Long-term disability claims

A long-term disability termination letter rarely says your condition has improved. It usually says something more procedural: that the available information no longer supports total disability under the terms of the policy. Nothing about your health changed in the week that letter was written. What changed was a definition.

Long-term disability insurance is a contract, and contracts are won and lost on their wording. That makes these claims different from Social Security. There is no five step evaluation and no set of federal listings. There is a policy document, a definition of disability that may change partway through, a list of exclusions and offsets, and an insurer with a financial interest in the outcome and the authority to decide the claim in the first instance.

The single most important thing to understand is this: if your coverage came through your employer, the internal appeal is probably the most important stage of the entire case, and most people treat it as a formality. This page explains why, and what else determines whether these claims succeed.

What long-term disability insurance covers

Long-term disability insurance replaces part of your income when illness or injury stops you working for an extended period. It sits behind short-term disability, which typically covers the first weeks or months, and it is designed to carry on for years, in many policies to age 65 or to normal retirement age.

Coverage reaches people in two ways. Most commonly it is a group policy provided as an employee benefit, sometimes automatically and sometimes with employee-paid supplements. Less commonly it is an individual policy bought privately, often by professionals, business owners and higher earners who want cover that is not tied to a job.

The distinction is not administrative detail. It usually determines which body of law applies, what evidence a court will look at, what the insurer has to prove, and what you can recover. It is the first thing worth establishing about any claim.

The ERISA divide

The Employee Retirement Income Security Act of 1974, universally shortened to ERISA, is a federal statute governing employee benefit plans. Most employer-provided disability coverage falls under it.

Some coverage does not. Common exceptions include policies sponsored by government employers, genuine church plans, and individual policies you bought yourself outside any employment relationship. Where ERISA does not apply, ordinary state contract law does, and the practical position is generally more favourable to the claimant.

Where ERISA does apply, several things follow that surprise almost everyone:

• You generally must exhaust the insurer's internal appeal process before you can sue.
• A court will usually review only the administrative record, meaning the documents in the file at the end of that internal appeal. New evidence is normally not admitted later.
• There is no jury trial.
• Remedies are limited, in the main to the benefits owed under the plan, with interest and attorney fees possible at the court's discretion. Punitive and consequential damages are generally unavailable.
• If the plan gives the administrator discretionary authority, the court may review the decision only for abuse of discretion rather than deciding the question afresh.

Put those together and the consequence is stark. The insurer decides your claim, the insurer decides your appeal, the record closes at the end of that appeal, and a judge later reviews that record, sometimes deferentially. Everything that will ever matter has to be put in before the window closes.

Own occupation and any occupation

Most group policies contain two definitions of disability, and switch from one to the other partway through the claim.

For an initial period, commonly twenty-four months of benefit payments, disability usually means the inability to perform the material and substantial duties of your own occupation. The comparison is your job, or your occupation as it is normally performed in the national economy.

After that period, the definition typically changes to the inability to perform the duties of any occupation for which you are reasonably fitted by education, training and experience. Some policies add an earnings component, such as any occupation that would produce a stated percentage of your prior income.

This is written into the contract from the first day. It is also why so many claims are terminated at almost exactly the two year mark. The insurer is often not asserting that you have recovered. It is applying a harder test and concluding that some job somewhere is within your capacity.

Practical consequences worth planning around:

• The change of definition is predictable. Roughly six months out, the file should be built for the harder test rather than the easier one that was satisfied at the start.
• Under the any occupation standard the insurer will usually obtain a transferable skills analysis or a labour market survey identifying alternative jobs. Those documents can be challenged, and often should be.
• Occupation is assessed as normally performed, so unusually demanding features of your particular role may not count. Conversely, genuine cognitive or interpersonal demands of a professional occupation frequently do.

The elimination period

The elimination period, sometimes called the waiting period, is the time you must be continuously disabled before benefits become payable. Ninety and one hundred and eighty days are common.

