10 More Legal Mistakes Professionals Make When
Filing a Claim for Disability (Mistake #9)

In an effort to provide professionals with more information about how the disability claims process works and identify some of the most common pitfalls for professionals filing disability claims, Comitz | Beethe attorneys Ed Comitz and Derek Funk have compiled an updated list of the 10 most common mistakes we are seeing physicians, dentists, and other professionals make when they file claims under the new post-2000 generation of disability policies (which are much more complex and stringent than the policies sold to professionals in the 1980s and 1990s).

In this post, we’ll be looking at the common mistake of not understanding how the care provision in your disability insurance policy impacts your disability claim.

Mistake #9: Allowing the Insurance Company to Dictate the Terms of Your Care

Many disability insurance policies now condition receipt of benefits on compliance with stringent care requirements. In contrast to older policies, which typically required an insured to obtain “regular care,” many newer policies require insureds to obtain care designed to achieve “maximum medical improvement.” While the older regular care requirements provided little leverage for insurance companies to require insureds to obtain specific treatments or procedures, these new requirements give them leverage to argue that an insured must undergo treatment that arguably could enable the insured to return to work. In some cases, the insurance company may go so far as to demand surgery, leaving the insured with the choice of undergoing an operation involuntarily and bearing all of the medical and financial risks himself or herself, or potentially giving up his or her right to collect benefits.

Action Step:  Contact an experienced disability insurance attorney to ensure your rights are protected if your insurer attempts to dictate the terms of your care.

To read the rest of the 10 most common mistakes, click here.

To learn more about some of the tactics insurers use to deny claims and other mistakes to avoid, click here.

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10 More Legal Mistakes Professionals Make When
Filing a Claim for Disability (Mistake #10)

In an effort to provide professionals with more information about how the disability claims process works and identify some of the most common pitfalls for professionals filing disability claims, Comitz | Beethe attorneys Ed Comitz and Derek Funk have compiled an updated list of the 10 most common mistakes we are seeing physicians, dentists, and other professionals make when they file claims under the new post-2000 generation of disability policies (which are much more complex and stringent than the policies sold to professionals in the 1980s and 1990s).

In this post, we’ll be looking at the common mistake of cancelling an existing policy and getting a newer policy, without fully understanding or considering how this decision can impact your chances to collect benefits if you ever need to file a claim.

Mistake #10: Replacing Your Old Policy with a New One

Many professionals decide to replace older, smaller value policies with a new policy with a higher monthly benefit, once they reach the point that they can qualify for a higher benefit amount. While this can be more convenient (because you don’t have to keep track of multiple premiums, or file with multiple companies if you end up needing to file a disability claim), generally speaking, older disability policies have more favorable policy definitions and better coverage for professionals. So, if you do have an older policy, it may be better to supplement that coverage, rather than replace it.

Another important consideration to keep in mind when assessing whether to replace existing coverage is that canceling an existing policy and choosing a new one resets pre-existing limitation periods that may have already been satisfied under the older policy. Additionally, if you purchase a new policy, you will likely have to go through the medical underwriting process again and, as a result, conditions that would have been covered under the older policy may be excluded from coverage altogether under the new policy.

Action Step:  Carefully review the pros and cons of replacing an existing policy before cancelling it or letting your policy lapse due to nonpayment of premiums.

To read the rest of the 10 most common mistakes, click here.

To learn more about some of the tactics insurers use to deny claims and other mistakes to avoid, click here.

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Multiple Sclerosis

Multiple sclerosis (MS) is a disease of the central nervous system, which is made up of the brain, spinal cord, and optic nerves. It’s estimated that 2.3 million people worldwide have MS.  In this post we’ll examine the symptoms, causes, diagnosis, and treatment of this disease.

Overview

With MS, the immune system begins to attack the protective sheath, called myelin, that covers the nerve fibers.  The result is faulty communication between the brain and the rest of the body.  The disease may eventually cause the nerves deteriorate and they may even become irreversibly damaged.

The symptoms experienced and the rate of progression and severity of the disease will vary greatly from person to person.  Some individuals may have a very minor form of MS, while others will go on to become paralyzed, or, in rare instances, have a potentially fatal form that progresses rapidly from onset.

MS has several difference courses, in terms of how the disease progresses:

Relapse-Remitting MS: Most people with MS experience times of new symptoms, or relapses, that develop in a relatively short period of time followed by periods remission where there are few or no symptoms.

Secondary-Progressive MS: About 60 to 70% of people with relapse-remitting MS type will go on to experience a steady progression of symptoms.

Primary-Progressive MS: Some individuals have a gradual onset and progression of symptoms without relapses.

Benign MS: MS is considered benign if the individual has no relapses and a mild, stable disability after about 15 years from the time of diagnosis.

