A: ERISA is a shorthand term that refers to the Employee Retirement Income Security Act. That sounds like it should only apply to retirement benefits, and would have nothing to do with disability insurance. Unfortunately, that is not the case. ERISA’s tentacles are far reaching and touch every benefit plan sponsored by an employer for the benefit of its employees, with few exceptions. To read further click here
A: Disability insurance is purchased to provide replacement income when you cannot work due to a disability.
There are two ways of buying disability insurance policies:
It is very important to understand how crucial it is to present the claim properly from the beginning. If the claim is denied and you end up in federal court, you want the federal court to see all the evidence, not just what the insurance company puts in the file. Remember, the federal court can only look at the claim file (called the “Administrative Record”), so this is where most cases are won or lost.
There are basically two types of disability insurance benefits:
A: Many group disability plans and policies contain two different disability definitions. The first one, usually only applicable to short term disability, defines total disability as the inability to perform the material duties of the claimant's own occupation. This is usually referred to as the “own occ” definition. It is important for the insurance company claim file to contain very detailed information about a disabled worker’s job, and it is his responsibility to furnish it. If the disabled worker’s job duties are not clearly presented he runs a substantial risk of either a denial of the claim or a decrease in benefits. Without specific job information from the disabled worker, the insurance company can themselves define duties of the disabled worker’s job. You can bet that the insurer’s job description will be very different from that supplied by the person who actually does the job - the injured worker. An insurer (or its hired doctors) will then note the workers’ limitations, but claim that the he or she can perform the material duties of his job despite these limitations. Another trick is to claim that certain duties are not "material" to the disabled worker’s job, and therefore the worker is not disabled at all!
A: Some policies provide disability benefits for people who are disabled and cannot do the work they were doing at the time of the onset of disability, but can do some work. Typically, partial or residual disability is defined as the inability to perform one or more of the substantial and material duties of your occupation, and because of such limitations, you have suffered at least a 20% loss of monthly income.
A lot of times, insurance companies will often interpret the two definitions (total disability and partial disability) together. They do this to move people from total disability status to partial disability status. They decide that if you are able to do at least one of the duties of your job, you are only partially disabled. But, in truth, almost everyone who is totally disabled can probably do at least one duty of his or her job. Here, the definition of total disability is crucial. Is it an “any occ” or an “own occ” definition? If the latter, the disabled worker has a much stronger case for total disability. However, even under the “any occ” definition, some cases can be won if they are presented right.
A: This depends on the definition in the plan or policy. Typically, it means any medical condition for which the insured was or should have been treated during the 2 years before becoming insured. The period can vary, as can the definition. Some definitions require that the insured received medical treatment, consultation, care or services, including diagnostic tests, or took prescribed drugs or medicines within the “look back” period. Some, though, look for any evidence of symptoms, regardless of treatment, that would put the ordinary person on notice that he or she should seek medical advice. It is sometimes surprising how far insurance companies will go in interpreting a medical record as a sign of a pre-existing condition, when in fact it is not. Generally, if the disability is the result of a pre-existing condition, the insurance company is not liable for benefits.
A: Probably! Insurance companies love surveillance. You can be watched, followed, and videotaped you while you are out in public or even outside on your own property. The best advice is to assume that the insurance company has a video tape of you every time you leave your home. They will try to get you to deny that you are able to do something that they have you on tape doing.
A: Like the answer to many legal and insurance questions, it depends. Most individual disability insurance policies (non ERISA), use the “own occ” definition of total disability. Under that definition, if you are able to work, but unable to do your previous job, you are entitled to benefits. But, the duties of your new job must be substantially and materially different from your pre-disability occupation.
If your policy is covered under ERISA (obtained through employment), it may have an “own occ” definition for short term disability, then switch to an “any occ” definition for long term disability. Under the “any occ” definition, you usually receive total disability benefits if you are able to work (but see “residual or partial disability” elsewhere in this FAQ)
A: Most disability insurance policies, provide that the Insured’s monthly benefit can be reduced (offset) by the amount of benefits he or she receives from another source for that same disability. These other sources include Social Security, benefits for the same disability from another policy, and disability retirement benefits.
A: First, if you retain a lawyer before your final denial on appeal, he or she can review the record, and ensure that your case is presented to the insurance company in the best possible light. That is why it is important to talk to an attorney early in the process.
It is best to retain an attorney right from the start. The insurance companies have attorneys to advise them, and even their own claims handlers are experts at handling claims. Most disabled workers are not and are at a distinct disadvantage.
In short, there are significant aspects of the process that take careful consideration long before you file suit in court. Without guidance, a disabled worker can inadvertently provide the insurance company with the means to delay or deny a claim.
While the insurance company may promise a full and fair review of the claim; they have a strong incentive to find you not disabled. Every claim they approve comes out of their pocket. If your claim is denied, it is up to you to provide them with the information, documents and medical support necessary to overturn the denial. If anything important is left out at this stage, it can be fatal to your claim, because you won’t have a chance to fix it in court.
A: If you are successful in court, a judge may order the insurance company to pay all or a part of your attorney’s fees. However, whether to do so is up to the judge and many judges just don’t like making one party to litigation pay the other side’s attorney’s fees. The factors that judges usually take into consideration include how badly the insurance company acted, how long they continued to press their defenses when they knew or should have known that there was no merit to them, and the ability of the parties to pay.
In 1970, the Studebaker Motor Corporation declared bankruptcy. Because it paid retirement benefits from current earnings, retired employees and long-term employees woke up to discover that they had nothing for their retirement. In 1974, Congress responded by enacting ERISA. However, as is usually the case, Congress not only reacted, it over reacted, so that ERISA covers not only retirement benefits but all “employee welfare benefit plans”. This includes health and disability insurance and in some cases, even vacation and sick leave entitlement. When Congress passed ERISA they specifically provided that it pre-empted the entire field and that state laws that affected the area were unenforceable.
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