By David S. Bross, Esquire
While most Americans insure their lives and material assets, like their homes, cars, etc., many overlook the need to protect their most valuable asset — the ability to earn an income.
In my last column, I reviewed individual disability insurance (“D.I.”). This article will look at group disability insurance policies, commonly referred to as “LTD” policies. First, though, everyone should be familiar with New Jersey’s law, which provides up to six months of disability benefits.
Short-Term Disability (STD) Beneﬁts
All disability claims begin with a claim for “short-term” benefits (STD) as opposed to long-term disability benefits (LTD). If you live and work in New Jersey, you have the benefit of the fact that New Jersey is one of only five states which provides compulsory short-term disability benefits to workers (Pennsylvania, for example, does not). Under the New Jersey Temporary Disability Benefits Law, cash benefits are payable when you cannot work because of sickness or injury not caused by your job. Employees whose employment is covered by the New Jersey Unemployment Law are also protected by a mandatory disability insurance system. In order to have a valid claim for disability, you must have had at least 20 calendar weeks in covered NJ employment in which you earned $143 or more (called “base weeks”), or have earned $7,200 or more in such employment, during the 52 weeks immediately before the week in which you became disabled (called “base year”). The weekly benefit amount is calculated on the basis of your average weekly wage. Claimants are paid 2/3 of their average weekly wage up to the maximum amount payable, which is $572.00 for disabilities beginning on or after January 1, 2012. The maximum amount of benefits which may be paid for each period of disability is 2/3 of the total wage in New Jersey covered employment paid to you during the base year, or 26 times the weekly benefits amount, whichever is less.
You may be eligible for temporary disability insurance benefits if you are disabled due to pregnancy. Eligibility for benefits is determined in the same way as any other disability. The usual payment period for a normal pregnancy may be up to four weeks before the expected delivery date and up to six weeks after the actual delivery date. However, if there are medical complications or you are unable to do your regular work, your doctor may certify to a longer period before and after the birth of your child during which you cannot do your regular work.
Long-Term Disability (LTD) Beneﬁts
If you have the misfortune of being unable to return to work after six months, but had the foresight to have purchased long-term disability insurance, you should now make a claim for LTD benefits. Most LTD claimants have purchased long-term disability insurance through their employers, pursuant to the federal law known by the acronym “ERISA”. There are marked differences between individual and group policies, primarily because of the differences between the “common law” and ERISA. Suffice to say that claims brought under the ERISA law tend to be more difficult to win if they are denied and/or terminated. Regardless of which type of long-term disability insurance you may have, there are some general rules of thumb to keep in mind:
1. First, be sure to obtain and read a copy of your actual policy. As simple as this may sound, I have found that few people ever bother to do this, and most employers don’t provide a copy unless specifically asked. You have a right to obtain a copy of your policy and you are strongly advised to read it fully as soon as possible. Your policy, in conjunction with the ERISA law, defines your rights and duties. Important: obtain the actual policy, not just a summary from an employee handbook.
2. Complete and file your claims application in a timely fashion. I suggest to my clients that, whenever possible, they employ certified mail. It is not unusual for claims to be denied because of the allegation that a claim was not received in time. Watch your deadlines carefully. Just as important, it is up to you to follow up with your doctor(s) to make sure that he/she completes any necessary claim forms timely as well. Whenever possible, review the claim form with your doctor personally (or at least with the doctor’s nurse or secretary), make sure it is signed by the doctor, and then file it yourself with your employer or your employer’s insurer. Similarly, if, as in most cases, your disability plan is being administered by an insurance company, be sure that your employer provides any documentation necessary, e.g., proof of earnings, job description, etc.
3. If you have supplied your employer and/or insurer with all documentation requested, don’t assume that your claim will be quickly approved. Delays are common. Don’t be afraid to follow up on a regular basis to ascertain the status of your claim. Document all telephone conversations and make written inquiries. If additional documentation is requested, make sure it is provided as quickly as possible, notwithstanding that all too often these requests for “additional documentation” are unnecessary and used by insurers to delay and discourage claimants. Regardless of the request, don’t give the insurer any reason to deny your claim based on “lack of cooperation.”
Long-term disability policies under ERISA typically have a number of other significant provisions which could dramatically affect your claim. One provision typically restricts claims for “mental impairment” to 24 months. This provision can get particularly nasty for claimants who have a physical disability but are also suffering from depression. Insurance companies will often invoke the “mental impairment” clause to terminate claims, even when depression is a secondary diagnosis. By no means should you forego treatment for depression or other mental health problems if you need it. However, be sure that your medical records accurately portray the physical predominance of your disability, if this is the case.
Another common restriction allows for termination of claims unless you can demonstrate the inability to return to any gainful employment after 24 months, as opposed to the inability to do only your previous job. This standard is similar to that used in Social Security Disability claims. This is also a complex area, in which it may become necessary to obtain a vocational assessment to verify continuing disability.
In conclusion, long-term disability insurance is vital. Buy as much as you can afford through your employer if it is offered. Better yet, buy your own private policy through a reputable agent. And don’t overlook applying for Social Security Disability if your policy requires it and/or if you expect to be disabled for at least one year.
In my next column, I will discuss the interplay between Social Security Disability and LTD benefits, as well as how to deal with the denial of disability insurance claims.