Symptoms 

Because MS attacks the central nervous systems, a wide range of symptoms in nearly any function can occur.  Symptoms will also vary in type and severity from one person to another.  Symptoms can resolve, come and go, or be permanent. Common symptoms include:

  • Blurred vision
  • Partial or complete loss of vision
  • Loss of balance
  • Poor coordination
  • Dizziness or vertigo
  • Slurred speech
  • Tremors
  • Tingling
  • Electric shock sensations
  • Numbness or weakness
  • Extreme fatigue
  • Depression
  • Temperature sensitivity
  • Memory and concentration problems
  • Paralysis

Causes and Risks Factors 

While the cause of MS is unknown, many believe it is a mix of genetics and environmental factors.  Scientists have identified several risk factors that may be associated with MS:

  • Genetics and family history
  • Gender (women are 2 to 3 times more likely to develop MS)
  • Age (most people are diagnosed between the ages of 20-50)
  • Certain infections, including the Epstein-Barr virus
  • Certain autoimmune diseases, including type 1 diabetes or thyroid disease
  • Smoking

Diagnosis 

MS is often a hard disease to diagnose, especially because symptoms vary from person to person, can come and go, and are similar to other disorders of the nervous system.  While there is no single diagnostic test, there are several methods physicians use to evaluate individuals for MS, including:

  • Blood tests to screen for other diseases with similar symptoms (e.g. Lyme disease)
  • Balance, coordination, vision, and other tests to see how the nerves are functioning
  • MRIs to detect changes in the brain (lesions) and/or spinal cord
  • Evoked potentials tests, which evaluate electrical activity in the brain
  • Analysis of the cerebrospinal fluid (CSF) in the brain and spinal cord for specific proteins
  • Spinal tap to look for abnormalities in antibodies, and look for infections or other conditions with similar symptoms

Treatment

At present, there is no cure for MS.  However, there are several treatments doctors utilize in an effort to manage symptoms, shorten the length of attacks, and modify the progression of symptoms.  Some of them are listed below.

Treatment to Modify Progression

  • Medications to curb the body’s immune system to attempt to stem the body’s attack on the myelin

Treatment for MS Attacks

  • Corticosteroids to reduce nerve inflammation
  • Muscle relaxants
  • Plasma exchange

Treatments for Symptoms

  • Medications (fatigue, depression, and other symptoms)
  • Muscle relaxants
  • Physical therapy
  • Staying cool, sometimes with devises such as a cooling vest (symptoms often worsen when body temperature rises)
  • Alternative medicine (acupuncture, massage, relaxation techniques)
  • Exercise and reducing stress

Treatment will often involve an interdisciplinary approach and may require treatment from a care team including neurologists, physiatrists, urologists, psychiatrists, physical and occupational therapists, and others as needed.

These posts are for informative purposes only and should not be used as a substitute for consultation with and diagnosis by a medical professional.  If you are experiencing any of the symptoms described below and have yet to consult with a doctor, do not use this resource to self-diagnose.  Please contact your doctor immediately and schedule an appointment to be evaluated for your symptoms.

References

National Multiple Sclerosis Society, https://www.nationalmssociety.org
Mayo Clinic, https://www.mayoclinic.org
John Hopkins Medicine, https://www.hopkinsmedicine.org
WebMD, https://www.mayoclinic.org

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Why You Can’t Blindly Rely on Your Agent to Choose the Right Policy for You

In earlier posts we’ve discussed how agents don’t have the authority to change, delete, or add provisions to a disability insurance policy.  We’ve also discussed how most disability insurance policy applications now contain language stating that you cannot rely upon representations made by agents regarding the scope of coverage, or eligibility for coverage.  Thus, while agents can provide helpful advice and help to point you in the direction of a disability insurance policy that may fit your needs, it is ultimately up to you, the purchaser, to review your policy, become familiar with the provisions of the policy, and confirm that you are in fact purchasing the coverage that you expected to receive.

If you don’t take the time to do this, and blindly pay premiums without reviewing your disability insurance policy first, you could end up paying for coverage that provides less protection than you thought you were getting when you applied for the policy.  For example, most physicians and dentists know that their disability insurance policies should be “own occupation”, meaning a policyholder is considered totally disabled (and eligible to collect benefits) when he or she can no longer work in his or her profession, versus being unable to work at all, in any profession.  In some policies, own occupation is further defined as being unable to practice in a particular medical or dental specialty (i.e. anesthesiologist, periodontist, etc.).

Quite often physicians and dentists decide to buy another policy, either because they let a previous one lapse, or because they want to purchase additional coverage as their income increases and they can afford higher premiums, and they ask their agent for a new policy with the “same coverage”.  This can be incredibly difficult or impossible to achieve, because over time disability insurance policies have evolved to become more restrictive, and each company has variations on what they deem an “own occupation” policy.  Consequently, while your agent may present you with a policy that contains the phrase “own occupation”, it may not be a true own occupation policy at all.

