Understanding Your Policy: Maximum Benefit Period

Your maximum benefit period is one of the most important provisions in your disability insurance policy.  Its terms control the period of time during which you are eligible to receive benefits under your policy.  Many disability insurance policies pay benefits until age 65 or 67, while others pay lifetime benefits.  Others still pay benefits only for a limited amount of time even if the claim  is filed decades before the policy terminates.

It is crucial that you read your policy carefully to fully understand how your maximum benefit period affects your ability to file a claim and collect benefits.  Many people, especially doctors and dentists, work through their pain without realizing that it may affect their maximum benefit period.  As you will see in some of the policy examples we look at in this post, oftentimes the maximum benefit period is more complicated than you may expect.

To begin, some policies have straightforward maximum benefit periods, like this policy from Central Life:

            Maximum Benefit Period for Injury or Sickness

            For Total Disability Starting:

    1. Before Age 63                                                  To Age 65
    2. At or After Age 63                                           24 Months

As you might expect, if you have a policy with this provision and file a claim before age 63, you will receive benefits until age 65.  However, if you file a claim at or after age 63, you will receive only 24 months of benefits.

Most modern policies contain a benefit schedule that details the length of your benefit period more precisely, based upon your age at the time the claim is filed.  This policy from MetLife contains a maximum benefit period schedule similar to those found in many disability insurance policies:

Table A.         Maximum Benefit Period Varies By Age When Disability Begins

Age When Disability Begins                         Maximum Benefit Period

Before Age 61                                               To Age 65

At Age 61, before Age 62                               48 Months

At Age 62, before Age 63                               42 Months

At Age 63, before Age 64                               36 Months

At Age 64, before Age 65                               30 Months

At Age 65, before Age 75                               24 Months

At or after Age 75                                          12 Months

Though on the surface this provision may seem more complicated that the Central Life provision, the principle is the same: date of disability at X age, you are eligible for benefits until 65 or for X months.  The date of your disability determines whether you receive benefits to age 65 or only for a few years or months.  The older you are, the fewer months of benefits you will receive.  The only difference is the more precise breakdown of the maximum benefit period after you reach age 61.

When looking for your maximum benefit period, keep in mind that it may be defined in one place, and then clarified elsewhere in the policy.  This can be confusing to the policyholder – for example, take a look at this Paul Revere policy:

   Commencement Date            Maximum                   Maximum

          Monthly Amount        Benefit Period*

From Injury:        91st Day of Disability              $2,600.00                    To Age 65

From Sickness:     91st Day of Disability              $2,600.00                    To Age 65

*The Maximum Benefit Period may change due to your age at total disability.  Please see Policy Schedule II.

At first glance, it may appear to the policyholder that they are eligible for benefits until age 65, regardless of when his or her disability starts.  However, when you turn to Policy Schedule II, you find a benefit schedule identical to the MetLife policy discussed above.  If you had this policy and did not read it carefully, you might assume that you are not eligible for benefits if you become disabled at age 65 – ultimately depriving yourself of the 24 months of benefits you would still be eligible to receive.

Some policies require a bit more calculation.  For example, policies like this one from Mutual of Omaha take your Social Security Normal Retirement Age into account:

Age at Disability Maximum Benefit Period
61 or less to Age 65 or to Your Social Security Normal Retirement Age, or 3 years and 6 months, whichever is longer
62 to Your Social Security Normal Retirement Age or 3 years and 6 months, whichever is longer
63 to Your Social Security Normal Retirement Age or 3 years, whichever is longer
64 to your Social Security Normal Retirement Age or 2 years and 6 months, whichever is longer
65 2 years
66 1 year and 9 months
67 1 year and 6 months
68 1 year and 3 months
69 or older 1 year

This provision is ultimately designed to work out to your benefit by providing you with the longest period of time, but its multiple parameters require a bit of calculation to determine your actual maximum benefit period. If your policy contains a provision like this, you can use this calculator to determine your Normal Retirement Age.

Finally, it is important to note that many policies have specific, limited benefit periods for certain conditions such as mental illness and substance abuse.  It is extremely important that you read your policy carefully to understand these exceptions, like the provision found in this MetLife policy:

Limited Monthly Benefit for Mental Disorders and/or Substance Use Disorders

The Maximum Benefit Period is limited to 24 months for all periods of Disability during your lifetime if:

    1. Such Disability is due to a Mental Disorder and/or Substance Use Disorder;
    2. You otherwise qualify for Disability benefits; and
    3. You are not confined in a Hospital.

However, any time during which you are confined in a Hospital does not count towards this 24-month limit.

As you can see from just these five examples, the maximum benefit provision can take many different forms in a disability insurance policy.  It is critical that you read your policy carefully and have a firm grasp on how your maximum benefit period provision affects your eligibility for benefits.  If you have any questions about your policy, contact an experienced disability insurance attorney.

