I deal with insurance companies every day. Why should this case be any more complicated?

For various reasons, in recent years the disability insurance industry has become very aggressive about denying and terminating claims and minimizing payouts. Insurance companies have forensically trained teams of experts reviewing every document in search of ways to defeat the claim. They can be calculating and systematic, especially in handling high-value claims like yours.

What is Individual Disability Insurance (IDI)?

Individual Disability Insurance (IDI) policies provide income protection should an insured become disabled. These policies are issued by insurance companies directly to the insured. The premiums are paid directly by the insured and are not part of an employee benefit plan or association policy. Typically, these polices are paid for with post-tax dollars, which result in a non-taxable benefit.

Depending on how the policies are purchased and paid for, they will not be subject to the Employee Retirement Income Security Act of 1974 (ERISA). ERISA governed polices, such as long-term disability policies, contain numerous provisions and limitations, which favor the insurance provider and not the insured. This includes the standard of review, administrative appeal requirement, and preemption of causes of action for extra-contractual damages and bad faith. If an IDI claim is denied, the insured’s options include filing an appeal of the denial or proceeding straight to litigation.

IDI policies are marketed with base coverages and à la carte riders. The riders often dictate the quality of coverage actually obtained. These riders should be thoroughly reviewed prior to finalizing your coverage and can include “True Own Occupation,” “Residual or Partial Disability,” “Cost of Living Increases (COLA),” “Lifetime Benefits,”  “Future Increase Options,” “Mental Nervous/Addiction coverage,” and “Social Security Disability Insurance (SSDI).” It is important to understand your actual coverage and riders, as most base policies provide limited coverage.

Learn More: Individual Disability Insurance

What is a Business Overhead Expense Policy (BOE)?

While Individual Disability Insurance (IDI) policies protect the insured’s income, Business Overhead Expense (BOE) policies are designed to protect the insured’s business if they become disabled and are often sold in conjunction with Individual Disability Insurance policies. BOE policies provide reimbursement for specified expenses related to operating the business. BOE policies are not uniform in coverage and contain confusing and ambiguous language. It is the insured’s burden to provide the necessary financial documentation to support their claim. Insurance companies’ rely on their teams of financial consultants to limit their liability by analyze and challenge certain monthly expense.

At Seltzer & Associates, we thoroughly analyze our clients’ policies and financial records to ensure their benefits are properly paid. This includes working with our own financial consultants to ensure our clients’ rights under their policy are protected.

What is a Group Long-Term Disability (LTD) Plan?

Long-Term Disability (LTD) policies are provided by an employer as part of an employee benefit plan. Because LTD policies are part of an employer-sponsored plan, they are governed by the Employee Retirement Income Security Act of 1974 (ERISA). These policies traditionally contain less favorable coverage than Individual Disability Insurance policies. Examples include issuing a benefit based on a percentage of one’s monthly earnings, excluding bonuses and other forms of income from the benefit calculation; limiting occupation coverage; limiting or excluding claims for mental health and addiction related disorders; and offsetting other sources of income, such as Social Security and worker’s compensation.

Unfortunately, these policies offer significantly less coverage than our clients’ anticipated. Moreover, ERISA plans require that an insured appeal a claim denial within 180 days. The insured is precluded form immediately litigating the appeal and is barred from filing a lawsuit if they fail to appeal the denial within 180 days.

Learn More: Long-Term Disability Insurance

What is an Association Long Term Disability Plan/Policy?

These policies are obtained by individuals through an association or group, such as the American Dental Association. These policies often contain less favorable coverage than Individual Disability Insurance policies. The coverage is often similar to Group Long Term Disability insurance without being governed by ERISA.

Does my policy protect my ability to work in my own occupation?

It depends. Your policy language controls the extent of your disability coverage. It is important to understand the difference between “Any Occupation,” “Modified Own Occupation,” “Limited True Own Occupation” and “True Own Occupation” coverage. Read more below to learn about these differences.

What is “True Own Occupation” coverage?

