Long-Term Disability Benefits: Terms To Look Out Forteam
Employees across various industries can find themselves physically or mentally incapable of performing the regular duties of their job for prolonged periods of time. This could result in severe losses in employment income and impose significant financial strain. In such an event, if the employee participates in group insurance benefits through their employer or has individual insurance benefits through an insurer, they likely have access to both short-term disability (“STD”) and long-term disability benefits. The terms of long-term disability (“LTD”) benefits are normally outlined in an LTD plan included with the employee’s benefits information package.
Long-Term Disability Plan
The LTD plan outlines everything regarding the employee’s entitlements and obligations relating to LTD benefits with a particular insurer. Like any contract, it is important for an employee to know which terms to look for and understand before applying for LTD benefits. Some of the most important include but are not limited to:
- Elimination Period
- Monthly Indemnity
- Benefit Offset
- Benefit Termination
Defining Long-Term Disability Benefits
The definition section for any LTD plan lays out what specific phrases mean for the purposes of the plan. This is section is particularly important because the meaning of words can affect an employee’s eligibility for, the amount and the length of long-term disability benefits. While there are common standards for definitions in LTD plans, it is important for employees to read their insurer’s specific policy to determine the precise definitions of terms.
Also known as the “waiting” or “qualifying” period, this term outlines the time an employee must wait between the onset of their relevant disability and the first day they become eligible for long-term disability benefits. Each individual LTD policy has its own elimination period which employees should carefully review before filing their claim. In most cases, an employee must be incapable of performing their duties due to their relevant disability for at least three (3) months before they become eligible for long-term disability benefits.
How much long-term disability benefits an employee is entitled to under their LTD plan is typically characterized as their “monthly indemnity”. In many cases, LTD plans set out what percentage of an employee’s ordinary employment earnings would be paid to them per month, up to an explicit maximum dollar amount. How much an employee may be entitled to and in what circumstances varies from policy to policy, including what the long-term disability benefits are.
Many LTD plans state that insurers will “offset” the amount of an employee’s receipt of long-term disability benefits dollar-for-dollar for payments from other sources. Some specific sources of income that will result in a dollar-for-dollar reduction in LTD payments typically include:
- Worker’s Compensation Benefits;
- Personal Injury Settlements;
- Severance Packages;
- CPP Disability Payments; and
- Income from self-employment.
In some cases, the relevant LTD plan allows insurers to force employees to apply for certain benefits, such as worker’s compensation or CPP benefits, that would result in an offset to the employee’s monthly long-term disability benefits payments. Employees should be careful to read what specific payments from other sources may be deducted from the long-term disability benefits and what their obligations may be in terms of disclosing such amounts to their insurer.
Many LTD plans include “rehabilitation” provision(s) that explicitly outline an employee’s obligations to receive ongoing treatment for their relevant disability and make appropriate efforts to gradually return to work. In some cases, the rehabilitation term(s) require the employee to receive certain kinds of treatment to maintain their entitlement to LTD benefits. An employee’s obligations under rehabilitation provisions can vary depending on the phrasing of the relevant policy.
It is important for employees to understand the appeal process for the denial of their LTD claim before they file for LTD. Many LTD plans outline the internal appeal process an insurer uses to re-evaluate their decisions. Employees who are seeking an appeal of an insurer’s final decision concerning their LTD benefits also have the option of appealing either through the legal system with the help of a lawyer or a union arbitration.
Just as an LTD plan can outline eligibility for benefits, they also explicitly state what conditions can result in benefit termination. Long-term disability benefit payments cease upon the termination of LTD, so it is extremely important for employees to thoroughly read and understand benefit termination provisions in their insurer’s LTD policy.
While some LTD plans have unique and specific conditions which can result in benefits termination, most policies commonly cease upon termination of the employee from their employment, the maximum benefits period being reached (usually around two (2) years of ongoing LTD), or employee fails to meet obligations to the insurer pursuant to the terms of the LTD plan.
Long-Term Disability Benefits Takeaway
Employees seeking to go on long-term disability should carefully review and ensure they understand the important terms of their insurer’s LTD policy. The provisions discussed above are some of the most important for the employee to review but are not the only important ones in all cases. Employees with questions about their long-term disability benefits or seeking to appeal an insurer’s decision regarding it should contact an employment and disability lawyer as every case turns on their specific facts.
If you are an employee who has questions about their long-term disability entitlements or are seeking advice about appealing an insurer’s decision regarding their long-term disability benefits, our team of experienced workplace lawyers at Achkar Law can help. Contact us by phone toll-free at +1 (866) 508-2548 or email us at [email protected] and we would be happy to assist.
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Disclaimer: This blog is not intended to serve as or should be construed as legal advice and is only to provide general information. It is in no way particular to your case and should not be relied on in any way. No portion or use of this blog will establish a lawyer-client relationship with the author or any related party. Should you require legal advice for your particular situation, fill out the contact form, call (800) 771-7882 or email [email protected]