Disability Insurance Claim Advice
Preparing for a long-term disability claim
RHD Magazine, August 12, 2015
By Art Fries
Whether you are planning to submit a new disability claim or transition from a partial claim to total disability, you should take the process seriously.
If you have a “Your Occupation definition” for the entire claim period, you should not be doing anything in your personal life that is in conflict with your medical symptoms. Some policies only pay you in “Your Occupation” for the first two years and then consider your ability to perform any occupation based upon your prior earnings, education, and experience.
Several months before the two-year “Your Occupation” period ends, you will receive a letter from the insurance company advising you of this change in definition. Unless you are also collecting under a Social Security disability claim, it is unlikely that your private insurance company will continue your claim past the two-year benefit period.
So, in this situation it is important to apply early on for SSDI, assuming you will meet the Social Security definition. Although the SSDI “pamphlet” indicates that you cannot work in any occupation based upon your medical issues, the actual wording is much more complex and is related to a host of various qualifying factors. Most attending physicians do not understand these qualifying factors since they have never been educated accordingly. In fact, the typical attending physician does not know the difference between the various definitions that make up the entire field of disability. This includes individual policies, group short-term and long-term disability, franchise association disability, state disability (where applicable), Social Security disability, and “Waiver of Premium” disability in life insurance policies.
Social Security disability will also cause you to be eligible for parts A & B of Medicare after a two-year period. For disabled workers in their mid to late 50s or early 60s, this benefit plus a Medicare supplement will save you considerable premium dollars compared to your conventional medical insurance premiums.
Partial or total disability?
A key question is often: Should I (and can I) first go on partial disability before I go on total disability? The answer is variable since it depends on your disability policy language, the extent of your medical symptoms, the type of job/profession employing you, and a host of other factors to consider.
If you start off on a partial claim, you will need to meet certain criteria, which also has many variables. There might be a requirement that partial must first follow a particular number of days of total disability. Or, there may be a requirement that you have a loss of time or loss of one or more duties. Your policy might indicate a 20% loss of time, or a 20% loss of a duty, or no mentions of these requirements. Typically, insurance companies will want to see a worsening of your medical condition when you transition from a partial to a total disability claim. How you communicate with your attending physician(s) will also be an important part of the claim process.
Performing social and recreational activities can also influence your claim, and many insurance companies use video surveillance techniques to see if you are doing anything that is in serious conflict with your medical symptoms. In addition, insurance companies will often have a visit made to see you personally by a field investigator, as well as have you examined by a physician as it relates to your medical issues. How you relate to these individuals can influence whether you are accepted or terminated from an existing claim.
Should your claim be denied or terminated, an attorney will typically handle these types of claims initially on a “contingency fee basis,” whereby they get no money to get involved. Almost all disability claims are “settled” by these attorneys for a much lower dollar amount.
Assume a $2 million potential payout and the claim is settled for 40% of this amount. That leaves $800,000 as a balance. The attorney typically gets 40% of the $800,000, or $320,000, leaving a balance of $480,000. From that amount, you would also have to pay for “costs” which might be $80,000 (more or less), leaving a net balance of $400,000.
So even though you have “won,” you could wind up with 20 cents on the dollar, or $400,000. Most of these attorneys are highly experienced and do a good job of getting your money. But there is a price to be paid.
A disability claim consultant is certainly a far less expensive alternative, giving you the opportunity to collect your monthly benefits early on and not going through the anxiety of a lawsuit. Experienced consultants have a high success rate and know how to advise you so you have a good chance of collecting your monthly benefit. If not successful, you still have the opportunity to sue the insurance company but that should be considered a “last resort.”
A good disability claim consultant will help you properly prepare your claim to present you in the best possible light. The key is to have a credible claim and one that is “error free.”
In terms of your ability to earn money, you are your most important asset. You secured disability insurance to protect that asset. When you need to count on the benefits of your policies, you should seek advice from someone who has sold disability policies, who is familiar with claim procedures, and has provided advice to attorneys who handle these types of claims.
A disability policy is nothing more than a series of promises to pay you money under a particular set of circumstances. You want to make sure those promises are kept.