True Own Occupation” coverage provides a Total Disability benefit, provided that an injury or sickness prevents the insured from performing the substantial and material (major, primary) duties of their occupation. The benefit is paid regardless of whether the insured is working in another occupation, so long as they are disabled from working in their “Own Occupation.”

Learn More: Own Occupation in Individual Disability Insurance and Own Occupation & Any Occupation for Long-Term Disability

What is my Own/Regular Occupation?

Your policy will provide a definition for Own/Regular Occupation. It is important to thoroughly review this definition, as it will govern how the insurance company administers your claim. Your occupation is not what you were doing when the policy was issued. Rather, it is determined based on what you were regularly doing at the time you became disabled.

While some policies contain specialty language, which expands upon the general definition to include recognized specialties and subspecialties, the insured bears the burden of providing the insurance company with proof that they are unable to perform the material duties of their occupation. As such, insurance companies look to challenge claims by generalizing ones occupation and the physical or mental demands of the occupation.

What is “Modified Own Occupation” coverage?

Modified Own Occupation” coverage will provide a Total Disability benefit, provided an injury or sickness prevents the insured from performing the substantial and material (major, primary)  duties of their occupation AND they are not gainfully employed in another occupation. The definition of gainful employment varies by policy; however, an insurance company will not pay a Total Disability benefit regardless of the insured’s disability, if they are working.

Learn More: Modified Own Occupation in Individual Disability Insurance

What is “Any Occupation” coverage?

To receive a benefit under “Any Occupation” coverage, the insured’s medical condition must be severe enough to prevent them from working in any occupation, based on their education, training, and experience. If the insurance company determines you do have gainful work capacity, they will seek to terminate your claim. Terminations based on any gainful occupation work capacity should be scrutinized and can be challenged based on the definitions within your policy and applicable case law.

Learn More: Any Occupation in Individual Disability Insurance and Own Occupation & Any Occupation for Long-Term Disability

What is an Own Occupation Period or an Occupation Change in Definition?

The policy of insurance governs your coverage. If a policy contains a time limitation on “own occupation” coverage and/or a change in definition to “Any Occupation” after a set period of time, then the company will conduct a transferable skills analysis to determine whether you have the ability to work in any gainful occupation, based on your education, training, and experience. If the company determines you do have gainful work capacity, they will seek to terminate your claim. Terminations based on any gainful occupation work capacity should be scrutinized and can be challenged based on the definitions within your policy and applicable case law.

What is Totally Disabled/Total Disability?

Typically, policies define total disability as an injury or sickness that prevents the insured from performing substantial and material (major, primary) duties of their occupation and that the insured is receiving treatment (appropriate care) from a physician. The insured bears the burden of thoroughly explaining the duties of their occupation and providing medical documentation supporting their claim. Insurance companies look to challenge Total Disability claims by alleging that a specified duty was not material or by alleging that the insured has the ability to do some of the material duties. Insurance companies often look to define an insured as Residually/Partially Disabled. If an insured is actually Residually/Partially Disabled, they must have coverage for the same or their claim will be denied.

Learn More: Total Disability in Individual Disability Insurance and Total Disability & Residual Disability for Long-Term Disability

What is “Residual/Partial Disability”?

Residual/Partial Disability coverage is generally offered in most base insurance packages. It is often added to the policy coverage through a rider. Residual/Partial Disability is generally defined as:

  • The inability to perform one or more of the substantial and material (major, primary) duties of your occupation, OR
  • The inability to perform all of these duties for as much time as you could before the disability; AND
  • You have suffered at least a 20% loss of monthly income.
  • You are under the regular care of a physician…

Insurance companies look to challenge Total Disability claims by asserting that an insured is capable of performing at least one of the duties of their occupation. However, just because an insured is capable of performing certain duties, it does not mean they are not Total Disabled under the subject policy. They in addressing this issue are to thoroughly analyze the “substantial and material” duties of the insured’s occupation.

Learn More: Residual Disability In Individual Disability Insurance and Total Disability & Residual Disability for Long-Term Disability

What can I do to maximize my chances of success in filing a claim?

