Long Term Disability (LTD): The Hidden Gem in Your Benefits Package
What is an LTD benefit?
Most long-term disability benefits are insurance policies that provide about 50-67% of your base income should you become disabled. What does it mean to be disabled? It will be defined in the policy, but typically it is defined as the inability to perform the material duties of your occupation due to illness or injury. After some time, usually 24 months, the definition of “disability” may change to the inability to perform the material duties of any occupation (taking into account your education, training, and prior income level) due to illness or injury. Mental illness disabilities are usually limited to 24 months of benefits in total.
Many illnesses or injuries can qualify you for a disability benefit. Examples include back, neck, knee, or upper extremity pain, migraines, fibromyalgia, cancer and its consequences, HIV/AIDS, pulmonary dysfunction, cognitive impairment, neurological conditions like Parkinson’s Disease, or chronic pain conditions. Disabilities do not just strike the elderly; my clients range from ages 29-67, with most of them being in their 50s. Yet they all have one thing in common: none were expecting to have to stop working before retirement age due to a medical problem.
Who has an LTD benefit plan?
Most professionals work for employers that provide disability benefit plans. These disability insurance policies have relatively low premiums, so employers often provide disability insurance to their employees as a matter of course. If you work for an employer that provides professional, medical, or technology services you are a prime example of someone who probably has a disability benefit plan through your employer. For example, I frequently represent doctors, nurses, and other medical professionals, lawyers, engineers, project managers, programmers, financial services professionals, executive directors, and even insurance claims adjusters. To see if you have disability coverage, look up your original benefits package or examine what benefits you elected. You can also look up your employer’s IRS Form 5500 filing, which should include details on ERISA retirement and “welfare” benefits such as health, disability, and life insurance benefit plans. ERISA is the law that governs almost all employer-sponsored benefits.
What to do if you need to apply for LTD benefits?
If your doctor has advised you to stop working, please verify whether your employer has an LTD plan or give me a call and I’ll help you figure it out. There are other benefits that might be available to you as well (state disability, Social Security, workers’ compensation, etc.), which I can outline for you. If your employer does have an LTD plan, bear in mind that the reason you stop working has to be because of your disability for you to have coverage and make a successful LTD claim. In some states, including California, late applications can still be accepted as long as the insurer is not harmed by your late claim notice. Typically, your last date of work is also your first date of disability. If you are laid off for performance reasons that are actually related to your disability, you may still have a good LTD claim, but call me to help you analyze it. (You may also have a disability discrimination claim.) If you 1) have an employer-sponsored LTD plan, 2) need to stop working because of a medical condition, and 3) your doctor has advised you to stop working and will fill out a form on your behalf, you should strongly consider applying for LTD benefits. These benefits may be available until age 65 or 67, so do not shy away from making an application! However, there are many traps along the road of applying for and receiving LTD insurance benefits, so feel free to reach out to me if you have any questions about whether you should apply or how to maximize your chances of receiving benefits.
#LTD benefits
My Patient Needs to Stop Work … Now What?
By Cassie Springer Ayeni, Disability and Life Insurance Benefits Lawyer
with Springer Ayeni, A Professional Law Corporation
cassie@benefitslaw.com . www.benefitslaw.com
It happens: your patient comes to an appointment, and after months or years of “getting by” at work, despite a degenerative or chronic condition, it is clear to you that those days are over. You recommend that for her health, she stop working. Now what?
What your patient now faces is a host of forms and requests from insurance companies and the government to ensure that she has some income even though she’s not working anymore. Besides savings (and it is unheard of for someone in the prime of her working life to have sufficient savings to live decently for the rest of her days), income sources for people with disabilities include:
- Employee benefit plans (short-term disability then long-term disability). Long-term disability usually starts after 6 months and can last until retirement age.
- Private disability insurance plans (also lasting until retirement age).
- State disability insurance that usually last for a year (like California’s EDD).
- Social Security Disability Benefits (available after being disabled for a year and lasting through retirement age).
To qualify for any of these benefits, the #1 thing that a patient needs is help and support from the doctor. Without it, she won’t be approved; and if support wanes in the future, the insurance companies won’t hesitate to cut off her benefits. Here’s what you can do to help ensure that your patient receives disability benefit income on time and without hiccups:
Medical Records
- Document the reason why the patient is disabled in the medical records. List as many objective findings as are available (ROM, atrophy, MRIs, visual findings, etc.), including your objective observations.
- Document in the medical records whether the patient’s complaints of pain, fatigue, or other disabling symptoms are credible.
- If the patient has worked with the condition, answer the question in the medical records of “why now?” Why was she able to work before with the condition but suddenly cannot? Has there been a worsening of symptoms? Do you feel that her best chance of getting better is by resting for a bit at home? Document your rationale in the medical records.