For example, some policies are actually conversion policies, which mean they start out as “own occupation” policies, but after a certain time frame (e.g 2 years, or 5 years), they change to an “any occupation” policy, which means that, in order to continue receiving disability benefits, you would have to show that you can’t work at all.  This can be very difficult to prove, particularly if you worked in another capacity for all or some of the prior “own occupation” period.

Even if your agent does locate an own occupation plan with similar premiums and benefit amounts to an older policy, there may also be provisions that cancel each other out in the new and old policies.  One scenario we’ve seen is a disability insurance policy containing the provision that a claimant must not be working (a “no work” provision) in their own occupation or another profession in order to collect benefits, while the second policy states that a claimant must not be working in their own occupation but must be working in another field in order to collect benefits (a “work provision”).  Under this scenario, in essence, one of the policies you’ve been paying years of premiums for is worthless, as both requirements cannot be met at once.

These examples highlight why it is important that you do more than just check an “own-occupation” box on your application and/or blindly rely on your agent’s assurance that a new policy is compatible and/or the same as an existing one.  If you end up with a policy you essentially cannot use, your recourse is limited, as insurance companies have gone to significant lengths to shield themselves from any liability based on an agent’s representations of a policy.  It is therefore far better to take the time to review your policy at the outset, before you pay years of premiums, to ensure that it provides the disability coverage that you applied for and need.

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How Do I Know if My Insurer Might Be Interested in a Lump Sum Settlement?

We are often asked whether a particular claim is the type of claim that an insurance company would be interested in settling for a lump sum buyout.  The answer, as explained in more detail below, is always, it depends, because there are a number of factors that come into play, and many of those factors are not even directly related to whether the claim itself is legitimate or whether the insured’s condition is permanent (although those are important factors that impact whether a buyout is a possibility).

What is a Lump Sum Buyout?

You may be familiar with the terms of your disability policy, but you may not know that, in certain instances, insurers are willing to enter a lump sum settlement. Under a lump sum settlement, your insurer agrees to buy out your policy and, in return, you agree to surrender the policy and release the insurer from any further obligations to you going forward.

There are certain pros and cons to this sort of settlement.  Some claimants prefer a lump sum settlement, because it allows them to avoid having to rely on month-to-month payments from their insurer (which may or may not arrive, or if they do arrive, may not arrive on time) and/or to avoid the hassle of dealing with claim forms, medical exams, etc. for years to come.  A lump sum settlement can also allow you to take advantage of present investment opportunities that can provide for your and your family’s future.  But there are also other considerations that you will need to discuss with your attorney as well as your accountant and other financial advisors.  For example, if your benefit period lasts to age 65 (and you end up living to the end of the benefit period), you would likely receive more money cumulatively over time if you stayed on claim and received monthly benefits in lieu of a lump sum settlement.

Lump sum settlements can also be attractive to insurance companies.  A settlement can allow insurance companies to release money from their reserves and to eliminate administrative expenses associated with the ongoing review of your claim year after year. But just as you might receive more money cumulatively over time if you stayed on the claim, the insurer might benefit financially from not offering you a lump sum settlement. For example, if your policy provided for lifetime benefits, and you met an untimely demise, your insurance company’s obligation to pay benefits would cease, and they may end up ultimately paying out a lower amount in total monthly benefits than they would have if they paid out a lump sum settlement on your claim.

Because this process is completely discretionary on their part, insurance companies are very deliberate about offering lump sum settlements. Before doing so, they must weigh multiple factors including the following:

    • Permanency. The insurer is more likely to offer a settlement if its actuaries determine that you will likely be on claim for the maximum benefit period.
    • Reserves. Over the course of your claim, your claim’s reserves slowly peak as you are on claim for an extended period of time (and permanency is established) and then at some point, they start to diminish as the claim is paid out, and you get closer and closer to the end of the maximum benefit period. The insurer is more likely to offer a settlement when the reserves are at their peak (typically around 3-5 years into a claim), because that is when the insurance company would improve its bottom line the most by freeing up the reserves.
    • Mortality/Morbidity Issues. The insurer is more likely to offer a settlement if its actuaries determine that you will probably live to the end of the maximum benefit period. Or if you have lifetime benefits, the insurer will estimate your lifespan based on your health history to determine whether it is financially beneficial for the company to offer a lump sum settlement.
    • Offsets. The insurer is more likely to offer a settlement if it determines that you will probably not receive income in the future that would offset the benefit amount before the end of the maximum benefit period.
    • Anticipated Gain. Companies will not offer a buyout unless they stand to save money in the long run, so they have their actuaries calculate how much of a gain (percentage-wise) the company would net if they settle the claim. Insurers often have internal financial objectives that impact the amount they are willing to offer on settlements such as requiring a net gain amount of a certain percentage (e.g. 35%).
    • Cash Outflow. The insurer will be more or less willing to offer a settlement depending on their quarterly or even annual cash outflows. Thus, if a company had paid out a lot of buyouts recently, the company may not have enough cash available to offer additional lump sum settlements.

