pays your monthly disability benefits (and this is rare), it is the insurance company that is in full control. Years of experience have shown that no matter how much your employer pleads with the insurance company, the insurance company always does what is in their own best interest.
Avoid making the mistake of trusting the advice of the “Human Resources” Department. Take personal responsibility for your claim!
When my client, who was brain injured, was unable to count bottles in the beer distributorship his employer fired him. After firing our client, the employer wrote a letter supporting my client’s claim for disability. The insurance company, even after hearing about all the hardship my client had undergone, denied his claim because it maintained he was still able to work at some other occupation.
We were ultimately successful in winning him his disability benefits. Unfortunately, his employer was completely unable to influence the disability insurance carrier who chose to refuse payment of benefits to a brain damaged employee.
Mistake #7 – Do Not Use Insurance Company Forms Alone to Document Your Claim
When you claim disability benefits, the insurance company will send numerous forms that you and your physician must complete. Typically, the physician forms will have questions such as: How much weight can this patient lift; How long can this patient sit? Can this patient walk long distances?
These questions are generally irrelevant to many claims. And even though your doctor may provide detailed answers to the questions asked by your insurance company, they will undoubtedly respond that your doctor did not provide enough information.
Don’t fall into this trap. Avoid the mistake of using only Insurance Company Forms to support your claim After you review your own medical records fully, sit down with your doctor and explain to him/her the terms of your policy. Then have your doctor prepare a report explaining why his diagnosis is supported by objective evidence which shows that your sickness, injury, or illness prevents you from performing the substantial and material duties of your occupation.
Sure, your doctor may charge you for this report. Pay the charges! It is far better to initially submit a well-documented claim for disability then to go back, after you have been denied benefits, and be forced to justify your claim.
If your doctor will not cooperate and assist you, strongly consider finding another physician who will during your time of need.
Remember, if you’ve already been denied disability benefits and are appealing your claim, you and your doctor have a limited amount of time within which you may submit additional medical, vocational, and other types of reports in support of your claim. Why be under the gun when the work may be done leisurely before you ever submit your claim?
Mistake # 8 – Leaving Work Before Calculating Your After Tax Monthly Benefits
Most long-term disability policies only pay 60% to 66.6% of your monthly salary. This would make sense if the disability benefits were tax free, but they usually are not. The taxing of your disability benefits is a major concern. Generally speaking, if your employer paid the premium on your disability policy, the disability benefits paid to you are subject to taxes.