 

 


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Policy Riders: A Guide to the Bells and Whistles of Individual Disability Insurance – Part 5

New and Unique Policy Riders

In this series of posts we are discussing policy riders, the add-ons to your basic disability insurance policy that provide additional terms or benefits in exchange for higher premiums. In part one, we walked through the basics of policy riders and evaluated the commonly-purchased COLA rider. In part two, we analyzed two benefit-based riders that enable you to increase your monthly benefits without the hassle of going through the hassle of the full underwriting process.  In the parts three and four, we looked at important provisions that sometimes appear as policy terms and sometimes appear as riders, depending on the insurer.

In this final post, we’re going to take a look at some of the more recent and unique riders appearing in modern individual disability insurance policies.

Return of Premium Rider

This rider entitles you to receive a refund of all monthly premiums in the event you do not become disabled before the expiration of the policy term.  For example, assume you purchased an individual disability insurance policy right of out dental school at age 28 with this rider and an annual premium of $5,500.00 per year.  At age 65, if you have not become disabled under the terms of your policy, the insurer has to cut you a check for $203,500.00 (37 years x $5,500.00).

Initially this may seem like a very attractive option.  At first glance, it appears that your insurance is essentially free if you don’t become disabled.  However, the right to recover your premiums has significant costs.

First, this rider usually comes with a hefty premium increase, and the opportunity cost of using those additional funds on a rider with no guaranteed return may be difficult to justify.  Sticking with the example above, if the rider costs an additional $1,000.00 per year and you chose to instead put that money in an investment portfolio with an 8% return, at age 65 your portfolio would be worth $203,070.32 – and that money is yours whether you become disabled or not.

Second, return-of-premium riders are often an all-or-nothing proposition: either you become disabled and collect benefits, or you get your premiums back.  If you become disabled, you essentially overpaid for the same benefits you would have received without the rider – the extra money paid each month for the rider simply vanishes.  Considering the fact that a majority of dentists will suffer from a musculoskeletal condition at some point in their career, this is not a small risk.

Some insurance companies offer return-of-premium riders that will still pay back part of your premiums even if you received disability benefits.  However, the terms are typically even less favorable.  With this version of the rider, any disability benefits paid to you during the term of your policy will be deducted from your premium return.  Additionally, you will typically only receive a percentage of remaining balance (between 50% and 80%) rather than the full amount. Under these terms, if you receive disability benefits for any significant amount of time it will likely diminish most of the value of the rider.

Though the return of premium rider may initially seem enticing, its benefits are often far outweighed by its costs.  Before purchasing this rider, consider meeting with a financial professional to determine if there is a more productive use of your money.

Student Loan Coverage Rider

Student loan debt in the United States has exploded over the last decade.  Americans now owe approximately $1.3 trillion in student loan debt.  Medical students and dental students are graduating with hundreds of thousands of dollars in debt, and in the event of a disability, the only debtors entitled to discharge of their federal student loans are those who meet the Social Security Administration’s stringent standard of “total and permanent disability.”  To make matters worse, student loans cannot be discharged in bankruptcy.

Some disability insurance companies are creating policy riders specifically to address this growing crisis.  For example, Guardian’s Student Loan Protection Rider allows an individual to insure their student loans for up to $2,000.00 per month on top of his or her disability benefits.  With this rider, you can choose between a 10- and 15-year term, and no loan documentation is required until a claim is filed.  As with your disability benefits, your insurance company must determine that you are totally disabled in order to be eligible for the benefits of this rider.

Doctors, dentists, and other professionals graduating with six-figure student loan debt should consider purchasing a rider of this nature to ensure that in the event of a disability their monthly benefits are not significantly eroded by their ongoing obligation to repay student debt.

Disfigurement Rider

Public figures, celebrities, models, and spokespeople occupy a unique place in the workforce: they are the only individuals in the economy for whom their likeness is the source of their livelihood.  Disability insurance companies that insure high-income celebrities and entertainers often offer a disfigurement rider that will pay benefits to the insured if they are disfigured, even if they are not disabled.  For many public figures disfigurement may completely deprive them of their ability to secure work, and have the same practical effect as total disability in many other fields.

Loss of Value Rider

Professional athletes also have a very unique place in the economy.  Like most employees, their value is typically directly related to their performance.  However, the demands on their bodies are so high that even a small decrease in performance brought on by an injury (or following recovery from an injury) can have a significant impact on their earning potential.  Professional athletes often purchase this rider as a safety net to protect themselves from the loss of value they could potentially face due to a major but non-career-ending injury right before the expiration of a contract and free agency.  More recently, elite college prospects are purchasing this rider to protect their value in an upcoming professional draft.  If a major injury causes a college prospect to be drafted in a later round for less money, the rider is designed to fill the salary gap between their projected draft position and their actual draft position.