The bottom line is that offering a lump sum settlement is completely voluntary on the part of the insurer and doing so depends on the unique factual circumstances of your claim. Nevertheless, knowing the factors that insurers consider in making this decision can help you understand whether a lump sum settlement is appropriate in your case.

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The Importance of Reviewing Your Policy Application

In our last post we discussed why you should not rely solely on your agent’s representations when purchasing a new disability insurance policy. It is similarly important that you not rely solely on your agent to complete the policy application.

While an agent may offer to help you by filling out the disability insurance application, this could end up negatively impacting a future claim or even voiding your policy down the road, if the application contains any errors or omissions.  As explained in our prior posts, while it may seem like telephone interviewers, licensed representatives, agents, and medical examiners have significant control over the application process and whether you receive a disability insurance policy, many applications have language that explicitly limits your ability to rely upon representations made by such individuals, and expressly places the burden of reviewing the application for accuracy upon you (regardless of who completed the application).  Below is a sample of policy language:

 

Thus, you may speak with several people during the application process, and give them the requested information, but it is ultimately up to you to make sure the information provided to the insurance company is correct.  It is therefore very important that you read through your disability insurance application carefully to make sure it is complete and accurate before signing.

It is also very important that you carefully review your disability insurance policy when you receive it from the insurance company, and not just file it away without a second thought.  When you receive your copy of the full policy, it will typically contain language stating that you have a certain time period (e.g. 10 or 30 days) to review the policy and return it to be voided if it does not contain the terms you expected.  This clause will normally be found on the first page of the policy, and typically looks something like this:

If you decide to keep your disability insurance policy and do not send it back within this review period, you are bound by all provisions of the policy, regardless of whether you are actually aware of them or not.  For instance, if you asked your agent for a certain provision and/or requested it on your disability insurance application, but the insurance company omits it for some reason, and you don’t catch it during this review period, you may end up paying years of premiums for coverage that is different than what you thought you had purchased.  Similarly, if your policy contains an unfavorable provision that you didn’t know was going to be in the policy, you will still be bound by it unless you return the policy.

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How Insurance Companies Distance Themselves from Agents (And Why It Matters)

Reading through contracts, especially lengthy insurance ones, can be time consuming. Many policies contain confusing language, terms of art, and often include supplemental riders that change the terms or definitions contained in the main body of the policy.  But if you don’t read your disability insurance policy until it’s time for you to file a disability claim, you may be caught off-guard by what your policy actually says.  This next series of posts will discuss the importance of taking the time to read through your policy, and will review some things to watch out for when you buy a disability insurance policy.

Dentists and physicians are often swamped with work, and rely heavily on insurance agents when selecting and purchasing a disability insurance policy.  One scenario we commonly see is doctors requesting a disability insurance policy that is “the same” policy that the other doctors in the practice have. Another common scenario is the doctor who wants more disability coverage and just asks his or her agent for another disability insurance policy that is “like” his or her existing policy, or has the “same coverage” as his or her existing policy.  What they don’t realize is that some of the same favorable terms may no longer be available in today’s policies.  For example, while most older disability insurance policies contained “true own occupation” provisions, there are now several different variations of “own occupation” provisions, so if you just ask for an “own occupation” policy, you may not actually be receiving the disability coverage that you think you are.

It is also important to be aware that, over the years, disability insurers have sought to distance themselves from agents and now often go so far as to include clauses or statements in their disability insurance policies and applications that state no agent or broker has the authority to determine insurability or make, change, or discharge any contract requirement.  Here’s an example of this type of policy language:

So what does this mean?  It means that, while solely relying upon an agent’s assurance of the terms of a policy may have been a more acceptable (but not advisable) option in the past (when policies were often similar and generally favorable to policyholders), you can no longer solely rely upon your agent’s description of the policy.  No matter how well-meaning or knowledgeable your agent may seem, ultimately, you are going to be on the hook if your disability insurance policy doesn’t say what you thought it said, so it is crucial that you carefully review your disability policy to ensure you are receiving sufficient coverage.

Our next post will discuss the importance of the disability application process and policy review period.

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What is a Neuropsychological Evaluation? – Part 3

Our previous posts in this serious have examined what a neuropsychological evaluation is and how these exams are conducted.  In this post we’ll be talking about some of the limitations associated with these types of exams.

