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Why Does Your Insurance Company Often Terminate Benefits When the Definition of Disability Changes ?

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By Scott E. Davis, Disability Attorney

A dirty little secret in ERISA disability claims is that benefits are frequently terminated when the definition of disability in the policy changes.

We receive phone calls every week from confused individuals who tell us their benefits were terminated after several years of the insurance company paying the claim.  Individuals who are receiving disability benefits are often never aware that at some point (i.e. usually after 24 months and sometimes 12 months) in the overwhelming majority of ERISA disability policies, the reason for the termination of benefits is because the definition of disability changes to one that is much more difficult to meet.

Almost all employer provided disability policies only require that you prove you are unable to work in your own occupation that you performed when you became disabled.  I refer to this as the “own occupation time frame or definition.”

However, after a certain timeframe, the definition changes to where an individual must  prove they are unable to work in any occupation that may exist within the national economy.  I refer to this as the “any occupation time frame.”

After representing hundreds of clients in ERISA disability claims over 16 years, my experience is that disability companies use this change in definition as an opportunity to review your claim and very often, terminate benefits after a so called “full and fair review” that ends with a conclusion that you do not meet the new definition.

After representing hundreds of clients in ERISA disability claims over 16 years, my experience is that disability companies use this change in definition as an opportunity to review your claim and very often, terminate benefits after a so called “full and fair review” that ends with a conclusion that you do not meet the new definition.

Why does the change matter?  First, many companies view it as an opportunity to terminate benefits.  Second, you have to be aware of the change because if you were performing a more highly skilled, highly compensated job when you became disabled, after the change, it does not matter any longer if you are still unable to do only that job.

If the insurance company can find any job you can perform, such as a receptionist, telemarketer, etc., regardless of compensation level, it can and will terminate your benefits.

The change in definition is significant because individuals who are receiving benefits, as well as their doctors, tend to be focused on whether they are unable to do their prior occupation.  Treating physicians who are required to complete forms for the insurance company during the own occupation definition are only concerned with that definition, and they may complete the form saying you are unable to do your prior occupation, but there are other occupations you could perform.

The problem arises because after the definition changes, the forms that enabled your claim to be paid during the own occupation definition now are the ones that may lead to your benefits being terminated.

The change in definition often traps individuals who work in more complex, highly skilled and highly compensated jobs.

The change in definition often traps individuals who work in more complex, highly skilled and highly compensated jobs.  To address this issue, I advise my clients as well as their doctors, to focus on the fact that very often, if they are unable to do their prior job, for all of those same reasons, they are unable to do any job on a regular and consistent basis.

Understand I am not saying that everyone is permanently disabled from working in any occupation, but when my client and their treating physicians understand this, it avoids the problem of your doctor completing a form and stating you can go do other work during the own occupation time frame.

Additionally, also understand I am not saying that you or your doctors need to view yourself as being permanently disabled, but rather if you are unable to work, when the definition of disability changes you will have an easier time proving you meet that definition without dealing with old opinions that hurt your case.

If the insurance company does terminate your benefits after the definition of disability changes, it is critical for you to consult a knowledgeable ERISA disability attorney right at that time and before you take any appeal of your case.

If the insurance company does terminate your benefits after the definition of disability changes, it is critical for you to consult a knowledgeable ERISA disability attorney right at that time and before you take any appeal of your case.

Another benefit of having your doctors complete the forms stating you are unable to work in any occupation at the beginning of the claim is that it will also assist you in proving your Social Security disability claim, where the definition of disability is that you must be unable to do any occupation from the first day you are disabled (*See Footnote).  Social Security does not have an own occupation definition.

In summary, being aware of the changeover in the definition of disability and managing your claim as I have discussed in this article will help you better navigate this important timeframe and assist you in continuing to receive your benefits for an extended period of time in the event that your disability lasts longer than you anticipated.

 

*Footnote:  Please be advised that in order to be eligible for social security disability benefits you need to be unable to work in any occupation for a minimum of 12 consecutive months due to a medical condition or your medical condition is expected to result in your death.

© 2015  Scott E. Davis, Disability Attorney