A brief Overview of Long Term Disability Insurance
Long term disability (LTD) insurance is private insurance which helps replace the income of the insured if they become disabled. Here’s how LTD works.
Individuals rarely purchase this type of insurance for themselves as it can be very expensive. Employers sometimes will offer long term disability coverage as a benefit. There are a few states (CA, HI, NJ, NY, RI) that require some degree of LTD coverage to be offered or offer state programs. Private long term disability insurance is separate from government programs such as Social Security Disability Insurance, Workers Compensation, or Supplemental Security Income.
Long term disability coverage generally does not completely replace a worker’s income.
A worker who becomes disabled will typically receive a little over half of the salary they had while working. There are many different long term disability coverage plans. Some plans will pay the insured a greater portion of income, some will continue making payments until the insured dies, some will stop making payments at age 65. If you are being offered several long term disability plans, it is important to research and understand the costs and benefits of your options.
One of the most important things to consider when reviewing LTD plans is what counts as a disability.
Some plans will let you receive benefits if you are unable to do your job, but some will not pay benefits unless you are unable to perform any job. For example, if you are a warehouse worker and become disabled due to a back injury, you may still be able to do office work. You could receive benefits for not being able to do your job, but not for not being able to do any job. Some plans will pay benefits for a limited time if you are unable to do your job, and after the time is over will only pay if you unable to perform any job. Many plans do not cover or only offer limited coverage for mental conditions or substance abuse issues. Some plans require higher premiums to cover certain conditions. If you have a family history of a debilitating disease or are in a profession where certain injuries or illnesses are common, it would be a good idea to make sure those specific conditions are covered under your plan.
While plans vary greatly between insurers, most long term disability plans are governed by the Employee Retirement Income Security Act of 1974, better known as ERISA.
ERISA is a federal law that regulates private insurance plans. The law requires several things from private insurers, including:
- Insurers must provide accurate and comprehensive plan information.
- Insurers must establish some sort of process for handling grievances and appealing claims.
- Insurers have a fiduciary duty to their insured and those insured have a right to sue if that duty is breached.
It’s important to note that plans provided by governments
and churches are exempt from ERISA regulation.
If you have a long term disability claim, it can difficult dealing with the insurance company. Many claims are denied the first time they are submitted. If you have been denied and would like help submitting an appeal contact the law offices of Bemis, Roach and Reed today for a free consultation. Our attorneys have the expertise to guide you through this difficult process and help with any questions you may have.
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