How Reliable Are Neuropsychological Evaluations?

As we explained in previous posts, neuropsychological evaluations seek to provide information about the brain and behavior through the use of established, standardized tests that produce quantitative data.  This data can then be used to confirm and back up a subject’s reports of cognitive impairment.

These evaluations can serve several purposes, such as corroborating the cognitive effects of a disability, or outlining a subject’s limitations in his or her daily life (including the inability to return to one’s own occupation).  For example, an evaluation might show that a dentist with a head injury has impaired motor skills and visuospatial processing abilities that make it unsafe for the dentist to continue treating patients.  In this sense, an evaluation can provide data that can lend further support to a disability claim, but wouldn’t necessarily show up on an MRI or the results from other types of medical testing.

However, while these evaluations can be useful, they also have certain limitations that are important to consider.  As with Functional Capacity Evaluations (FCEs) the examination is truly just a snapshot—the data is based on your functioning on a specific day, for a limited amount of time, in a quiet and controlled testing room.

Generally, findings indicate that performance on tests of motor function, speed of cognitive processing, cognitive flexibility, complex attention, and memory are related positively to real-word success. However, some argue that these exams do not adequately take into account the fact that, in the real world, several executive functions (such as recognizing a task must be completed, starting a task, switching tasks, making needed changes, finishing a task, etc.) can occur simultaneously.  Further, the administered test may not indicate whether a subject was mentally exhausted after the test,[1] and thus may not provide any insight into whether the subject is able to sustain the same demonstrated level of executive functioning day in and day out.

While the administered tests are designed to be objective and produce results that can be extrapolated across populations, this is not always possible.  While a subject’s results should be compared with both population-based norms as well as specific patient populations for strengths and weaknesses, there can be gaps in normative data for certain age, educational, and intellectual ranges.[2]  This can be especially true for minority populations.[3]  Along these same lines, an evaluator may not take into account norms specific to doctors, or a doctor’s need for higher performance on certain tests (e.g. those for sensory-perceptual functions), when assessing whether a return to work is possible.

Excessive fatigue, medications, lack of motivation (sometimes due to depression), emotional distress, severe psychiatric conditions, serious medical complications, and illicit substances can also all impact the reliability of an evaluation.

Additionally, as we’ve discussed before in the context of Independent Medical Examinations (IMEs), a neuropsychological examiner selected by an insurance company may be presented as independent, but may not truly be so.  An examiner selected and paid for by a disability insurer may be more likely to report that a subject is “malingering,” trying to influence a test’s outcome, or not putting forth a true effort.

In our next post, we will further explain why an insurer might require a neuropsychological evaluation, and how these exams can impact a disability claim.

[1] Atif B. Malike, MD; Chief Editor, et al., Neuropsychological Evaluation, Medscape, http://emedicine.medscape.com/article/317596-overview, updated May 18, 2017.

[2] Id.

[3] Id. (citing Decker SL, Schneider WJ, Hale JB, Estimating Rates of Impairment in Neuropsychological Test Batters: A Comparison of Quantitative Models, Arch. Clin. Neuropsychol. 2011 Dec 15 [Medline].

Sources:

Atif B. Malike, MD; Chief Editor, et al., Neuropsychological Evaluation, Medscape, http://emedicine.medscape.com/article/317596-overview, updated May 18, 2017.

Neuropsychological Evaluation FAQ, University of North Carolina School of Medicine Department of Neurology, https://www.med.unc.edu/neurology/divisions/movement-disorders/npsycheval

Kathryn Wilder Schaaf, PhD, et al, Frequently Asked Questions About Neuropsychological Evaluation, Virginia Commonwealth University Department of Physical Medicine and Rehabilitation, https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0ahUKEwir3pKk__fUAhUBEmMKHenkDzsQFggoMAA&url=http%3A%2F%2Fwww.tbinrc.com%2FWebsites%2Ftbinrcnew%2Fimages%2FNeuropsych_FAQ.pdf&usg=AFQjCNG0Mv3o17ZrNmXuDN5ITUIh4fWYtA&cad=rja

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Do I Have to Keep Paying Premiums Even Though I’m Disabled?

If you are thinking about filing a disability claim, you are likely wondering whether you will be able to meet your monthly expenses if you’re no longer able to work.  You may have made a list of your necessary expenses, and likely included your disability insurance premium payments on that list, as your agent likely told you that your policy would lapse and you would lose your coverage if you missed a premium payment.  At this point, you probably started to wonder whether you still have to keep paying the premium after you file the disability claim, and if so, for how long?

The answer depends on the specific terms of your policy.  The paragraph that you’ll want to look for when you’re reviewing your policy is typically titled “waiver of premium,” but some policies address waiver of premiums as part of a larger section of the policy that discusses premiums more generally.