Two traps live here. The first is continuity. Attempting to return to work during the elimination period can restart it, unless the policy contains an accumulation provision allowing separate periods of disability to be added together. Check before you attempt a return.

The second is coverage while you wait. If employment ends during the elimination period, coverage may lapse, and the claim can fail for that reason alone. When employment status is in doubt, the timing of a resignation or termination is worth advice before it happens rather than afterwards.

How much the policy pays

Group policies commonly replace around sixty per cent of pre-disability earnings, subject to a monthly maximum. Individual policies vary widely.

Several definitions determine the actual figure:

• Pre-disability earnings. Whether bonus, commission and overtime count is a matter of policy wording, and it is a frequent source of dispute for people whose pay is substantially variable.
• Maximum monthly benefit. A cap that can make the headline percentage misleading for higher earners.
• Maximum benefit period. Often to age 65 or normal retirement age, with reduced schedules for claims beginning later in life.
• Taxation. Where the employer paid the premium, benefits are generally taxable. Where you paid with after-tax dollars, they are generally not. This can matter more than a difference in the percentage.

Offsets and the SSDI interaction

Almost every group policy reduces its payment by other income you receive. Common offsets include Social Security disability benefits for you and sometimes your dependants, workers' compensation, state disability benefits, certain retirement and pension payments, and settlement proceeds attributable to lost income.

The SSDI interaction deserves particular attention because it produces a specific and unpleasant surprise.

Insurers routinely require claimants to apply for Social Security disability, and frequently pay for a representative to assist. The reason is straightforward: every dollar the SSA pays reduces the insurer's obligation. Many policies also allow the insurer to estimate the Social Security benefit and reduce payments immediately, before any award is made.

When SSDI is eventually approved, it is usually backdated. The insurer then asserts that it overpaid you for that entire period and demands repayment, often as a lump sum, and often from money you have already spent on living costs. This is contemplated by the contract you signed, and it catches people who had no idea it was coming.

Planning helps. Understanding the offset provisions early, setting aside retroactive Social Security money where possible, and checking the arithmetic of any overpayment demand rather than accepting it are all worth doing. Social Security disability claims and long-term disability claims are best handled with an eye on each other, because a decision or statement in one can be used in the other.

Pre-existing condition exclusions

Group policies commonly exclude disability caused by a condition for which you received treatment, took medication, or consulted a physician during a look-back period before coverage began, usually three or six months, if the disability begins within a stated period after enrolment, often twelve months.

These provisions are applied mechanically and generate a great many denials for people who changed jobs shortly before becoming unwell. Disputes typically turn on whether a consultation counted as treatment for the condition that later became disabling, whether the disabling condition is genuinely the same condition, and precisely when coverage began. The wording is narrow and specific, and it repays close reading rather than assumption.

Mental health and self-reported limits

Most group policies cap benefits for certain categories of condition, commonly at twenty-four months for the lifetime of the claim.

Two categories recur. The first is mental or nervous disorders, which usually captures depression, anxiety, bipolar disorder and post-traumatic stress disorder. The second is self-reported symptoms, a category some policies use for conditions diagnosed largely from what the patient reports rather than from objective testing. Fibromyalgia, chronic fatigue syndrome, chronic pain and some headache disorders are frequently placed here.

These limitations can often be addressed, and the arguments tend to be specific:

• Whether a physical condition independently supports disability, so the cap does not apply.
• Whether objective findings exist that take the condition outside a self-reported category, such as imaging, neuropsychological testing or laboratory results.
• Whether the policy's definition of the limited category actually covers the diagnosis, which is a question of wording rather than medicine.

Where a limitation genuinely applies, knowing that early changes the strategy for the whole claim.

Filing the claim

A claim normally requires forms from three sources: you, your employer, and your treating physician. Each carries risk.

