When most folks think of ERISA, they think of IRAs and 401ks. ERISA also covers disability insurance. If you become unable to work for any reason, your expenses don’t just go away. It is possible to invest in an LTD (long-term disability) plan that covers this potential circumstance. Here is everything you need to know about an ERISA insurance plan.
1. Look at How Your ERISA Insurance Policy Defines Disability
Insurance companies love to sell you on peace of mind, but an insurance policy is not there to give you comfortable feeling. It’s supposed to kick in when you’re unable to work. Some policies define the term “disability” so narrowly that it becomes rare that any injury would rise to the standard of a “disability” as defined in the insurance policy.
Other policies will state that the insurance policy pays out when you can no longer perform the duties of your current job. After a period of time, however, these same insurance policies will only pay out in the event that you cannot work at all or perform “any” job.
This is one instance where you want to read the fine print.
2. There’s a Waiting Period for Your ERISA Insurance
Waiting periods of between 3 and 6 months are not uncommon. Those who are disabled are expected to use up all of their short-term disability, sick time, and whatever other benefits they have before their LTD kicks in.
3. Is Your ERISA Insurance Stipend Taxable or Not Taxable
Whether or not your monthly stipend is taxable depends heavily on the type of plan you have. Group plans are generally paid into with untaxed money and then taxed on their way out of the account. There are, however, plans in the style of Roth IRA’s that are not taxed on their way out.
4. Prepare to Be Under Surveillance
Insurance companies will hire private investigators to conduct surveillance on those claiming long-term disability benefits. This is especially true for claims that may not have specific medical proof. A claim such as fibromyalgia is diagnosed based on exclusion and identifying pain points on the body. There are no MRI’s or other laboratory tests to prove or deny such a diagnosis. It is not uncommon for insurance company PI’s to stake out a claimant’s house, follow them to the grocery store, or attempt to interact with in an effort to deny their claim.
5. The Insurance Company May Require You to Apply for SSDI
As part of your policy, you may be asked to apply for SSDI. Why pay out on a policy if you can have the general public do it for you? Whatever money you get from SSDI is then deducted from your disability insurance.
6. ERISA Insurance Benefits Pay You a Percentage of Your Salary
In other words, LTD benefits do not pay you the entire amount of what you used to make, but only a percentage. There is a chance that what you’re paid will not cover your expenses and a greater chance that you will not live comfortable on your stipend.
7. Many ERISA Insurance Claims Are Denied
The plan’s structure and wording often are designed to deny claims. That doesn’t mean that your claim is legally deniable. You can file for an appeal and have a lawyer represent your interests.
8. Not All Disability Claims Pay Out Over the Same Period
While some LTD benefits pay out until you’re retired, others only pay for 5 or 10 years depending on the policy.
9. Psychiatric Conditions Have Shorter Pay Periods
Depending on your policy, a psychiatric condition such as depression, anxiety, or bipolar disorder may only pay out for 24 months.
10. Medical Evidence Is Crucial to Your Claim
As soon as you file a claim, your insurance company is looking for any reason to deny it. Insurance companies are for-profit businesses and they turn a profit by not paying out on claims. Nonetheless, their hands are tied in the face of well documented medical evidence.
Talk to your doctor if you plan on filing a disability claim. The insurance company will send them a packet to fill out regarding your medical history. When the two of you are on the same page the process goes much smoother.
Contact an ERISA Attorney Today
If your insurance company denies your claim, and ERISA attorney at Uscher, Quiat, Uscher & Russo, P.C. may be able to help. Call us today to discuss what evidence you need to prove your ERISA insurance claim.