How Do Waiver of Premium Provisions Work?

Generally speaking, waiver of premium provisions state that your disability insurance company cannot charge premiums during periods of time when you are disabled.  A waiver of premium provision typically will also require your insurance company to reimburse you for premiums you have previously paid during your period of disability (i.e. the premiums that you paid while the insurance company was investigating your claim).

Waiver of premium provisions are included in most disability insurance policies.  If you are considering purchasing a policy that does not include a waiver of premium provision, you may have the option to purchase a waiver of premium rider.

Here is an example of a waiver of premium provision from an actual disability insurance policy.

————————————————————————————————————————————

Waiver of Premium Benefit

We will waive Premiums of this Policy from the date of Total Disability after the later of:

  • 90 consecutive days of Total Disability, or
  • The end of the Elimination Period.

When we approve the Waiver of Premium, We will refund any Premiums paid from the first day of Total Disability. Waiver of Premium will continue while You are receiving a Total or Partial Disability Benefit of this Policy or a Rider. When You are no longer eligible for Waiver of Premiums, You must resume payment of Premiums to keep Your Policy in force.

————————————————————————————————————————————

Under this policy, the waiver of premium provision requires you to pay premiums either for 90 consecutive days after you become disabled, or until the end of the elimination period (the elimination period is the number of days you must be disabled before you are entitled to benefits, and is usually noted on the first few pages of a policy).

So, for example, under this policy, once you have been disabled for 90 consecutive days, you no longer would have to pay premiums (at least until you recover from your disability, or your insurer terminates your benefits).  You also would receive a refund of any premiums that you paid for any period prior to your date of disability.

Notably, the waiver of premium provision above also requires you to be receiving benefits for the waiver to apply.  This is significant because, depending on the terms of your policy, in some cases you could be disabled but not receiving benefits.  For instance, your policy might have a foreign residency limitation that prevents you from receiving benefits if you are living in another country, even if you remain disabled. In such a case, you might have to resume paying premiums until you returned to the United States in order to keep your coverage in force.

The Takeaway

Timely and proper payment of premiums is critical, as a failure to pay premiums can result in you losing your disability coverage completely.  It is important to read your disability insurance policy carefully so that you have a clear understanding of when you are required to pay premiums, and when you are entitled to a refund of past premiums.

Most insurance companies will provide you with written confirmation that premiums have been waived, and it is best to keep paying your premiums until you receive this written confirmation, even if you think that you no longer have an obligation to pay premiums under the terms of your policy.  If you have questions about whether your insurance company should have waived and/or refunded premiums under the terms of your policy, an experienced disability insurance attorney can review your policy and explain your rights and obligations under your particular policy.

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Don’t Owe Your Insurer Money – Be Aware of Overpayment Provisions

In previous posts, we’ve discussed how insurance companies typically place caps on how much disability coverage a policyholder can receive.  For physicians and dentists, this typically results in monthly disability benefit amounts that are lower (and sometimes much lower) than the monthly income you would bring in if you were still able to practice.

In some cases, policyholders are able to supplement their income by working in another field, but this is only possible if your disability insurance policy allows you to work in another occupation.  Alternatively, your policy could contain a “no work” provision, which would foreclose this as an option. And some newer policies even require you to be working in order to collect disability benefits, so you don’t have a choice–you must find another job if you want to receive your disability benefits each month.

If you are not able to work in another occupation, due to the nature of your disabling condition and/or the contractual terms of your policy, you may be placed in a position where you must either cut expenses, find another source of income, or both.  If you find yourself in this unenviable position, or you are planning ahead and contemplating what you might do in this sort of situation, you will want to keep in mind that some policies–particularly employer-sponsored plans–can contain offset provisions, which allow the insurance company to reduce your monthly disability benefit if you receive additional income from certain enumerated sources.

What Types of “Other Income” Can Be Offset?

There are many types of income that your disability insurer might include in an offset provision.  Some examples include:

  1. Social Security benefits;
  2. Pension plans;
  3. Sick leave or a salary continuation plan of an employer;
  4. Income from other disability insurance policies;
  5. Retirement benefits funded by an employer;
  6. Workers’ compensation;
  7. Partnership or shareholder distributions; or
  8. Amounts paid because of loss of earning capacity through settlement, judgment, or arbitration.

The list above is by no means exhaustive and, again, you should carefully review your disability insurance policy for its specific list of offsets.

What are Overpayment Provisions?

If your disability insurance policy contains an offset provision, it will also likely contain an overpayment provision.  In most instances, if your policy contains an offset provision, your insurer will be able collect information about your income from other sources prior to issuing the disability benefit, and calculate the amount due accordingly. However, in some cases this is not possible.