Your own statement describes your occupation, your condition and your limitations. Describe your job by its real demands rather than its title, including physical requirements, cognitive load, hours actually worked and the consequences of error. Describe limitations concretely and in terms of sustaining activity over a full working day, not on a single occasion.

The employer statement sets out your job duties and earnings. It is worth knowing what it says, because an inaccurate description of your role, often taken from a generic job listing, can undermine an own occupation claim before it starts.

Before filing, get the policy and the summary plan description, and read the definitions section. It is dull and it is the most valuable hour you will spend on the claim.

The attending physician statement

The attending physician statement is usually the most important document in the file, and the form is not designed to elicit what you need.

Diagnosis alone establishes very little. What decides claims is function stated in the vocabulary the policy uses: how long you can sit at one time and in total, how long you can stand and walk, what you can lift occasionally and frequently, how your ability to use your hands is affected, how much of the working day you would be off task, how many days a month you would be absent, and how symptoms and medication affect concentration, memory and pace.

Two further points matter. Restrictions and limitations should be tied to objective findings and clinical observations wherever they exist, because unsupported conclusions are given little weight. And where symptoms fluctuate, the statement should describe the pattern over months rather than the position at a single appointment, since an insurer will otherwise treat a good day as the baseline.

How insurers evaluate claims

Understanding the process removes a great deal of the sense that decisions are arbitrary. They usually follow a pattern.

Paper reviews

The most common tool. A physician retained by the insurer reads the file and offers an opinion without ever examining you. These reviews frequently conclude that the records do not support the restrictions your own doctor described. They can be challenged on their own terms, particularly where the reviewer overlooked records, misstated findings, or never contacted the treating physician.

Independent medical examinations

An in-person examination with a doctor the insurer selects and pays. Usually brief. Attend, be accurate, and do not exaggerate or minimise. If the resulting report misdescribes what happened, that discrepancy is worth documenting promptly while your recollection is fresh.

Functional capacity evaluations

A physical testing session, often several hours, measuring lifting, carrying, sitting, standing and endurance. Evaluators typically assess whether effort was consistent. A poorly conducted evaluation can be criticised, but the results carry weight, so understanding what is being measured is useful preparation.

Vocational analysis

Particularly at the change to the any occupation standard, the insurer will identify alternative occupations said to be within your capacity. These analyses are often built on optimistic assumptions about your restrictions, or identify jobs that do not exist in meaningful numbers, or ignore limitations the file supports. They are evidence, not fact, and they can be answered with vocational evidence of your own.

Surveillance and social media

Surveillance is routine in disability claims of any size. Investigators may record you over several days, typically around scheduled appointments.

The difficulty is not dishonesty. It is context. A few minutes of footage showing you carrying shopping or driving to a doctor says nothing about whether you could sustain that activity for eight hours a day, five days a week, and nothing about what the rest of the day looked like. But it is frequently offered as though it did.

Social media is treated the same way. Photographs from a family occasion, posted because it was a good day, are routinely used to suggest a level of function the claimant does not have.

Two sensible responses. Be consistent: describe your limitations accurately from the outset, including what you can still do occasionally, so that ordinary activity is not later presented as contradiction. And review your privacy settings, while understanding that anything already public may already have been collected.

Why claims are denied

The reasons recur across insurers:

• Insufficient objective evidence to support the reported restrictions.
• A reviewing physician's contrary opinion, usually from a paper review.
• Change of definition to any occupation, with vocational analysis identifying alternative work.
• Policy limitations for mental health or self-reported conditions.
• Pre-existing condition exclusions.
• Gaps or inconsistency in treatment, or care that the insurer characterises as not appropriate for the condition.
• Surveillance or social media said to be inconsistent with the claimed limitations.
• Missed deadlines or unreturned forms.

Read the letter closely. It should identify the specific policy provisions relied on and the evidence considered. That tells you what the appeal has to answer, and an appeal that answers something else is wasted effort.

Terminations of benefits already paid

A termination is different from an initial denial in an important respect: the insurer has already accepted the claim, paid it, and is now reversing that position.

