Benefits &Financial
Disability Insurance
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Disability insurance typically provides disability income benefits to the covered employee that begin after a specified waiting period and continue until one of the following occurs:
• The insured person returns to work.
• The insured becomes deceased.
• The insured becomes eligible for pension benefits (usually age 65).
Disability insurance exists to replace income in the event of total or in some cases partial disability, due to accident or illness. It typically comes in two forms; short-term disability (STD) insurance and long-term disability (LTD) insurance.
Short-term disability (STD) insurance covers a percentage of your lost salary should injury or illness prevent you from working for more than a few days. Payments generally start when you have exhausted any available sick leave. Duration of benefits varies by policy, but six months is typical.
Long-term disability (LTD) insurance is a more common insurance benefit that usually pays you until age 65, provided you meet the terms of the policy. Policies vary. Some pay benefits if you are unable to perform the duties of your own occupation, others only if you can engage in no gainful employment at all.
Typical long-term disability group policies pay 60% of your current income. Most policies cap income replacement at a certain level. If your employer's policy is capped you may receive less than 60% in replacement income.
Are You Covered By Group Disability Benefits?
Check with your employer’s benefits office to see if you are covered and, if so, what is available to you. Most employers allow some short-term sick leave, which may last from a few days to as much as six months, depending on employer policy and duration of employment. Some states require employers to provide disability benefits for up to 26 weeks. In California, most employers must provide coverage for up to 52 weeks.
There are no laws that require employers to offer LTD insurance. If you are covered, find out how long you must wait before benefits begin and how long payments will continue during your disability. Find out, too, whether your employer’s plan takes other disability coverage (such as workers’ comp and social security) into account when calculating your long-term disability benefit.
In order to receive benefits you must notify your employer that you are unable to work, complete the required claim forms, and provide a written explanation from your physician why you can no longer work. Your physician will need to address your cognitive functioning and how this impacts your inability to work. A neuropsychological examination may be necessary. The brain injury will have to be severe enough that it disables you from performing your job. If your claim for benefits is approved, you will have to provide the insurance company with regular updates of your condition to continue to receive benefits. Most policies can require you to attend medical evaluations, etc. in order to continue to receive benefits.
Most plans require you to apply for Social Security Disability benefits. If Social Security Disability benefits are approved, most plans will reduce your disability payment by an amount equal to the Social Security Disability benefit.
Most plans allow you to appeal denied claims and contain provisions allowing claimants to submit additional information that supports an appeal.
James McPherson is a certified life care planner, certified case manager, and a certified rehabilitation nurse. He is the former CEO of J. E. McPherson and Associates, Inc., and CEO of Azalea Assisted Living, Inc. He is the national manager of disability litigation for a large international insurance company. He has been a consultant to the insurance industry for over 16 years.