In recent years, the number of policy riders available for purchase with individual disability insurance policies has risen substantially as insurers create products to fit the unique needs of policyholders.  Some riders are more beneficial than others, and some are simply not suited for certain individuals.  Before you purchase any rider, look carefully at the fine print and make sure that it fits your financial needs.


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Policy Riders: A Guide to the Bells and Whistles of Individual Disability Insurance – Part 4

Provisions Appearing As Policy Terms or As Riders (2 of 2)

In this series of posts we are discussing policy riders, the add-ons to your basic disability insurance policy that provide additional terms or benefits in exchange for higher premiums. In part one, we walked through the basics of policy riders and evaluated the commonly-purchased COLA rider. In part two, we analyzed two benefit-based riders that enable you to increase your monthly benefits without the hassle of applying for additional coverage.

In the part three, we looked at a pair of provisions that may appear as policy terms or as riders, depending on the insurer.  Some of these provisions can have a significant effect on your rights and benefits in the event of a disability, and identifying where and how they may fit into your policy is critical to ensuring you are fully protected.  In this fourth post, we’ll look at two more provisions that sometimes appear as policy terms and sometimes appear as riders, depending on the insurer.

Own Occupation

On this blog we have spent a significant amount of time writing the importance of purchasing an individual disability insurance policy to that defines “Total Disability” in terms of your own occupation, rather than any occupation.  This is especially true for doctors, dentists, and other highly specialized professionals who have invested years of time and hundreds of thousands of dollars in their careers.

To determine if you have an own occupation policy, look under the “Definitions” section of your policy for the definition of “Total Disability”:

Total Disability or Totally Disabled means that, solely due to Injury or Sickness, You are not able to perform the material and substantial duties of Your Occupation.

Your Occupation means the regular occupation in which are engaged in at the time you become disabled.

This is a typical own occupation definition of Total Disability.  If your policy does not define total disability in terms of Your Occupation, Your Regular Occupation, Your Current Occupation, or similar language, it is unlikely that you have an own occupation policy.  If that is the case, you may nonetheless be able to purchase an own occupation rider.  An own occupation rider will likely come with a significant premium increase, but for most medical professionals the high cost is justified by the additional income security the provision provides.

Lifetime Benefits

Most modern-day disability insurance policies pay benefits until the policyholder reaches age 65, though in some unique cases a standard policy may pay lifetime benefits.  More often, however, a lifetime benefits provision must be purchased as a policy rider.  The provision usually includes language stipulating that the disabling condition must occur before a certain age (typically between 45 and 55) in order for the policyholder to be eligible for lifetime benefits at 100% of their monthly benefit.  If the condition occurs after the cutoff age, the policyholder will only be paid a percentage of their monthly benefits for the remainder of their lifetime.  For example, the provision may structured as follows:

Lifetime Benefit Percentage is determined based upon the following table:

If Your continuous                                                                 The Lifetime Benefit

Total Disability started:                                                          Percentage is:

Prior to Age 46                                                                              100%

At or after Age 50, but before Age 51                                               75%

At or after Age 55, but before Age 56                                               50%

At or after Age 60, but before Age 61                                               25%

At or after Age 64, but before Age 65                                               5%

At or after Age 65                                                                           0%

A lifetime benefit extension rider can be enormously advantageous if you become disabled prior to the cutoff age.  However, as you can see from the table, it can also have rapidly diminishing returns if you become disabled later in life, depending on your policy’s terms.

In the last post of this series on disability insurance policy riders, we’ll be taking a look at some of the more recent policy rider products disability insurance companies are offering to the next generation of professionals, such as the student loan rider.

 


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Policy Riders: A Guide to the Bells and Whistles of Individual Disability Insurance – Part 3

Provisions Appearing As Policy Terms or As Riders (1 of 2)

In this series of posts we are discussing policy riders, the add-ons to your basic disability insurance policy that provide additional terms or benefits in exchange for higher premiums. In part one, we walked through the basics of policy riders and evaluated the commonly-purchased COLA rider. In part two, we analyzed two benefit-based riders that enable you to increase your monthly benefits without the hassle of applying for additional coverage.

All of the provisions we’ve discussed so far are typically purchased as policy riders, and are rarely included in the basic terms of your policy.  In the next two posts, however, we will evaluate provisions that may appear as policy terms or as riders, depending on the insurer.  Whether an additional provision is included in your policy or must be attached as a rider, additional benefits typically come with a higher premium. Some of these provisions can have a significant effect on your rights and benefits in the event of a disability, and identifying where and how they may fit into your policy is critical to ensuring you are fully protected.