- When the patient gets approved for benefits, keep track of the symptoms in regularly scheduled check-ups; insurance companies request updated medical records every 6-12 months.
Forms Requests
- Be sure to complete and return forms as quickly as possible. Although it is tempting to punt the form-filling to a secretary, it is more credible when completed by you.
- If there are any boxes on the forms that not applicable to your patient, just write N/A or rephrase the question so it makes sense for your patient
- Beware of traps in the questions: If a question states “how often can your patient work? 3 hours, 6, hours, or 8 hours a day,” but you feel your patient could only work 1 hour a day with breaks and unreliable, don’t check a box; just write your true response.
Working with the Lawyers
- Thankfully, with the increasing popularity of medical-legal alliances, most physicians and lawyers now truly comprehend their shared interest in the patient’s well-being, and working together on the insurance requests helps for seamless communications with the insurer. A patient about to go on disability can benefit from a quick call to a benefits attorney to make sure that every “I” is dotted and “t” is crossed.
- A patient whose disability benefits claim has been denied should never attempt to appeal on her own without the benefit of some legal advice.
- Also, even when a patient is approved for benefits, don’t hesitate to ask her lawyer for help understanding the forms; the lawyer and the patient will appreciate it more than you know.
Cassie Springer Ayeni is the President and Founder of Springer Ayeni, A Professional Law Corporation, in Oakland, CA, where she focuses on ERISA disability and life insurance cases. She can be reached atcassie@benefitslaw.com or www.benefitslaw.com
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ERISA Disability Traps & Tricks for the Non-ERISA Practitioner
By Cassie Springer Ayeni, President Springer Ayeni, A Professional Law Corporation
The Employee Retirement Income Security Act, better known as ERISA, is referred to by at least one judge as “Everything Ridiculous Imagined Since Adam.” Florence Nightingale Nursing Service, Inc. v. Blue Cross and Blue Shield, .832 F. Supp. 1456, 1457 (N.D. Ala. 1993), affirmed, 41 F.2d 1476 (11th Cir. 1995) (Acker, J.). It gets its sordid reputation from its limited remedies, roots in trust law, and limited discovery rules. Yet ERISA is so vast that every lawyer should know a little bit about it.
Most practitioners know that ERISA covers employer-sponsored retirement plans, yet few realize that with minor exceptions[1] it also governs all employer-sponsored health plans, disability benefit plans, and life insurance plans. 29 U.S.C. § 1002. Of these categories of ERISA litigation, disability benefit lawsuits comprise 64.5% of ERISA litigation, health care accounts for 14.4% or ERISA litigation, and pension just 9.3%. Anderson, S., ERISA Benefits Litigation: An Empirical Picture, 28 ABA J. Lab. & Emp. L. 1 (2012) at p. 7. Why is that? Though ERISA was originally designed to protect pension claims, more and more employers are eliminating traditional pension plans for employees or have outsourced to fiduciaries, and ERISA provides limited relief for breaches of fiduciary duties. Health claims are notoriously mishandled (we all probably have our own examples of that!), yet if a plaintiff brings an ERISA claim for denied health benefits, the remedy is that the medical provider gets reimbursed, and there are no punitive, compensatory, or consequential damages available to the plaintiff. Disability benefit claims, however, are another story. If a worker with an employer-sponsored disability benefit plan files a claim for benefits, that claim is typically administered and paid for by an insurance company. And because these insurers have a financial conflict of interest, many disability benefit claims are denied despite the claimant’s doctor’s decision that the claimant should stop working. The remedy under ERISA is payment of the disability benefits through the date of judgment, and benefits can potentially continue until retirement age. In other words, disability benefits are worth a lot over the claimant’s working lifetime. That’s why a little ERISA knowledge comes in handy for any practitioner.
Screening for ERISA
First, in screening these calls from potential clients, be aware that some issue spotting will be incredibly valuable, as most individuals do not even realize that their claim for disability benefits is governed by ERISA. Most individuals call with an assumption that the appropriate area of expertise is disability discrimination, workers’ compensation, Social Security disability, or California state disability insurance. But if the employer offered a disability plan, it is ERISA help they need.
TRAP #1: Assuming that the potential client knows what kind of attorney she needs for her disability issues. TRICK #1: Simply ask “did your employer offer a disability benefit plan?” If so, ERISA will probably govern.
