Our video discusses how disability insurance companies can reduce or limit disability benefits in group, or employer-sponsored, LTD plans. This is achieved through the wording and terms written into the disability insurance policy.
Do you know what benefits are limited in your disability plan?
The only way to know what benefits your policy may restrict of exclude is to read it as thoroughly as you would any contract. It is important to carefully read your policy when your first become covered by the plan. You may decide you need to supplement the group policy with an individual policy.
Also keep a copy of the policy on file. Should you ever need to file a claim, you can review it and know exactly where you stand. Otherwise, the various ways your insurer can limit disability benefits – through exclusions, offsets and other provisions – may cause unexpected and often disastrous repercussions, when money is desperately needed and assumed available.
Common Ways Insurers Limit Disability Benefits
Our video talks about occupational definitions generally written into group LTD policies that restrict your chance to recover full benefits. Your policy defines the maximum length of time that benefits are payable. In most cases, if you are disabled in your own occupation, you receive benefits up to 24 months. Then, if you are considered disabled in any occupation (and you can continue to prove you are so disabled) you generally receive disability benefits up to age 65.
Another example is a percentage payout. Most disability policies contain a provision that pays 60% of the claimant’s salary, minus any offsets for other benefits. So right off the bat you would not be receiving 40% of your accustomed salary.
What Are Offsets and How Do They Limit Disability Benefits?
Benefit offsets are deductions from your LTD benefit amount. The deductions “offset” other payouts you receive from other sources.
Most group disability policies contain offset provisions. Your policy must list and define the specific types of benefits the insurance company is allowed to deduct from, or offset, the income you’re eligible to receive.
The following list describes common benefits that are offset if you are receiving benefits from any of the following sources:
- Mandatory benefit laws (such as state disability plans)
- Governmental retirement system
- Disability or retirement benefit received under a retirement plan
- Social Security Disability Insurance (SSDI) benefits
- Earnings received or earned from other employment
- Workers compensation
- Employer contributions to an employer sponsored retirement plan.
Every group disability plan will be written uniquely, with various influencing factors such as the state in which you live.
More Ways Group Insurance Plans Limit Disability Benefits
Below are other ways in which monthly benefits are commonly restricted in group disability plans.
Mental Illness Benefit Limitations:
Most group disability policies have a provision that limits benefits for mental health impairments – including conditions such as depression, anxiety or bipolar disorder – to 24 months.
Combination of Mental Disorders, Substance Abuse or “Other Limited Conditions”:
Under a Limited Conditions Provision, a group LTD plan might state that certain disabilities are subject to a limited benefits period. This generally limits disability benefits to 24 months for a disability caused by (1) Mental Disorders, (2) Substance Abuse or (3) Other Limited Conditions.
“Other limited conditions” mentioned in group disability policies commonly include conditions such as chronic fatigue, chronic pain, carpal tunnel or repetitive motion syndrome, sensitivities to the environment, chronic pain conditions, arthritis or sprains or strains of joints or muscles.
Preexisting Condition Exclusion
Most policies have preexisting condition exclusions. These requirements prevent you from receiving benefits if certain illnesses or injuries occurred in your past. These exclusions usually take effect when you have been eligible for benefits for less than 12 months, but sometimes the stated period is 24 months.
Be Prepared for Limited Disability Benefits under Group Coverage
Group disability insurance is much more limited in its payouts than privately purchased long term disability insurance policies. In cases where the insurer attempts to limit disability benefits wrongfully, we are often able to successfully challenge an unfair restriction or denial of benefits.
Having an experienced disability lawyer on your side throughout every stage of the disability claim application – or through every step of the disability appeal process – gives you the best possible chance of winning your rightful benefits.