Group disability insurance provides a monthly benefit to employees who, due to illness or injury, are unable to work for an extended period of time. According to the National Compensation Survey: Employee Benefits in the United States, March 2014, conducted by the United States Department of Labor Bureau of Statistics (on the Internet at http://www.bls.gov/ncs/ebs/benefits/2014/benefits_life.htm), thirty-three percent of civilian workers participated in long term disability insurance protection, thirty-three percent of private industry employees had long–term disability insurance protection, and thirty-three percent of state and local government workers had long-term disability insurance coverage.
Most of the LTD policies offered by both public and private employers are issued by major disability insurance companies such as Aetna, UNUM, CIGNA, the Hartford, the Standard, Lincoln Financial, SunLife, Liberty Mutual, Mutual of Omaha, Metlife, and Prudential.
Generally, long-term disability (LTD) payments begin after a waiting period and continue until retirement age or death. Most LTD plans are provided at no cost to employees. LTD benefits can provide a disabled employee with a monthly income in addition to Social Security Disability (“SSD”) benefits. Long term disability benefits may also “bridge the gap” between the employee’s last day of work and when the claimant’s SSD claim is approved by the Social Security Administration.
Most group Long Term Disability claims are governed by a federal law called the Employment Retirement Income Security Act of 1974, or ERISA for short. As you can tell by the title of the Act, ERISA was originally proposed to protect worker’s retirement pensions. However, at the 11th hour, the insurance lobby convinced Congress to broaden ERISA’s scope of coverage to include “health and welfare benefits”, which includes Long Term Disability insurance claims, health insurance claims and employer-provided life insurance claims.
Unfortunately for most employees who have group disability insurance, ERISA is federal law and thus it pre-empts (supersedes) state law. Why is this bad for the consumer? Claims against an insurance company for bad faith and punitive damages are based on state law. Due to preemption by ERISA, such state law claims are unavailable to a disabled person even where the insurance company appears totally inappropriate. “Worst case scenario” for the insurance company is that it may have to pay the past due disability benefits.
Want more evidence that ERISA regulations favor the insurance companies? Under ERISA, disability insurance companies do not have to give much weight to the Social Security Administration’s determination that a person is totally disabled. In fact, it is very common for claimants to be approved for SSD benefits and still be denied LTD benefits.
If your group disability insurance claim has been wrongfully denied or terminated, call the Ortiz Law Firm at 850-308-7833 for a free initial consultation. We can discuss your individual situation and let you know whether we can help fight back against the insurance company.