Terminations cluster around predictable moments. The change to the any occupation definition. The expiry of a mental health or self-reported symptom cap. The completion of a periodic review. A change of claims handler. The arrival of a new paper review.

The practical point is that the insurer's own earlier conduct is evidence. It paid the claim, sometimes for years, on a medical picture that has not materially changed. Where the file shows no genuine improvement, the question of what actually changed is a fair one to press, and it frequently exposes that what changed was the definition or the reviewer rather than the claimant.

The appeal, and why it decides the case

Under ERISA, the internal appeal is the last opportunity to build the record. Whatever is not in the file when the insurer issues its final decision will usually be unavailable to you in court.

A thorough appeal generally involves:

• Obtaining and reviewing the complete claim file, including the reports of every reviewing physician and the internal notes.
• Obtaining the policy and the summary plan description, and confirming which version governs.
• Collecting all treatment records for the relevant period, including those the insurer never requested.
• Obtaining detailed, function-specific opinions from treating providers addressing the policy language.
• Commissioning independent evidence where it will help, which may include a functional capacity evaluation, neuropsychological testing or a vocational assessment.
• Answering the insurer's reviewers directly, point by point, identifying records they overlooked or misread.
• Statements from family, colleagues or supervisors describing observed function, where appropriate.
• A written submission tying the evidence to the exact policy provisions relied on in the denial.

Amendments to the federal claims regulations that took effect for disability claims filed from 2018 strengthened claimants' rights during this process. They require that decisions be made independently and impartially, and that a claimant be given any new evidence or rationale the insurer generates during the appeal, with an opportunity to respond before a final decision. Those provisions are useful and are not always volunteered.

The 180 day deadline

For ERISA-governed disability claims, you generally have one hundred and eighty days from receipt of the denial to file the internal appeal. The letter should state the deadline.

Miss it and you will usually have forfeited the claim, because failure to exhaust the plan's procedures ordinarily bars a lawsuit. There is no general equivalent of good cause relief.

One hundred and eighty days sounds generous. It is not, once you account for requesting the claim file and waiting for it, obtaining records from multiple providers, arranging any testing, and getting detailed statements from physicians who are not quick to complete paperwork. Work backwards from the deadline rather than forwards from today.

Note also that many plans allow only one appeal, some allow two, and the number affects strategy. And separately from the appeal deadline, policies and plans often contain a contractual limitation period for filing suit, which can be shorter than the state statute of limitations.

Getting the claim file

Under the ERISA claims regulations you are entitled, on request, to copies of all documents, records and other information relevant to your claim, without charge. That includes the internal notes, the reports of reviewing physicians, vocational analyses, surveillance material and the instructions given to reviewers.

Request it in writing and early. The file frequently reveals things the denial letter does not: that a reviewer never saw a key record, that the insurer's own nurse reached a different conclusion from the doctor who signed off, that a vocational analysis assumed restrictions materially lighter than those in the file, or that surveillance produced nothing useful and was quietly set aside.

Building the administrative record

Because the record usually closes at the end of the appeal, the work is to put everything relevant into it while you still can.

The most common failure is an appeal that argues rather than evidences. A letter explaining that the claimant is genuinely unwell, unaccompanied by new records, new opinions or new testing, gives a reviewing court nothing to work with. The insurer's decision stands on its reviewers' reports, and if nothing contradicts them in the record, a deferential standard of review makes the outcome close to inevitable.

The opposite approach is to treat the appeal as the trial. Assume that this file, and nothing else, is what a judge will read in two years' time.

The standard of review

Two standards can apply in ERISA benefit litigation.

Under de novo review, the court decides for itself whether you are disabled under the policy. The insurer's view carries no special weight.

Under abuse of discretion review, sometimes called arbitrary and capricious review, the court asks only whether the decision was reasonable and supported by evidence in the record. A decision can be wrong and still survive, provided it was not unreasonable.