For example, say you applied for Social Security disability benefits.  In some cases, it can take several years before a Social Security determination is made.  Then, at that point, if your disability claim was approved, you would receive a lump sum of benefits covering the time period from the date of disability you reported to the date your claim was approved.

This is where the overpayment provision kicks in.  If your policy has an overpayment provision, upon learning of the lump sum payment from Social Security, your insurer could potentially require you to pay the entire lump sum of benefits back to your insurance company (depending on the terms of your policy). This is because the lump sum payment represents several monthly payments you would have received over the relevant time frame.  If your insurer paid the full monthly disability benefit for those months and your policy has an offset provision, your insurer will likely ask for the Social Security benefits as payment for the amounts that should have been offset each month over that time period.

What Happens if You Cannot Pay Back the Overpayment in a Lump Sum?

If you are not in a position to pay back an overpayment in a lump sum, your disability insurer will seek to collect the overpayment amount in other ways.  One way is reducing and/or withholding future disability benefits until the full amount of the overpayment has been recouped by the insurer.  Your insurer may also work out a payment plan with you, initiate collection efforts against you and/or file suit to recover the overpayment.

The Takeaway

Offset and overpayment provisions can be particularly devastating if you are caught unaware and find yourself with considerably less income than expected, or an obligation to repay a large sum to your insurer.  When selecting a disability insurance policy, you should try and avoid these types of provisions if at all possible.  If you already have a policy, you should read it carefully, so that you are fully aware of any offsets that could occur and any overpayments that you could potentially be responsible for under the terms of your disability policy.

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Can You Move Out of the Country and Still Receive Disability Benefits?

The answer depends on what your disability policy says. Many people don’t realize that their disability insurance policy may limit their ability to receive disability benefits if they move out of the country. If you’ve ever wondered why claims forms ask for your updated address, one of the reasons might be that your disability policy contains a foreign residency limitation, and your insurance company is trying to figure out if they can suspend your disability benefits.

Foreign residency limitations allow disability insurance companies to stop paying benefits under your policy if you move out of the country. These limitations may be especially relevant if you have dual citizenship, you want to visit family living abroad, or you plan to obtain medical care in another country. A foreign residency limitation may also affect you if your disability insurance policy allows you to work in another occupation and you have a job opportunity in another country that you want to pursue. For instance, if you are a dentist and can receive disability benefits while working in another occupation, your insurance company may suspend your benefits if the opportunity you pursue is in another country.

Foreign residency limitations benefit disability insurance companies in several ways. By requiring you to remain mostly in the country while receiving benefits, these limitations simplify the payment process and reduce the possibility that insurers will need to communicate with doctors in other countries to manage your claim. They also make it easier for insurance companies to schedule field interviews and conduct surveillance of you to find out if you have done something that could be interpreted as inconsistent with your claim.

While these limitations are not included in every disability insurance policy, it is important to check if your policy—or a policy you are considering purchasing—contains a foreign residency limitation, because it could limit your ability to collect benefits later on.

Foreign residency limitations vary by policy. Here is an example of one foreign residency limitation from a Guardian policy:

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Limitation While Outside the United States or Canada

You must be living full time in the 50 United States of America, the District of Columbia or Canada in order to receive benefits under the Policy, except for incidental travel or vacation, otherwise benefits will cease. Incidental travel or vacation means being outside of the 50 United States of America, the District of Columbia or Canada for not more than two non-consecutive months in a 12-month period. You may not recover benefits that have ceased pursuant to this limitation.

If benefits under the Policy have ceased pursuant to this limitation and You return to the 50 United States of America, the District of Columbia or Canada, You may become eligible to resume receiving benefits under the Policy. You must satisfy all terms and conditions of the Policy in order to be eligible to resume receiving benefits under the Policy.

 If You remain outside of the 50 United States of America, the District of Columbia or Canada, premiums will become due beginning six months after benefits cease.

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This limitation highlights several details you should look for if your disability policy contains a foreign residency limitation, including the length of time you can spend in another country before your insurance company will suspend your disability benefits, whether you can resume receiving disability benefits if you return to the country, and when you will have to resume paying premiums if your insurance company suspends your disability benefits. Another important consideration is the effect a foreign residency limitation will have on your policy’s waiver of premium provision. Under the policy above, premiums will continue to be waived for six months after benefits are suspended. However, your disability insurance policy may have a different requirement regarding payment of premiums, so it’s important to read your policy carefully.

Here is an example of another foreign residency limitation from a different Guardian policy:

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Foreign Residency Limitation

We will not pay benefits for more than twelve months during the lifetime of this policy when you are not a resident of the United States or Canada.

