The Basics of LTD Insurance
Insurance is supposed to be there when you need it, but dealing with LTD claims can be extremely frustrating and confusing. In today’s post we’ll go over some of the basics.
What is Long-Term Disability (LTD) insurance?
LTD is a type of private insurance that replaces part of your regular income when you are unable to work for a long period of time. It often covers about 60-70% of your normal income, but generally has a cap (meaning, the benefits max out at a certain dollar amount).
Most (but not all) employees with health benefits have LTD coverage. It usually kicks in after you have used any sick leave benefits that your employer offers, EI sickness benefits and/or short-term disability insurance benefits. Generally, if you qualify for CPP disability benefits, your LTD insurer will want you to apply to receive them, and adjust their benefits to you accordingly.
To be eligible for LTD, you need to have been off work continuously for at least 17 weeks.
What does “long term” actually mean?
Most commonly, LTD will pay benefits for up to two years. Depending on your injury or illness, two years may be enough time to recover and return to work.
But for many people who have become permanently disabled, their ability to work has not returned by the two-year mark–and indeed, may never return.
Though it is less common, some plans will pay out benefits for longer than that: until you are able to work again, or until you turn 65, or for the rest of your life. It all depends on your specific plan.
Often, LTD plans are set up so that after 2 years, the coverage switches from “own occupation” to “any occupation”. This means that if they believe you are capable of working at some sort of job, even if it’s not what you used to do, they can stop paying benefits.
My LTD application was denied, or my coverage has run out but I can’t return to work. What should I do?
You’re not alone–the reality is that many, many who apply for LTD are initially denied, or have their benefits cut off.
This is a difficult situation to be in. Often doctors won’t deem a disability as “permanent” until you’ve had it for two years: exactly when your LTD benefits run out.
You can appeal the insurer’s decision to deny or discontinue your benefits in two ways. First, you can pursue what’s known as an “internal appeal”. This means you’re appealing to the insurance company to reconsider their decision, and no external parties (like a judge or arbitrator) are involved. You can spend a lot of time, effort and expense (things you are likely in short supply of) on an internal appeal and still come away unsuccessful.
The alternative to an internal appeal is to hire a lawyer to put pressure on the insurer and to file a lawsuit if necessary. In our next couple of posts, we’ll look a little deeper at common reasons that LTD claims are denied, as well as internal and external appeals.
Van Dyke Law has helped hundreds of people get settlements or have their LTD benefits reinstated, and we would be happy to assist you, too.