How Long Do I Have to Wait for a Disability Insurance Decision?
After you apply for short-term or long-term disability benefits, the insurance company may take what seems like forever to make a decision. The company might repeatedly send you forms, ask for more information, or even go silent and stop communicating altogether. When you’re waiting for much-needed financial benefits, these delays can cause incredible frustration and anxiety.
At Bryant Legal Group, we understand exactly how you feel. In this blog, we’ll talk about disability insurance claim deadlines and explain what you can do if your adjuster unreasonably delays paying your benefits.
Different Deadlines Apply to Employer-Sponsored and Private Disability Insurance
Many people don’t realize that different laws apply to employer-sponsored and private disability insurance plans. If your employer funds your long-term or short-term disability plan, a federal law called ERISA (Employee Retirement Income Security Act of 1974) governs your claims. This law sets out strict rules about how insurance companies must process claims.
Many doctors, lawyers, entrepreneurs, and business owners have their own privately funded policies, and ERISA does not apply to their claims. Instead, the insurance company must follow Illinois’ insurance laws, which take a different approach to unnecessary delays.
- Related Article: 5 FAQs About Private Disability Insurance Claims
ERISA Gives Insurers Up to 150 Days to Review Your Application
Under ERISA, insurance companies must process your claim within specific deadlines. Usually, they must either approve or deny your claim within 45 days of receiving your application.
However, ERISA permits several extensions:
- A 30-day initial extension, if the insurer was unable to complete its investigation
- You have 45 days to respond if the company asks you (the policyholder) for more information
- The insurance company can get a second 30-day extension if they say they still need more time
The insurance company must notify you of any extensions in writing and explain why they need more time.
With all these extensions available, it could take up to 150 days for the insurance company to either approve or deny your disability insurance claim (45 days plus a 30-day extension plus 45 days to respond plus another 30-day extension).
If the insurance company denies your claim, you’ll typically get 180 days to appeal your claim and file an administrative appeal. This appeal process may take several months, depending on your case’s complexity.
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Private Insurance Policies: Unreasonable Delays Can Provide Evidence of Insurance Company Bad Faith
Many policyholders don’t know that the insurance company can’t unreasonably delay their claims. Insurers have a duty of good faith that applies not just to the decision of whether to affirm or deny coverage but also to the speed of handling claims.
Delays in handling legitimate disability insurance claims can cause terrible financial stress and anxiety for the people filing those claims, especially when it comes to claims for short-term benefits. Often, the person filing the claim has no way to provide for themselves while the insurance company drags its feet.
Unfortunately, insurance companies know this all too well. Sometimes, instead of using a person’s plight as motivation to process their claim fairly, the company will instead take advantage of the policyholder’s desperate situation and delay the claim to coerce an unfair settlement.
Unreasonable Delays Give Rise to Bad Faith Liability
Section 155 of the Illinois Insurance Code governs bad faith insurance claims. A number of insurance company actions can constitute a violation of section 155, including failure to communicate promptly or regularly with the policyholder or failure to pay an acknowledged claim amount that is due.
Under Section 155, unreasonable delays in process or paying disability insurance benefits can constitute a violation of the law. However, it can be challenging to prove in court that a delay is unreasonable.
During a bad faith lawsuit, the court will consider your total circumstances, including factors such as the insurer’s attitude towards you, the overall length of time involved in the claim, and whether you had to file a lawsuit to get your benefits.
As an example, suppose you have a private short-term disability insurance policy. You suffer a serious back injury in a car accident, and your doctor says you cannot work for at least 90 days. Your short-term disability lawyer helps you compile your evidence and file an application for disability insurance benefits.
The insurer acknowledges that your claim is valid, that you have coverage, and that they are obligated to pay the claim. However, the company delays your payments in hopes that you won’t bother to pursue your claim further. For three months, the company sits on your claim, hoping you’ll either give up or accept a tiny settlement instead of the full and fair compensation you’re owed.
Luckily, you have a skilled short-term disability lawyer. They investigate your claim and conclude that:
- The evidence overwhelmingly supports your claim for disability insurance benefits
- The insurance company’s internal documents acknowledge your right to benefits, but the company delayed your claim to try and pressure you into taking a settlement offer
- The company’s actions forced you to file a lawsuit to get the benefits you deserved
After examining the facts, the court is likely to find that a 90-day delay was unreasonable under section 155. In this case, you should be entitled to additional compensation for the insurance company’s misconduct.
Keep in mind that every private disability insurance claim is different. While a 90-day delay may be unreasonable in one case, it could be justified in another. If you think the insurance company may be creating unreasonable delays while handling your disability claim, you should consult an experienced disability insurance lawyer right away.
Bryant Legal Group: A Practical Approach to ERISA Litigation
Bryant Legal Group is one of Illinois’ premier disability insurance law firms. We understand the stress and anxiety you feel when the insurance company ties up your claim with endless delays, and we’re here to help. We prioritize results over industry recognition, and we have recovered millions in compensation and insurance benefits for our clients.
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