Partial/Residual Disability Benefits

Partial disability benefits, also referred to as residual disability benefits, pay a percentage of the maximum benefit amount in the event that the policyholder’s medical condition prevents him or her from performing some, but not all, of the duties of his or her occupation on a full-time basis.  At first, this may appear to be an attractive option for a dentist suffering from a lumbar disc herniation, for example, who wishes to keep working to the degree he is able while receiving a portion of his disability benefits.

The most important benefit of a residual disability claim is that it allows you to preserve your pre-disability occupational definition while collecting a portion of your monthly disability benefits. If you have an own occupation policy, preserving your pre-disability occupational definition is vital to ensuring that any future total disability claim is accepted and fully paid down the road.

However, there are also some drawbacks to partial disability claims. For example, most insurers calculate monthly benefits for a partial disability claim using a formula that takes into account your prior monthly income, your current monthly income, and the maximum benefit amount under your policy.  However, calculating these figures can be tricky for doctors and dentists who are often paid a percentage of their production.  If your insurer measures your prior and current monthly income based on the overall profit of your clinic, your personal drop in production may not be fully taken into account and your partial disability benefits may end up being significantly less than your actual lost income.

Furthermore, the maximum benefit period for a partial disability claim is typically shorter than a total disability claim. As a result, your insurer has an incentive to continue characterizing your medical condition as a partial disability even if you become totally disabled. In doing so, they may run out the clock paying only a percentage of your benefits for 60 months or until age 65 instead of paying full benefits potentially for life. With these incentives, it is unsurprising that insurers approve relatively few total disability claims that begin as partial disability claims – even if the policyholder stops working completely.  For more information on how insurers assess potential disability claims, see this article.

Some insurers include a partial/residual disability provision in the terms of their standard disability insurance policy, while others offer it as a policy rider. To determine if residual disability benefits are part of your standard policy, check the “Definitions” section of your policy to see if “Partial Disability” or “Residual Disability” is a defined term. If it is, check the section of your policy titled “Benefits” or “Monthly Income Benefits” – if this section contains provisions describing the payment of residual disability benefits, they are included in the standard terms of your policy.

If residual or partial disability is not defined in your policy, the provision is only available as a policy rider. If residual disability benefits are not included in the terms of your policy, consider the pros and cons outlined above before purchasing residual coverage as a policy rider.  The advantages of residual disability benefits may not justify the additional cost associated with the rider in your particular case.

Waiver of Premium

This provision allows you to forego paying your policy premiums while you are receiving disability benefits, freeing up a substantial portion of your monthly income you would otherwise be paying back to the insurance company. This provision usually includes a waiting period – typically ninety days – before it kicks in. Once the waiver takes effect, however, it can significantly ease the financial burden created by a disabling condition, saving you hundreds of dollars every month.

A premium waiver is a standard term in most modern-day disability insurance policies.  The provision is typically found toward the end of the “Benefits” section of your policy, under the subheading “Waiver of Premium.”  If your policy does not include this provision, you may consider purchasing it as a rider.

As you read through your policy, look carefully to determine which of the provisions discussed above appear in your disability insurance policy.  Not only will this help you fully understand your rights under your policy, it will help you determine if additional riders are necessary to fully protect your financial security in the event of a disability.  In our next post, we will look at two more provisions that may appear either as riders or as policy terms.


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Policy Riders: A Guide to the Bells and Whistles of Individual Disability Insurance – Part 2

Benefit Increase Riders

In the first post of this series, we introduced you to disability policy riders and discussed a common rider designed to help protect your benefits from a fluctuating economy.  Policy riders can be useful for protecting your growing income as well, and we continue this with an evaluation of two riders intended to ensure that your monthly benefits remain in alignment with your current income and lifestyle.

The vast majority of doctors and dentists will experience significant increases in income as their careers develop.  If you are a dentist who purchased a disability policy right after graduating from dental school, it is likely that after ten or twenty years there will be a significant difference between your current monthly income and your monthly benefits under your policy.

If debilitating carpal tunnel syndrome forces you to stop practicing dentistry, the basic terms of your policy will not cover the gap between your monthly benefits and your current income.  The automatic benefit increase rider and the future increase option rider are designed to fill that gap in different ways.  However, both are intended to ensure that in the event of a disability, your benefits will be sufficient to cover the monthly expenses associated with your current lifestyle.

Automatic Benefit Increase Rider

The automatic benefit increase rider adjusts your monthly benefit on an annual basis to account for anticipated increases in income after you purchase your policy.  The annual increases are typically for a term of five years, after which you will generally be required to provide evidence of increased income in order to renew the rider.  If you renew the rider, it often includes a corresponding premium increase as well.  A typical automatic benefit increase schedule looks like this:

Increase Date Monthly Benefit Increase Annual Premium Increase
December 12, 2003    $500.00   $74.16
December 12, 2004    $500.00   $75.82
December 12, 2005    $500.00   $77.52
December 12, 2006    $500.00   $79.18
December 12, 2007    $500.00   $80.88
Total Increase $2,500.00 $387.56

An automatic benefit increase rider can help ensure that your monthly benefits adjust to compensate for increases in income throughout your career.  If you are purchasing a disability insurance policy and you are concerned with maintaining your lifestyle in the event of a disability, you may consider adding an automatic benefit increase rider to your policy.