One basic precaution is to choose a doctor who will give your claim maximum credibility, specifically one who is well credentialed, forensically trained, and specializes in your exact disabling condition. When you see the doctor, be sure to explain carefully your professional and occupational responsibilities and duties, especially as they may be affected by your disabling condition. For instance, if your job entails long hours of cognitive functioning at an executive level, or if your job requires physical skills or demands, make sure your doctor is aware so he or she can make a full and accurate assessment of your ability to work.

Other key crucial steps include understanding your own contractual obligations under your policy and identifying issues that might create problems for or defeat your claim- likely candidates include the incontestability clause, pre-existing condition clauses, and the nature and extent of the disabling condition. It is also essential for your doctors to learn the responsibilities of your “own occupation” and then to clearly establish any and all restrictions and limitations you face as a result of your condition.

Am I required to treat with a physician and what is appropriate and regular care?

Most policies contain “care” language. Regardless of the specific definition, your disability insurance company will not pay a benefit unless a physician and/or qualified healthcare professional can document a disabling medical condition. The next requirement is that you demonstrate treatment for the condition that is generally accepted by the medical committee. If you lack medical documentation supporting your claim and/or reasonable treatment for the medical condition, your disability insurance company will challenge your claim.

Learn More: Appropriate Care in Individual Disability Insurance and Appropriate Care in Long-Term Disability

What kind of doctor should I see?

The medical assessments that accompany your disability insurance claim have the best chance of success if they come from a doctor who specializes in your disabling condition. Look for a well-credentialed treating doctor who is forensically trained, has experience with insurance claims, and is willing to go to the trouble of providing your disability insurance company with the completed relevant paperwork. You should also be careful to explain to the doctor exactly what it is that you do in your work and how it might be affected by your disability. If you need to multitask, function at an executive level, and/or perform physical skills or demands, your doctor should know about it.

Which policy clauses are most likely to be used as grounds for denying a claim or reducing benefits?

One common reason claims are denied is the “incontestability clause,” which allows insurers to contest policies that have been held for less than two years. (Sometimes the carrier may have the right to contest the policy or claim even after the two years have passed. This depends on the specific language used in the clause, and the facts of each claim.) Another common cause for denial, especially in cases of addiction and mental health claims, is a determination that the disability was a pre-existing or non-disclosed condition. A third common reason arises in “own occupation” policies—if the insurer determines you are still capable of performing your material and substantial duties of your own occupation, it might refuse your claim. Alternatively, it can take the position that you are residually disabled, instead of totally disabled, thereby reducing the monetary benefits to which you will be entitled, and even possibly the duration of the claim. “Own occupation” is often broadly interpreted so that companies can claim, for instance, that a surgeon is not totally disabled—even if a disabling condition prevents performing surgery. Sometimes the insurance company will use “elimination periods” as a way to defeat or reduce duration of claims. In many other cases, especially addiction disabilities, insurance companies argue that a professional has the ability to work “but for fear of the risk of relapse” and they are therefore not disabled. Courts have upheld that in such cases benefits can be terminated.

What is my duty to cooperate and to provide proof of loss?

As an insured, you have a duty to work with your insurance company to respond to all reasonable requests for information. A request is reasonable if it is not redundant and is necessary to evaluate your claim. This information is typically referred to as “Proof of Loss” or “Proof of Claim” and consists of claim forms, attending physician statements, profit and loss statements, tax records, medical records, face-to-face interviews, and independent medical reviews. If you refuse to cooperate and/or fail to provide reasonable Proof of Loss in a timely manner, your claim can be denied and/or terminated.

Can my insurance company limit its liability based on my medical condition?

Insurance coverage is based on the terms and conditions of the policy. It has now become common for insurance companies to include 24-month limitations for claims resulting from mental health and addiction related disorders, self-reported medical conditions, fibromyalgia, and other conditions that cannot be documented with objective medical evidence.

Learn More: Policy Limitations for Long-Term Disability