Disability insurance plans and policies are filled with a lot of technical “legalese.” Consequently, it can be difficult to understand the terms and conditions of an ERISA plan. We can help. In this post, ERISA disability lawyer David M. Hicks explains the important terms that you may see in your policy.
Key ERISA Disability Policy Terms
- Appeal of Adverse Benefit Determination
If the disability insurance company denies your claim, you have the right to appeal. Before you file a lawsuit, you must file an “administrative” appeal with the insurance company.
This first level of the ERISA appeal process may the most important part. During this appeal, you (or your disability lawyer) should review the insurance company’s file and submit any missing evidence that supports your claim. If your appeal is denied, then you may appeal to the federal courts. However, after the administrative appeal, it is virtually impossible to submit additional evidence to the federal court judge.
Before you file for benefits, you must understand your insurance policy’s definition of disability. Unless you can prove you meet your policy’s definition of disability, you cannot receive benefits. Your ERISA policy may include several different definitions of “disability”:
All Occupation. An “all occupation” policy requires that you are unable to perform any job within the economy. Typically, this includes the simplest and lightest jobs. However, there are also “modified all occupation” policies that pay benefits if your health conditions severely limit your ability to earn wages.
Own Occupation. If you have an “own occupation” policy, you will receive disability benefits if you are unable to perform substantial and material duties of your job. An inability to perform even one core job function may result in a finding of disability.
Presumptive Disability. Some disability insurance policies have a different analysis for catastrophic injuries. For example, some policies will presume you are disabled if you have suffered the loss of two limbs, or your vision, or hearing, or speech.
Residual Disability. Other policies allow for a partial benefit based on proportionate income loss.
An elimination (or qualification) period is a waiting period before you become eligible for benefits. The elimination period may range from 30 days to six months, depending on your policy. After the elimination period expires, you will start receiving benefit payments.
The Employee Retirement Insurance Security Act of 1974 (ERISA) is a federal law that governs a wide variety of employee benefits. ERISA sets out policies and procedures for the administration of pensions, employee health insurance, and disability insurance. ERISA only covers employee benefits that are funded by the employer. If you pay the full insurance premium, you are covered by a non-ERISA plan (and different laws apply).
Long-term disability (LTD) coverage may pay benefits until you reach retirement age (depending upon your policy). Typically, the qualification or waiting period for LTD eligibility ranges from 30 days to six months. Most LTD policies do not kick in until your short-term coverage has ended.
Your policy’s definition of disability may change once you become eligible for LTD benefits. Many disabled workers’ claims are denied at the LTD level due to changed definitions and increased insurance company scrutiny. However, you have the right to appeal the insurance company’s denial of benefits.
Every disability insurance policy has a plan document. The plan document sets out in detail the terms and conditions of the policy. They can be very lengthy and technical, but include a comprehensive discussion of your plan. If requested, the insurance company must give you a free copy of your plan document.
Most ERISA plans are not portable—meaning that you cannot take the coverage with you when you leave a job. However, many non-ERISA disability insurance policies will let you continue coverage as long as you pay your premiums.
Depending on your policy, there may restrictions on its renewability, including how and when its premiums and terms may change.
Conditionally Renewable. An insurance company will continue to renew your disability insurance policy as long as you meet certain terms (typically the maintenance of full-time employment).
Guaranteed Renewable. An insurance company must renew a guaranteed renewable policy as long as you make on-time premium payments. While premiums may increase, your policy cannot be terminated due to a change in your health.
Non-cancelable. As long as you make on-time payments, an insurance company cannot change the policy terms or premiums of a non-cancelable policy.
Symptoms that cannot be proven through diagnostic testing are considered “self-reported.” They can include fatigue, pain, and dizziness. Some insurance policies limit or exclude claims that are based upon self-reported symptoms. This can become a challenge for disabled workers who have been diagnosed with chronic fatigue syndrome, irritable bowel syndrome, fibromyalgia, and other conditions that are not diagnosed by MRI, EMG, or other objective testing.
Short-term disability (STD) coverage pays benefits for a relatively brief period of time (typically three to six months). The qualification or waiting period before you become eligible for STD benefits also is short, ranging from zero days to two weeks.
Every disability insurance plan must have a summary plan description (SPD). The SPD must explain the terms and conditions of your policy, including disability definitions, the claim and appeal processes, and benefit amounts. The insurance company must provide you with a free copy of the SPD if requested.
Are You Having Trouble Interpreting Your Disability Insurance Policy?
An experienced ERISA disability lawyer can help. We can review your policy, explain the key terms and your legal rights, and guide you through the claims process. To schedule a free claim evaluation, please complete the form on this page or call us today.