Future Increase Option Rider

This policy rider guarantees you the right to purchase additional coverage at predetermined dates in the future without going back through the long and tedious process of reapplying for a policy.  Additional coverage purchases are typically limited to half the original benefit amount, and most insurers will not let you purchase this rider after age 45.  The increase in your premiums will often be a function of the amount of additional coverage purchased and your age at the time of the purchase.  This future income option rider was taken from a standard Unum policy:

You may apply for up to one Unit of Increase as of any Option Date. You may apply for part of a Unit of Increase as of any Option Date.

If all or part of a Unit of Increase is not used as of an Option Date, You may carry it over and apply for it on the next Option Date. But You cannot carry it over beyond that Option Date.

On the first Option Date, You may also apply for up to one additional Unit of Increase if You are not disabled. But You must also exercise all of Your current Unit of Increase.  This additional Unit of Increase cannot be carried over.

In no event may You exercise more than two Units of Increase as of any Option Date.  To use all or part of a carried-over Unit of Increase You must also exercise all of Your current Unit of Increase. The total number of Units of Increase exercised can never exceed the maximum number of Units of Increase shown on the policy schedule.

If You qualify, We will increase Your Policy Benefit by the amount for which You apply.

Like the automatic benefit increase rider, this option helps ensure that your monthly benefits are proportionate with your current income.  As such, if you elect to purchase additional coverage you may be required to show that your current level of income warrants additional coverage.

The future increase option is one of the most common and most popular policy riders, and it is cheaper than the automatic benefit increase rider because all you’re paying for is the right to purchase additional coverage.  Keep in mind, however, that the value of that right is the guarantee of your ability to increase your coverage regardless of subsequent changes in your disability risk factors.

Before you purchase an individual disability insurance policy, take the time to evaluate your financial goals and look carefully at the benefits provided by the basic terms of the policy you are considering.  If the policy basic policy benefits do not cover your needs, you may consider adding one of these riders to ensure your investment in your career is fully protected.  In our next post in this series, we will discuss provisions that may appear either in the basic terms of your policy or as a policy rider and how to identify them.


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Policy Riders: A Guide to the Bells and Whistles of Individual Disability Insurance – Part 1

An Introduction to Policy Riders

In this series of posts we will evaluate the policy riders offered by most disability insurance companies in addition to their basic terms of their policies.  A policy rider is an add-on provision at an additional cost that provides you with additional benefits and/or terms not included in a standard policy.  Individual disability insurance policies have very little room for modification or customization outside of choosing your monthly benefit amount. Policy riders allow you to customize certain aspects of your policy based on your individual needs.

Doctors, dentists, and other professionals purchase disability insurance policies to protect their earning potential and the time and money they’ve invested in their careers.  The basic provisions of an individual disability insurance policy, however, may not be enough to protect you in the event of a disability.  Policy riders may be necessary to ensure that your financial future is secure if you become disabled.

In this first post, we will evaluate a common and widely-available policy rider that can help you protect your benefits from a changing economy: the Cost-of-Living Adjustment rider.

Cost-of-Living Adjustment (COLA) Rider

A COLA rider automatically increases your benefit amount by a certain percentage every year to account for increased cost-of-living due to inflation.  To determine the annual percentage increase, your insurer will often let you choose between a set percentage and tying it to an establish index such as the Consumer Price Index (CPI).  Most insurers will cap the overall increase in benefits – often at one or two times the original benefit amount.

Imagine that you become permanently disabled at age 45 due to severe cervical spinal stenosis.  Your individual disability insurance policy pays $20,000.00 per month to age 65.  Ten years in, you’re still receiving $20,000.00 per month, but inflation has risen at an average of 1.6% per year according to the CPI.  Without a COLA rider, your $20,000.00 has approximately $3,440.00 less buying power than it did ten years ago.  With a COLA rider tied to the CPI, your benefit amount will increase along with inflation and at ten years you will receive $23,440.00 per month rather than $20,000.00 per month.

This particular rider is very important for long-term individual disability insurance, and if you are considering purchasing a policy you should strongly consider a COLA rider for the best long-term income protection. It is a fairly expensive increase to your monthly premium, but it will ensure that your buying power and lifestyle are not affected by inflation in the event of a long-term disability.

In our next post, we will discuss the Automatic Benefit Increase rider, the Future Increase Option rider, and how they both allow you to increase your benefits down the road without jumping through the hoops of reapplying for additional coverage.