Which applies depends on whether the plan grants the administrator discretionary authority to determine eligibility and construe terms. Many plans contain exactly such a clause. A number of states restrict or prohibit discretionary clauses in insurance policies by regulation, and whether such a restriction applies to a particular policy depends on the state, the policy and when it was issued or renewed. It is a technical question worth answering early, because it changes the value of the case.

Even under the deferential standard, a conflict of interest is relevant. Where the same entity both decides claims and pays them, courts weigh that conflict as a factor, and it carries more weight where there is evidence of procedural irregularity or a history of biased claims administration.

Litigation under ERISA

If the final internal appeal is denied, the remaining route is a civil action, typically in federal court.

The shape of that case is unusual. There is generally no discovery into the merits, no witnesses, no jury and no trial in the ordinary sense. The case is usually decided on the administrative record through cross-motions, with the judge reading the same file the insurer read.

Remedies are limited. The principal recovery is the benefits owed under the plan, with prejudgment interest possible and attorney fees available at the court's discretion. Damages for the consequences of the wrongful denial, such as lost savings, damaged credit or emotional distress, are generally not recoverable, however real those consequences were.

A successful outcome is frequently a remand to the insurer for a proper decision rather than an immediate award of benefits, which is frustrating but still valuable, because it reopens a claim that had been closed.

Claims that are not governed by ERISA

Where the policy is individual, or the plan is a government or genuine church plan, the position is materially different and generally better.

State contract law applies. There is normally a right to a jury trial, ordinary discovery is available including depositions of the insurer's personnel, and the court is not confined to the insurer's file. Florida law also provides a statutory mechanism for pursuing an insurer's bad faith in handling a first-party claim, subject to specific procedural prerequisites including a civil remedy notice and the opportunity to cure. Those requirements are strict and the sequence matters, so advice before acting is sensible.

Because the two regimes diverge so sharply, establishing which one governs is genuinely the first question in every long-term disability matter.

Residual, partial and recurrent disability

Disability is not always total, and policies often account for that.

Residual or partial disability provisions pay a proportionate benefit where you can work in a reduced capacity and suffer a stated loss of earnings, often twenty per cent or more. These provisions are underused, and they can make a return to part-time work financially viable rather than a reason to lose the claim entirely.

Recurrent disability provisions address a relapse. If you return to work and become disabled again from the same cause within a stated period, often six months, the claim is usually treated as a continuation rather than a new claim, which avoids serving a fresh elimination period.

Anyone contemplating a return to work should read both provisions first. The decision to try is often the right one, and the terms on which you do it matter.

Overpayment demands

Overpayment demands arrive most often after a retroactive Social Security award, and sometimes after other income is discovered or an offset is recalculated.

Do not treat the figure as correct simply because it is on letterhead. Check the arithmetic, check the offset provisions actually relied on, check that dependent benefits are being counted only where the policy allows, and check the period covered. Where the amount is right, repayment terms are frequently negotiable, and an insurer that is still paying monthly benefits has an interest in a workable arrangement.

What to do when a letter arrives

If a denial or termination letter has landed, the first hours are worth using well.

• Find the deadline stated in the letter and diary it immediately.
• Request the complete claim file in writing, including all reviewer reports.
• Request the full policy and summary plan description, not the benefits booklet summary.
• Keep treating. A gap in care during an appeal is read as evidence of improvement.
• Do not give a recorded statement before you understand what the file already says.
• Keep the envelope or note the date of receipt, since deadlines run from receipt.

Bendel Law assists clients at every stage of a long-term disability claim: preparing and submitting the initial claim, responding to requests for information, appealing denials and terminations, and pursuing litigation where the internal process does not resolve the matter. Where a Social Security claim runs alongside, the two are handled with an eye on each other.

This page is general information about long-term disability insurance claims. It is not legal advice for your situation, policy terms and time limits vary between plans, and reading this page does not create an attorney-client relationship.