Frequently Asked Questions

Long-term disability is a form of insurance that is supposed to pay you a set percentage of your pre-disability income (up to a maximum monthly limit) if you are disabled and unable to work. 

In most cases, long-term disability coverage activates once short-term disability coverage ends. Depending on the terms and conditions of your policy, LTD benefits may continue for a set number of years or until you reach Social Security normal retirement age, provided you remain unable to work. 

There are two main types of long-term disability plans: 

• Group disability insurance may be provided by your employer, like other types of employee benefits such as health or dental insurance. These plans almost always are governed by a federal law known as ERISA. 

• Individual disability insurance can be purchased directly from an insurance company if you are self-employed, an independent contractor, or have simply chosen to purchase additional coverage beyond employer-sponsored plans. Because individual plans are not covered by ERISA, the procedures and regulations for filing and appealing claims may be quite different from group policies. 

Please note that long-term disability insurance is not the same as Social Security Disability Insurance. Bryant Legal Group does not handle standalone Social Security Disability claims. 

Claims related to most physical and mental conditions are covered by long-term disability insurance policies, including substance abuse. However, your LTD plan may limit or exclude coverage for certain conditions. 

Generally speaking, you should be entitled to benefits under your long-term disability plan if the following conditions are satisfied: 

• You can show that you have a medical condition that prevents you from working, under your insurance policy’s definition of disability. 

• That condition is not explicitly excluded by your policy. 

Our Chicago disability attorneys can help you determine how and whether your specific condition is covered. 

Related: Types of Disabilities Covered 

Private disability insurance policies vary significantly from policy to policy, as do the coverage exclusions that apply to insureds.

Whether certain coverage exclusions apply to your policy—and the limitations imposed by those exclusions—is often heavily dependent on how “premium” the disability insurance policy is. More expensive policies tend to feature fewer limitations and more generous benefits.

Despite these variations, there are certain exclusions more commonly encountered than others in the long-term disability insurance. These include, but are not necessarily limited, to exclusions that disqualify coverage to those who have been: 

• Disabled through intentional or self-inflicted injuries 

• Disabled pursuant to military service 

• Disabled in an “extreme” and “risky” scenario, as defined by the insurance policy (e.g., skydiving, bungee jumping) 

• Disabled during the commission of a criminal offense 

• Disabled due to some specific condition (the insurance policy may define a range of conditions that will not qualify) 

• Disabled due to a mental health condition (though most disability insurance policies simply limit the time period of eligibility for such conditions) 

Related Article: How to Talk to Insurance Claims Adjusters About Your Long-Term Disability Case 

Whether or not an insurer is entitled to rescind coverage and deny benefits if you have made a material misrepresentation on your original insurance application is a matter of state law.

Generally, whether a misrepresentation is “material” depends on the total circumstances surrounding such misrepresentation. If the misrepresentation would have reasonably caused the insurer to alter or refuse coverage, then it will likely be considered “material.”

For example, mistaken administrative information (i.e., use of an older address, or incorrect spellings of names or conditions) are unlikely to be considered material, while the failure to disclose serious medical history concerns is likely to be considered material.

Whether you are entitled to receive partial benefits — referred to as residual benefits — is dependent on the coverage that you purchased. Residual benefits are not always automatically included in private disability insurance policies and tend to be offered as a supplementary rider. If you do not purchase supplementary “residual benefits” coverage, then you may not be eligible for residual benefits.

In any case, if your plan does include some provision for residual benefits, then you may be entitled to receive a portion of your total disability benefits in circumstances where you have not been rendered “fully disabled” but have still had your ability to work and earn impacted by your condition.

How does it work?

• Residual benefits qualification can vary greatly, but generally, it is measured by a percentage reduction in income or hours.
• For example, if your total income has been reduced by 40 percent in the wake of your disabling injury, then you may be entitled to receive 40 percent of your total disability benefit (monthly) as a partial income replacement.
• Thus, if you would have been entitled to $5,000 monthly disability benefits (for a fully disabling condition), you would be entitled to receive $2,000 per month in partial benefits.