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Ninth Circuit Determines That Persons Who Can’t Sit for More than Four Hours Can’t Perform Sedentary Work

 

In a previous post, we summarized the five exertion levels (sedentary work, light work, medium work, heavy work, and very heavy work), as defined by the Dictionary of Occupational Titles (DOT), and discussed why they matter in the context of disability claims.  Essentially, these exertion levels function as broad classifications that are used to categorize particular jobs and occupations.  The physical requirements under each exertion level increase as you move up from level to level, with sedentary work requiring the least physical exertion and very heavy work requiring the most physical exertion.

If you have an “own occupation” policy, these exertion levels will likely not come into play, because the terms of your policy will require your insurer to consider the particular duties of your specific occupation, as opposed to the broader requirements of the various exertion levels.  However, if you have an “any occupation” policy, which requires you to establish that your disability prevents you from working in any capacity, your insurer will likely seek to determine your restrictions and limitations at the outset of your claim, using claim forms or possibly a functional capacity evaluation (FCE).  Once they have done so, they will then likely seek to fit you into one of the five exertion levels listed above and have their in-house vocational consultant provide them with a list of jobs that you can perform given your limitations.

Not surprisingly, your insurer will generally try to fit you into the highest category possible, and then argue that you can perform all of the jobs at that exertion level, and all jobs classified at a lower exertion level.  Typically, someone suffering from a disabling condition can easily establish that they cannot perform medium, heavy, or very heavy work, so, in most cases, the insurer will be trying to establish that you can perform light work, or sedentary work, at the very least.

As you might expect, one of the key differences between sedentary and light work is that sedentary work mostly involves sitting, without much need for physical exertion, whereas light work involves a significant amount of walking and standing, in addition to other physical requirements, such as the ability to push or pull objects and the ability to operate controls.  Given the low physical demands of sedentary work, it can often be difficult to establish that you cannot perform sedentary work.  This can be problematic, because there are many jobs that qualify as sedentary work.  However, if you have a disability that prevents you from sitting for extended periods of time, the very thing that makes sedentary work less physically demanding—i.e. the fact that you can sit during the job—actually ends up being the very reason why you cannot perform sedentary work.

While this is a common sense argument, many insurance companies refuse to accept it and nevertheless determine that claimants who cannot sit for extended periods of time can perform sedentary work.  However, the Ninth Circuit Court of Appeals recently held in Armani v. Northwestern Mutual Life Insurance Company that insurers must consider how long a claimant can sit at a time when assessing whether they can perform sedentary work.

Avery Armani was a full-time controller for the Renaissance Insurance Agency who injured his back on the job in January 2011.  He eventually stopped working as a result of the pain from a disc herniation, muscle spasms, and sciatica.  Multiple doctors confirmed that Avery was unable to perform the duties of his job, which required him to sit for approximately seven hours per day. In July 2011, Northwestern Mutual classified Avery’s occupation as “sedentary” and approved his claim under the “own occupation” provision of his employer-sponsored plan.

Despite regular statements to Northwestern Mutual from his doctor that he could only sit between two and four hours a day and must alternate between standing and sitting every thirty minutes, Avery’s disability benefits were terminated in July 2013.  Northwestern Mutual’s claims handler identified three similar positions in addition to Avery’s own position that he could perform at a “sedentary” level, and determined that his condition no longer qualified as a disability under his policy.

When his benefits were terminated, Avery sued Northwestern Mutual.  After several years, his case ultimately reached the Ninth Circuit Court of Appeals.  In resolving the case, the Ninth Circuit held that an individual who cannot sit more than four hours in an eight-hour workday cannot perform “sedentary” work that requires “sitting most of the time.”  In reaching its conclusion, the Ninth Circuit cited seven other federal courts that follow similar rules, including the Second Circuit Court of Appeals, the Sixth Circuit Court of Appeals, the District of Oregon, the Central District of California, the Northern District of New York, the Southern District of New York, and the District of Vermont.

While this case is not binding in every jurisdiction, it does serve to reinforce the common sense argument that a claimant who cannot sit for extended periods of time due to his or her disability cannot perform sedentary work.  Additionally, though this rule was created in the context of a disability insurance policy governed by ERISA, the court did not qualify its definition or expressly limit its holding to cases involving employer-sponsored policies.  Accordingly, in light of this recent ruling, it would be reasonable to argue that a court assessing an “own occupation” provision of an individual policy should similarly consider whether sitting for extended periods of time is a material and substantial duty of the insured’s occupation.  If it is, and the insured has a condition that prevents him or her from sitting for more than four hours of a time—such as deep vein thrombosis (DVT) or chronic pain due to degenerative disc disease—then the insured arguably cannot perform his or her prior occupation and is entitled to disability benefits.

