Long-term disability insurance is supposed to provide policyholders with a financial safety net in the event an injury or illness limits or prevents their ability to work in their chosen occupation.
However, these policies are typically very complex, and without a thorough understanding of their nuances, policyholders risk having valid claims denied or seeing their benefits terminated without any real justification.
To help clear up some of this confusion, Michail Hack, partner at Schwartz, Conroy & Hack PC, has recorded a series of video blogs that aim to answer some of the most frequently asked questions related to long-term disability insurance.
So what did he address in the latest installment? Let’s take a closer look.
The “Own Occupation” Provision: Can I Work in Another Occupation After the Insurance Company Begins to Pay?
In most cases, policies state that you are “totally disabled” if you’re unable to perform the important or the substantial and material duties of your occupation.
But how do you define “occupation?” While there are occasional exceptions, courts generally consider your occupation to consist of the actual occupational duties you are engaged in immediately before the onset of your disability. For example, in the case of an orthopedic surgeon who, in addition to performing surgeries three days a week, was also tasked with a range of administrative responsibilities, the definition would include both the surgical and administrative aspects of their work.
“The insurance company would say, ‘Well, you did administrative duties before, and you’re doing administrative duties now. There are still some of the important duties of your previous occupation that you’re able to perform. We don’t consider you to be totally disabled,'” Michail noted.
So what’s the bottom line? Before transitioning to another occupation, it’s crucial to consult a highly-qualified attorney who can help you determine whether or not making such a move would jeopardize your existing long-term disability claim.
I Have a Long-Term Disability Policy Through My Employer. Do I Have to Apply for Social Security Disability?
Most insurance companies will require you to apply for Social Security Disability benefits, as a successful claim enables them to reduce the monthly indemnity they’re required to pay by an amount equal to your monthly Social Security benefit. In most cases, they’ll also require you to file an appeal in the event your initial application for Social Security Disability benefits is denied.
“One of the most important things that I want to leave you with in response to this question is that, quite often, when social security disability is approved, they will pay you in a lump sum check. Sometimes it’s $20,000, $30,000, $40,000,” Michail warned. “It’s really critical that you do not go out and spend this money. Chances are you’re gonna owe it to the insurance company.”
I Made A Claim, and Now My Insurance Company Is Rescinding My Policy. What Should I Do?
Rescission is a device whereby the insurance carrier will say: “When we entered into this contract, we relied on your application for the policy. Now that we’re looking at everything, we think that you gave us some incorrect information. Had we known this information, we either would not have issued this policy, or we would have issued a policy at a higher premium, in which we would have put in an exclusion. Because you misrepresented this information, we are no longer bound by this policy.”‘
A rescission letter will typically be accompanied by a check equal to the premiums you’ve paid thus far. However, if you disagree with the decision to rescind your policy, under no circumstances should you cash that check. Depending on your state, doing so could indicate agreement on your part, leaving you without any option other than to live with the insurance company’s decision.
You also should not take it upon yourself to write to the insurance company to contest the rescission, as you risk making a statement that could prejudice your right to keep the policy and receive your benefits. If you disagree with the decision to rescind, your best course of action is to immediately contact an attorney who has a good grasp of the issues related to insurance rescissions.
I See a Mental Health Professional, and Now My Insurance Company Wants My Records In Connection With My Physical Disability. What Do I Do?
While an insurance company is generally entitled to review any medical records remotely related to your long-term disability claim, they don’t have an absolute right to review your mental health records. If they’re asking, it’s likely for one of two reasons: they’re hoping you made an admission during therapy that would allow them to deny your claim, or they’re seeking to blame your physical disability on a mental disorder, which they refer to as a somatoform disorder.
You don’t want to deny access to your mental health records outright, as the insurer could use your failure to cooperate as a reason to deny your claim. But you can negotiate with them and request an explanation as to why they need those records. If you do decide to turn over your mental health records, be sure to review them first and redact anything related to other people and your personal life, Then send them to the insurance company with a letter stating: “I’ve redacted these records because they discuss other people, they discuss things that are not relevant to this claim, and you don’t have any right to know.”
However, your best course of action is to retain an attorney who understands the ins and outs of
long-term disability insurance and have them handle any interactions with the insurance company on your behalf.
How Often Is the Long-Term Disability Insurance Company Allowed to Investigate My Claim?
A long-term disability insurance carrier can investigate your claim and ask you for ongoing proof of loss for as long as they are paying you.
Such proof might include a monthly claimant statement confirming whether or not you’ve gone back to work and identifying the doctors you’ve seen and any alternative treatment modalities you’ve tried. The insurance carrier may also require that you undergo an I. M. E. (independent medical evaluation) once or even twice per year.
“The reality is that once an insurance company becomes convinced that you’re disabled, and it’s going to be of a long duration, they aren’t going to want to continue to invest money in it,” Michail noted. “So ultimately, it’s been my experience that they’ll put you in something called an E. D. U., an Extended Duration Unit, or SAM unit, Stable and Mature unit. This is where your claim is subject to less intensive scrutiny. And all they really ask you for is a yearly claimant statement.”
Need Help With Your Long-Term Disability Claim?
For over 20 years, Michail Hack and his colleagues at Schwartz, Conroy & Hack have been protecting the rights of professionals throughout New York City, New York State and the greater tri-state area.
If you’re experiencing difficulty with a long-term disability claim, need advice on any aspect of your long-term disability policies, or have a question regarding this unique area law, please don’t hesitate to contact our attorneys today for a free consultation.