Long-term disability insurance is insurance, often offered as part of an employee benefits package, that pays an employee some percentage of their regular income when they cannot work. The covered period begins where short-term disability coverage ends, usually somewhere between 10 and 53 weeks after the event that caused the disability. If your employer offers the plan, it is subject to the rules and regulations of the Employee Retirement Security Income Act (ERISA), which complicates any appeal you may need to make.
The coverage provided depends on the specific policy but can last until the insured is 65 years old or reaches Social Security Normal Retirement Age. The employer or employee can fully pay long-term policies, or they may share the costs.
To ensure you receive the full benefits you deserve under your policy, seek help from a Palo Alto long-term disability attorney right away.
Group coverage through an employer terminates when your relationship with that employer ends. An individual policy goes with you.
Your individual policy may be more expensive but will likely be more tailored to your specific needs. Further, if you have a dispute with your insurance company, you do not have to take it through the long, complicated administrative process required by ERISA.
One significant difference between a plan through your employer and one from the marketplace is taxation. If you purchased the plan in the open market and paid for it with post-tax dollars, your benefits will be tax-free. In contrast, your benefits are taxable if your employer paid or you paid with pre-tax dollars.
If you purchase your own long-term disability insurance coverage in the open market, not through your employer, it is not subject to the requirements of ERISA.
There are, however, advantages to having a plan through your employer that is subject to ERISA. First, group coverage is almost always far less expensive than buying an individual policy in the open market. Group plans often consider you disabled; however, if you cannot perform any occupation, your own occupation coverage is more common in individual plans. Even these latter plans may, however, change to any occupation at 24 months, thus reducing or eliminating our coverage.
ERISA plans almost always contain restrictions on disability claims based on mental health problems or substance abuse. You may, on the other hand, be able to purchase coverage for conditions such as depression, fibromyalgia, or chronic fatigue syndrome, for a higher premium.
ERISA plans often have limits on the monthly benefit size and are based on a smaller percentage of your income than you will see with an individually purchased plan.
If you receive an adverse decision on a claim subject to ERISA, you must exhaust your plan’s internal appeals process before you can sue in federal court. This requires asking the insurance company to review its own decision before you can sue. This requirement does not apply to an individually purchased plan.
Employer plan suits go to federal court and can be difficult to pursue. You generally may not add new evidence to your file and will have short filing deadlines. The judge will decide your case only, as opposed to the jury trial available in state court with an individually purchased plan.
Finally, ERISA may require that your case be viewed under an easy-to-pass “abuse of discretion” standard of review. Only somewhat egregious conduct meets this standard. On the other hand, with an individually purchased plan, the judge or jury will be looking for the insurance company’s breach of promise to you. If you win, ERISA only provides back benefits and interest, while individual plans allow for additional compensatory and punitive damages.
Long-term disability denials are common and require the understanding and following complicated rules and regulations to file an appeal. You are likely to do better with the help of an attorney rather than without. Contact us today at Roberts Disability Law, P.C. for assistance filing your initial claim or an appeal of a long-term disability decision.
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