In short, the Armani case is noteworthy because its reasoning could potentially be applied to not only ERISA cases, but also disability cases involving individual policies and occupations—such as oral surgeon, endodontist, periodontist, attorney, accountant, etc.—that require the insured to sit for long periods of time in order to perform the occupation’s material duties.  It will be interesting to see if, in the future, courts expand the Armani holding to cases involving individual policies outside of the ERISA context.

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Source: Armani v. Northwestern Mutual Life Insurance Company, No. 14-56866, 2016 WL 6543523 (2016)

 


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Can Your Disability Insurance Company Dictate The Medical Treatment You Must Receive To Collect Benefits? Part 4

Care Dictation Provisions

Throughout this series of posts we’ve addressed the increasingly restrictive medical care provisions in disability insurance policies.  In Part 1, we discussed the evolution of the care standard and its effect on an insured’s ability to collect benefits and control their own medical treatment.  In Part 2 we looked at the “regular care” standard, which places no obligation on the insured to undergo any unwanted medical treatment.  In Part 3 we looked at the “appropriate care” and “most appropriate care” standards, which require much more vigilance on the part of policyholders, because they must be prepared at any time to establish that the treatment they are receiving is justified under the circumstances.  In this final post, we are going to look at the most aggressive and intrusive language that has been adopted by insurance companies in an effort to dictate the care of their policyholders.

Here is an example of a very strict care provision, taken from a Great West policy:

Regular Care of a Physician means personal care and treatment by a qualified Physician, which under prevailing medical standards is appropriate to the condition causing Total Disability or Residual Disability.  This care and treatment must be at such intervals as will tend to lead to a cure, alleviation, or minimization of the condition(s) causing Total Disability or Residual Disability and which will lead to the Member’s return to the substantial and material duties of his own profession or occupation or maximum medical improvement with appropriate maintenance care.

Clearly, this provision was designed with one goal in mind:  to give the insurer nearly unlimited power to scrutinize a policyholder’s course of treatment, including the ability to insist that any given procedure is necessary to cure or minimize the disability and maximize medical improvement.  It is easy to see how an insurer might invoke this provision to assert its control over the medical decision making of their policyholder and use the leverage of benefit termination and claims denial to dictate their treatment.

Imagine that you are a surgeon with a herniated disc in your cervical spine, and that your policy contains the provision cited above.  Your insurer insists that a fusion of the surrounding vertebra is the procedure most likely to alleviate your disability. Your doctor disagrees, recommending a more conservative course of treatment, such as physical therapy, modified activity and medication, such as muscle relaxants.  Your doctor also warns you that if you have the surgery, you will experience reduced mobility and risk adjacent segment degeneration.  However, your disability benefits are your only source of income.  Fearing a claim denial, you agree to the procedure despite your doctor’s concerns.  This results in a no-lose scenario for the insurer.

The best case scenario, from your insurer’s perspective, is that the surgery (for which you bore all the risk both physically and financially) is successful and you are no longer disabled.  At worst, the procedure fails and the insurer merely has to pay the benefits it was obligated to pay to you in the first place.  For you, however, an unsuccessful procedure can mean exacerbation of your condition, increased pain, and prolonged suffering.  It is therefore vital that you understand your rights under your policy.

Insurers are risk-averse by nature, and disability insurance is no different.  Modern disability insurance policies, and particularly the medical care provisions, are designed to minimize the financial risk to the insurer. Insurers place an enormous burden on claimants to prove that their course of treatment meets the rigorous standards in their policy. Though stringent policy language can make it significantly more difficult to obtain the benefits you are entitled to, it does not strip you of your right to make your own medical decisions.

In order to preserve your medical autonomy in the disability claims process, you must become familiar with the details of your policy before filing a claim.  Understanding the terms of your policy—including the care provision in your policy—is critical to successfully navigating a disability claim.  You need to be familiar with your policy’s care requirements from the outset, so that you can communicate effectively with your physician to develop a plan of treatment that you are comfortable with and that comports with the terms of your policy.

Even if you have a basic understanding of your rights under you policy, it can be daunting to deal with an insurer that is aggressively seeking to dictate your medical care.  In some cases, you may be forced to go to court to assert your right to make your own medical decisions—particularly if your policy contains one of the more recent, hyper-restrictive care provisions like the Great West provision above.  Insurers know this, and they also know that most claimants are in no position to engage in a protracted court battle over whether they are receiving appropriate care.  However, simply submitting to the medical mandates of your insurer to avoid the stresses and costs associated with litigation can have drastic consequences, depending on the nature of the medical care you are being asked to submit to.  If you should find yourself in this difficult position, you should contact an experienced disability insurance attorney.  He or she will be able to inform you of your rights under your policy and help you make an informed decision.

