Frequently Asked Questions (FAQs)
on Long Term Disability
Long Term Disability Insurance
We are here to help answer your questions on long term disability insurance claims. The information presented in these Frequently Asked Questions (FAQs) should not be construed to be formal legal advice nor the formation of a lawyer/client relationship; however, they should help to answer some of the questions you may have regarding your claim.
For more information, contact us today to speak with an experienced ERISA long term disability lawyer regarding your long term disability claim or disability appeal.
What qualifies as long term disability?
Long term disability is a private benefit which is governed by contract (generally, a policy) that is purchased by an individual or someone on his or her behalf. When it is provided by an employer, it is regulated or governed by federal or state law, depending on the employer. Generally, employers do not have to provide this benefit as there is no federal or state law requiring it.
If there is a long term disability policy or plan, then you qualify for long term disability benefits when the conditions set forth in the policy are met. There may be other benefits available if you become disabled, such as Social Security disability or Supplemental Security Income (which are government-provided benefits), and disability pension benefits (provided by a pension plan).
How is long term disability calculated?
The first step in calculating a long term disability benefit is determining covered pay (or earnings), which is defined by the policy. It could be a set amount. If it is, that amount will be your benefit. However, the benefit provided by the majority of policies offered through the workplace is calculated as a percentage of covered monthly pay.
For example, the long-term disability benefit may be 60% of covered pay. Some policies do not include bonuses, overtime, or shift differential in covered pay. With the covered pay and percentage identified, the gross benefit is a simple calculation.
The policy may set a maximum benefit. If the calculated gross benefit is greater than the maximum benefit, the maximum benefit is the gross benefit.
The second step is determining any offsets that reduce the long term disability benefit. Again, these will be defined by the policy. Some common offsets are Social Security disability benefits, retirement, pension benefits, wages in another occupation, or another long-term disability benefit. The gross benefit is reduced by all offsets. The result is the net benefit.
The policy may set a minimum benefit. It could be a dollar amount or a percent of gross benefit. If the calculated net benefit is less than the minimum benefit, then most policies require that the minimum benefit be paid.
There are other factors to consider, of course, such as the elimination period and the maximum benefit period. Again, these would be defined in the policy.
At the outset of most long term disability cases, our law firm calculates an estimate of the benefit based on the information provided by the client. As ERISA disability attorneys, years of experience calculating benefits under an array of long term disability policies allows us to give our clients a pretty good estimate of their long term disability benefits.
Does long term disability continue after termination?
The right to long term disability benefits continues as long as you are eligible for that benefit and up to the point of the maximum benefit period, even when your employment is terminated. The policy will define the maximum benefit period. Most policies issued in the workplace have age 65, or your Social Security retirement age, as the maximum benefit period. The policy will also define when your eligibility for continued benefits otherwise cease.
If your benefit is terminated and your plan requires an appeal, it is critical that you protect your right to future benefits by appealing that determination within the time required. If you ignore that determination and fail to timely appeal, your right to future benefits may be lost.
If your benefits are terminated, you should seek advice from experienced ERISA long term disability lawyer as soon as possible.
Is long term disability taxable?
Whether long term disability benefits are taxable is a difficult question to answer and depends on a number of factors. Generally, tax professionals advise that disability benefits from a disability insurance policy are considered income if your employer provided the benefit or paid for the coverage using your pre-tax dollars for the plan year when you became disabled, but that they are not considered income if you paid for the benefit yourself with after-tax dollars or through your employer with your after-tax dollars.
We are not tax professionals or tax advisors. However, we work with our clients to make sure that they receive sound advice from someone who is. And, we make sure that the advisor has all of the information that they need to give our clients good advice.
Can long term disability be garnished?
Long term disability benefits can be garnished if the plan does not have anti-assignment or anti-lien provisions. If it does, it still may be possible for the long term disability claim administrator to be required by court order to pay money directly to an entity having a right of garnishment. Because most people deposit their benefit payment into a checking account, practically it may not matter. Most creditors will simply garnish the bank account.
How does long term disability work with Social Security Disability?
Long term disability is provided in accordance with its governing contract (plan or policy). Its terms will govern any impact of Social Security benefits. Social Security benefits are not reduced by long term disability benefits, but many policies require that disability benefits be offset or reduced by any Social Security benefits.
Social Security offsets can vary. Some policies only offset the individual’s Social Security benefit, while others offset ALL Social Security benefits received by the family of the disabled person because of his or her disability. For example, a $3,000 long term disability benefit may be completely offset by $3,000 in Social Security family benefits. There may be ways around this result. For example, the policy may provide a minimum benefit.
It’s always best to check with an experienced ERISA long term disability lawyer.
Can I volunteer while receiving long term disability?
If you perform volunteer work that is in conflict with the restrictions and limitations in place due to your disability, the long term disability provider may argue that you are capable of full-time employment (or part-time employment). This is true even though you only volunteer a few hours a week. Even if your volunteer work does not conflict with your disability restrictions, the fact that you are doing anything might cause problems with your long-term disability. There are usually ways to engage in volunteer work without jeopardizing your long term disability. Before volunteering while receiving long term disability benefits, you should obtain the advice of an experienced ERISA long term disability lawyer.
Can I work while receiving long term disability?
Some long term disability plans have a partial disability provision which allows you to work part-time, even in your own occupation. Other plans have an earnings qualifier, meaning that you can work in your own occupation (or another occupation) without your benefit being affected so long as you do not earn in excess of a certain percentage of your previous pay.
You must be careful. Under some policies, working a few hours may be evidence that you can work, causing a termination of your long term disability benefits. Call an experienced ERISA long term disability lawyer before engaging in any work while you are receiving disability benefits.
Can I receive long term disability for mental illness?
What is covered by a long term disability plan depends on its terms and provisions. Generally, there is no requirement that a long term disability plan cover mental illness or if so, for how long. The majority of plans issued in the workplace which cover mental illness do so for only 24 months. Coverage for physical conditions, on the other hand, may continue for much longer periods. Some states have laws which prevent disparity between disabilities.
The mental health issue may be the result of a physical condition. For example, chronic pain can lead to depression. The real cause of the disability is the chronic pain not the depression. So, even if a policy can properly limit coverage for mental health issues, the actual disability may be a physical condition.
It is important to obtain the advice of an experienced ERISA long term disability lawyer as soon any type of limitation is imposed on your benefit. For a full list of the medical conditions our clients have suffered and received benefits for, click here.
What is an offset?
An offset is the reduction of the long-term disability benefit due to be paid by the receipt (or the right to receive) monies from another source.
Long term disability insurance carriers and managers of claims departments are constantly looking for ways to make the company more profitable. One way is to push the boundaries of offsets provided in the plan.
A very common offset in nearly all group long term disability plans is the Social Security disability benefit. If a long-term disability benefit is $3,000 and Social Security pays $2,000, then the long-term disability benefit is reduced to $1,000. If there is another offset, it can be reduced further. Many plans often contain ambiguous language that includes an offset for Social Security, “or any other similar act or law provided in any jurisdiction.”
An experienced long term disability lawyer can help you figure out what offsets are proper and take action when the company makes improper offsets.