Long-term disability (LTD) picks up where short-term disability (STD) leaves off. The purpose of long-term disability insurance is to help replace your income in the event that you become physically unable to work as the result of an illness or injury. Typically, it replaces 50-70% of an individual’s salary; however, some employers allow employees to purchase extra insurance, sometimes raising the total to 80%. It is important to note that the amount of the benefit is based on the employee’s salary at the time the policy is purchased, so it is important to increase the value of the plan as your salary increases.
Long-term disability policies vary in the length of payout. Some pay for only about 2-10 years, while others will pay out until the employee reaches the age of 65.
Claims arise when insurers deny long-term disability (LTD) benefits to an employee. These disputes often involve injuries or illnesses that do not have “concrete” proof, for example fibromyalgia, which does not show up on x-rays, MRIs, or other tests. Denials are often also the result of technicalities, rather than merit.
If a claim is denied, the insurer must send the applicant a letter providing: the specific reason(s) for the denial; the policy provision(s) on which the determination was made; any internal rules, guidelines, criteria that entered into the determination; the information necessary to validate the claim; the steps in the appeal process; a notification of your right to sue under the Employee Retirement Income Security Act (ERISA).
If the letter is in any way unclear or vague, call the claims representative to get more information. While it is understandable to be upset about being denied, being combative or argumentative will not get you anywhere. Stay calm, be respectful, and try to gain as much information as possible.
Time for filing an appeal can vary by policy; however, under the Employee Retirement Income Security Act (ERISA), a claimant has 60 days to file an appeal. Many insurers have adopted this same timeframe.
The first step in the process is to gather supporting information for your claim, with a specific emphasis on whatever it is the claims representative told you your claim was lacking. Usually this can be accomplished by bolstering your medical records. Make record of any pain, limitations, and other experiences resulting from your illness or injury on a daily basis, and have others make notes as well based on their observations. If you have not done so already, have your doctor prepare a detailed letter explaining the injury or illness and its specific impact on your ability to do your job.
The second step is to send the insurer an appeal letter. The letter should provide an overview of your job. If you do not have one, request a copy of your job description from your employer, which should provide a good basis for the overview. It should also describe the supporting information you have gathered and explain how it supports your claim, proves that you are “disabled” and unable to do your job, and rebuts the insurer’s initial denial of your claim. As with your dealings with the claims representative, there is no point to being combative or argumentative in the letter. Simply state your case clearly and concisely.
The third step is to stay on them! Check in with the insurer to make sure it received your letter and to keep up on where your claim is in the appeal process. You should receive the insurer’s decision in about 45 days.
If, after taking these steps, you appeal is rejected, start over. Talk to the claims representative to find out what is still lacking, gather more information, write another appeal letter, and follow-up.
At the same time you are filing your second appeal with the insurer, you should also file a complaint with the Wisconsin Office of the Commissioner of Insurance (OCI). If you are forced to sue, you have to show that you “exhausted your administrative remedies” first. This means that you had to have filed a complaint with the OCI before you sued.