 


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Can Your Disability Insurance Company Dictate The Medical Treatment You Must Receive To Collect Benefits? Part 3

“Appropriate Care” and “Most Appropriate Care”

In this series, we are looking at the different types of care provisions disability insurers insert into their policies so that they can later argue that they have a right to dictate the terms of your medical care.  In Part 1, we discussed how many policyholders do not even realize that their policy contains a care provision until the insurance company threatens to deny their claim for failure to obtain what the insurer perceives as sufficient medical care.  We also discussed how care provisions have evolved over time to become more and more onerous to policyholders.  In Part 2, we looked at one of the earliest and least stringent care provisions—the “regular care” provision—in detail.

In this post, we will be looking at a stricter care provision—the “appropriate care” provision.  Here is an example of a typical “appropriate care” provision:

Appropriate Care means you are receiving care by a Physician which is appropriate for the condition causing the disability.”

Disability insurance carriers implemented this policy language to allow their claims handlers and in-house doctors to weigh in on the type and quality of care their policyholders receive.  As you’ll remember from Part 2 of this series, “regular care” provisions only required policyholders to be monitored regularly by a physician.  Thus, under a “regular care” provision, as long as the policyholder was seeing a doctor, the insurer could not scrutinize or direct his or her treatment.  Only by changing the policy language could they hope to have greater influence over the medical decisions of their policyholders.

This prompted insurers to add the additional requirement that the care must be “appropriate.”  But what is “appropriate?” If you are suffering from cervical spinal stenosis, you likely have several reasonable treatment options available to you. For example, your physician might recommend physical therapy, but also indicate that you would be a candidate for more invasive treatment, such as steroid injections.  If you have an “appropriate care” provision, does that mean that your insurer gets to decide which treatment you receive?

When presented with this question, most courts determined that “appropriate care” limits the insurer’s review of its policyholder’s care to whether it was necessary and causally related to the condition causing the disability.[1]  Courts also held that “appropriate” care does not mean perfect care or the best possible care—it simply means care that is suitable under the circumstances.[2]  Thus, if physical therapy, steroid injections, and surgery are all suitable treatments for cervical stenosis, most courts agree that your insurer cannot deny your claim or terminate your benefits based upon your decision to undergo a course of treatment they view as less effective than another.

In response to these cases, disability insurers again modified their policy language and created the “most appropriate” care provision.  Here is an example of what a “most appropriate” care provision looks like:

“[You must receive] appropriate treatment and care, which conforms with generally           accepted medical standards, by a doctor whose specialty or experience is the most      appropriate for the disabling condition.”

This change places significant restrictions on a claimant’s autonomy not only because it limits the type of physician the claimant may choose, but because it restricts the claimant’s medical care to a singular “appropriate” course of treatment.

These types of provisions can make collecting disability benefits extremely difficult.  For example, take the experience of Laura Neeb, a hospital administrator whose chemical sensitivity allergies became so severe that they rendered her totally disabled.  After one of her doctors—Dr. Grodofsky—concluded that she had no identifiable allergies, Ms. Need sought another opinion from Dr. William Rea, founder of the Environmental Health Center in Dallas, Texas.  Dr. Rea concluded that Ms. Neeb’s hypersensitivity to chemicals was so severe that she was “unable to engage in any type of work,” and required extensive treatment to manage the condition.  Ms. Neeb’s insurer, Unum, nonetheless denied the claim.  The court ultimately held that Ms. Neeb failed to obtain the “most appropriate care” by treating with Dr. Rea, agreeing with Unum that Dr. Grodofsky’s conclusions were correct.[3]

Ms. Neeb’s case illustrates just how restrictive the “most appropriate care” provision can be. It places the burden squarely on the policyholder to show that their chosen course of treatment and treatment provider are most appropriate for their condition.  If your policy contains a “most appropriate care” provision, it is essential that you find a qualified, supportive treatment provider who is willing to carefully document your treatment and the reasoning behind it.  You do not want to place yourself in a position where you cannot justify the treatment you are receiving and must choose between an unwanted medical procedure and losing your benefits.

In the final post of this series, we will discuss the hyper-restrictive care provisions appearing in disability insurance policies being issued today and the serious threats they pose to patient autonomy.

[1] 617 N.W.2d 777 (Mich. Ct. App. 2000)

[2] Sebastian v. Provident Life and Accident Insurance Co., 73 F.Supp.2d 521 (D. Md. 1999)

[3] Neeb v. Unum Life Ins. Co. of America, 2005 WL 839666 (2005).


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Edward O. Comitz and Michael F. Beethe Named Southwest Super Lawyers for 2017

Ed Comitz and Mike Beethe, the founding members of the firm, were both recently named Southwest Super Lawyers for 2017.  This is the sixth consecutive year that Mr. Comitz and Mr. Beethe have been recognized by Super Lawyers for excellence in their field.

Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high-degree of peer recognition and professional achievement. The selection process includes independent research, peer nominations and peer evaluations.


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