Severance Waivers of ERISA Claims
Second, many people with disabilities may contemplate quitting their job for performance issues or have already been told they will be terminated. If they are getting close to retirement age, they may assume that an early retirement is the honorable way to exit the job. The disabled worker may be offered separation or severance pay, but many standard separation or severance agreements actually waive all claims under ERISA! If someone could potentially obtain a monthly disability benefit until retirement age through their disability benefit plan, this is an extremely valuable benefit to waive in exchange for severance. Indeed, the prudent plaintiff’s attorney should routinely screen for disability if negotiating severance, as no one would want to give the green light for waiving hundreds of thousands of dollars in disability benefits in exchange for a little severance.
TRAP #2: Failing to edit out a waiver of ERISA claims. TRICK #2: Carve out any claims for disability benefits, health benefits, or pension benefits that might arise under ERISA. An example of a good carve out is: “However, the following claims are specifically and expressly excluded from the foregoing Release: (i) health insurance benefits under ERISA or the Consolidated Omnibus Budget Reconciliation Act (COBRA); (ii) claims with respect to benefits, including short- and long-term disability benefit benefits, under a welfare benefit plan governed by the Employee Retirement Income Security Act (ERISA); or (iii) claims with respect to vested benefits under a retirement plan governed by ERISA.” Most employers understand the practicality of this, particularly because such claims are usually (but not always) filed against the disability insurer, not the employer.
Strict ERISA Deadlines
Third, although it is best for the potential client to find an ERISA attorney before making the decision to apply for disability benefits, most do not. Rather, most potential clients try to find legal help only after the insurer has denied the claim for disability benefits. At that point, ERISA’s Regulations prescribe a 180-day period for appealing the denied benefit claim. This process MUST be completed or else the claimant loses the right to file suit, also known as “failure to exhaust administrative remedies.”
TRAP #3: Failing to submit an appeal of an adverse disability benefit decision within 180 days of receipt of that decision. TRICK #3: Don’t miss this deadline! But if all else fails, immediately call the insurer to request an extension. ERISA’s regulations allow for “at least” 180 days, but it is up to the insurer to allow an extension. If granted over the phone, immediately follow it up in writing and indicate a date by which the claimant will submit the appeal.
Evidence in the Appeal
Fourth, although filing a hasty appeal is all that is necessary to preserve the ability to file a lawsuit, a scant appeal letter will not win the appeal, nor will it enable an ERISA practitioner to take the case for litigation. ERISA disability litigation is limited to the factual evidence presented in the aforementioned administrative appeal. Once in court, in all but rare circumstances, there will be no depositions, further medical records, or opportunities for direct or cross-examination. And there are also no jury trials. So if you help someone with their disability benefit appeal, please be sure to include all evidence necessary to win the case down the road.
TRAP #4: Assuming that there will be a chance in court to put in more evidence supporting the disability claim. TRICK #4: Throw in everything but the kitchen sink into the appeal! If you think the evidence might be useful in litigation, put it into the appeal. Declarations from the client, friends, family, medical providers, and colleagues, as well as all relevant medical records and expert reports, are key to submit in the appeal of a denied claim.
Filing an ERISA or ERISA-Related Claim
Finally, if you do decide to litigate an ERISA claim, be aware that these claims must be brought in federal court or you will face removal of the ERISA claims and all claims related to the ERISA claims. With limited exceptions, if you are bringing state law claims and ERISA claims, ERISA will preempt those state law claims.[2]
TRAP # 5: Failing to separate any state law claims from ERISA claims. TRICK # 5: Don’t even mention ERISA or other employee benefits or benefit-related remedies in your state law complaint. Leave the ERISA claims alone and litigate those separately as ERISA claims in federal court, or face removal.
TRICK #6: Give me a call. I’m an ERISA nerd and I’m happy to field your ERISA questions! 510-926-6768 Option1, or cassie@benefitslaw.com
Cassie Springer Ayeni is the President of Springer Ayeni, A Professional Law Corporation, in Oakland, CA, where she focuses on ERISA disability and life insurance cases. She can be reached at cassie@benefitslaw.com or www.benefitslaw.com
[1] Those exceptions are for public employees (anyone who works for the government such as teachers, legislators, public safety officers, etc.), and “church plans,” (anyone employed, even tangentially, by a religious organization including those who work at Catholic hospitals).
[2] ERISA’s “savings clause” provision saves from preemption any law that regulates insurance, banking, or securities. ERISA § 514(b)(2)(A). An example of the application of the savings clause is in California’s “notice prejudice” rule, which provides that claims can proceed even where there is late notice unless the insurer is prejudiced by the late notice. Because this is a law that regulates insurance and does not provide a remedy that conflicts with ERISA, the law is not preempted. UNUM Life Ins. Co. of Am. v. Ward, 526 U.S. 358, 373, 119 S. Ct. 1380, 1389, 143 L. Ed. 2d 462 (1999).
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