It should be noted, however, that most insurers require that the impact of your partial disability meet a baseline percentage amount before you are entitled to receive residual benefits. If the impact of your partial disability on income is just five percent, for example, you might be ineligible to receive any benefits.

Yes, absolutely. Not only is it likely that you will receive regular requests for updated information relating to your disabling condition (and its progression) from your insurer, but insurers will expect you to keep them apprised of any material changes to your medical condition(s). You must provide updated information as you bear the burden of the proof of loss as the insured under most disability insurance policies.

It’s critical that you do not forgo such notification, or you could not only lose your benefits, but you could also be held liable for damages. 

Related Article: How Long can You Be on Long-Term Disability? It Depends 

Insurers must provide some justification for denying your long-term disability benefits claim. If their justification has no reasonable basis, then you should appeal the denial or pursue a lawsuit to recover your benefits.

Common justifications for a claim denial include: 

• Lapse of coverage 
• Material misrepresentations in the original insurance application 
• Insufficient evidence of disability 
• Application of a coverage exclusion 
• Disability tied to a pre-existing condition 
• Failure to seek ongoing medical treatment 

Most employer-sponsored disability plans — except for those sponsored by public employers and religious organizations — come under the Employee Retirement Income Security Act (ERISA), which creates an exclusive federal regulatory scheme for benefits claims and subsequent challenges.

ERISA was created with the intention of protecting plan participants from the abuses of plan administrators, but over time, ERISA has actually developed into something of a headache for the plan participants it was originally meant to protect. If your plan is ERISA-governed, for example, then you must fully exhaust your administrative remedies before pursuing civil action against the plan administrator or insurer — this can extend the timeline of the dispute and keep you in a vulnerable position for longer.

Additionally, ERISA preempts bad faith actions against insurers, thus eliminating a significant recovery option for insured plan participants whose insurers have mishandled their disability claims.

In long-term disability situations, private disability carriers can make offers to buy out coverage to avoid having to pay out benefits for the lifetime of the policy.  

When you accept a lump sum buyout, you must agree to forgo legal claims against the insurer for the benefits at-issue (and any related issues, such as a bad faith claim you might have against that insurer for how they mishandled the processing of your benefits). The benefits owed over the lifetime of the policy are negotiated and repackaged as a lump sum payment. If you accept the lump sum buyout, then you will not be entitled to receive monthly benefits payments.

Now, is it worth it? Although it might seem like an unsatisfactory answer, the truth is that the attractiveness of a lump sum buyout depends on the circumstances of your disability claim and your own preferences.

Let’s clarify.

A lump sum offer for a buyout is less than the total present value of your maximum future benefits under your disability insurance policy. Whether the offer is reasonable or “worth it” for you requires deeper analysis.  

For one thing, long-term disability insurance benefits are not static in nature. The insurer may conduct surveillance over time and will expect you to update them on changes in your medical condition(s), your continued medical treatment, and any efforts to return to work.  

It is in the insurer’s best interest for you to improve and therefore to no longer be “disabled” under their policy, thus terminating the receipt of benefits. By negotiating a lump sum buyout, you don’t have to worry about whether the insurer will terminate your benefits at some later date. You can focus on recovery. 

Related Article: When Should I Take a Disability Insurance Settlement or Buyout? 

Though in the past, federal circuit courts — when reviewing denial of benefits cases governed by ERISA — used to defer to the decisions made by the plan administrator (pursuant to the “abuse of discretion” standard), the law in many states has since changed significantly.

Many states have prohibited the use of discretionary provisions (transferring responsibility for claims handling and determinations from plan administrators to insurers).

In these states, ERISA jurisprudence now requires that the court review the denial of benefits decision in accordance with the “de novo” standard, which requires that the court review the denial of benefits as if no prior decision had been made (pertaining to the facts at-issue).

By reviewing denial of benefits claims de novo, the court empowers ERISA beneficiaries to a significant degree — you must present the facts that support your claim, and the court will evaluate whether you should have received benefits in accordance with the language/terms of the applicable plan.