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This limitation contains much less detail than the first limitation. For instance, it does not clarify how suspension of disability benefits will affect waiver of premium. If your disability policy contains a foreign residency limitation that does not discuss waiver of premium, you should look to your policy’s waiver of premium provision to find out when premiums will become due after disability benefits are suspended. The policy above also defines foreign residency differently than the first policy. At first glance, it may seem that you can continue to receive disability benefits any time you leave the country for twelve months or less. What the policy actually says, though, is that the insurance company will only pay benefits for twelve months that you are out of the country at any time you are covered by the policy. So, if you have received disability benefits for twelve months while living in another country—even if those months were spread out over several years—your insurance company will not pay benefits in the future unless you are in the United States or Canada.

As you can see, foreign residency limitations vary among disability policies. If you are thinking about leaving the country, it is important to read your disability insurance policy carefully first so that you understand how leaving the country may affect your ability to recover disability benefits.

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Disability Insurance: What Residents Need to Know – Part 4

Previous posts in this series discussed why residents should secure disability coverage sooner rather than later and examined some important terms and provisions to look for in choosing a disability insurance policy.  In this final post, we’ll be discussing some provisions that allow you to increase your monthly disability benefits.

As a medical resident, you likely will not be able to obtain a high amount of disability coverage at first, due to your limited income.  Consequently, it is important to look for a disability policy that offers a way to increase your benefits in the future, as your earning capacity and expenses increase.  You can also, of course, just purchase an additional disability policy if you want to increase your monthly benefit amount, but there can be certain advantages to building benefit increases into your disability insurance policy from the start.  For example, if your policy has a future increase option provision, you can typically increase the monthly benefits without undergoing any additional medical underwriting (which could otherwise result in exclusions being added to your policy if you have recently suffered from a new medical condition).

Here are a few of the most common methods of increasing the monthly disability benefit of an existing disability policy:

Automatic Benefit Increase

The automatic benefit increase rider adjusts your monthly disability benefit on an annual basis to account for anticipated increases in income after you purchase your disability insurance policy.  The annual increases are typically for a term of five years, after which you will generally be required to provide evidence of your increased income in order to renew the rider.

Future Increase Option Rider

This policy rider guarantees you the right to purchase additional disability coverage at predetermined dates in the future without going back through the long and tedious process of reapplying for a disability insurance policy. These riders can be attractive because often no additional medical underwriting is required.  Most insurers will not allow you to purchase this rider after age 45.

Cost-of-Living Adjustment (COLA)

A COLA rider automatically increases your disability benefit amount by a certain percentage every year to account for increased cost-of-living due to inflation.

Assuming that you will not face a short or long-term disability until you are older is not a risk you want to take. An individual disability insurance plan is a key component in making sure you are financially stable in the event you are no longer able to practice medicine in your chosen field.  However, not all plans are created equal.   Take the time to evaluate your financial goals and look carefully at the disability benefits provided by the basic terms, provisions, and riders of the disability insurance policy you are considering.

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Disability Insurance: What Residents Need to Know – Part 3

In our previous posts in this series, we examined why residents should not wait to acquire disability coverage and discussed some key provisions to look for when selecting an individual disability policy.  In this post, we’ll be taking a look at a few more provisions you may want to look for when selecting a disability insurance policy.  More specifically, we are going to look at some policy provisions that can help you meet your monthly expenses in the event of disability, along with some policy provisions that can help you plan for your retirement.

Student Loan Coverage Rider

If you are like most residents, you have accrued a significant amount of student loan debt.  The time it takes to pay off student loan debt varies widely based on income and other expenses.  Many doctors must practice for several years before they are able to pay off all of their student loans, and student loan obligations can be a significant monthly expense to meet if you are disabled and no longer able to practice.  Although not as common as other riders, a student loan coverage rider allows policy holders to insure their student loan for an additional amount each month, on top of their disability benefits.

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 the monthly income you would otherwise be paying back to the insurance company.

Return of Premium

This provision, while not as common, entitles the policy holder to receive a refund of all premiums if he or she does not become disabled before the expiration of the policy term.  This can be appealing to residents, whose plans will be in effect for a long time.

Maximum Benefits

This important provision in a policy controls the period of time the insured is eligible to receive disability benefits.  Most plans pay benefits until age 65 or 67, some pay lifetime benefits, and others pay for only a limited amount of time, even if a claim is filed decades before the policy terminates.

Retirement Income

The majority of doctors under 40 list preparing for retirement as their top financial goal.[1]  There are several different disability policy riders directed towards this goal, including the following.

Graded Lifetime Benefit Rider:  This provision, based on its terms, extends some or all of your disability benefits past the normal end date of age 65 or 67.

Lump Sum Rider:  This rider provides for a one-time payment once the policy expiration age is reached.  Typically, policy holders must have received disability benefits for at least one year and the lump sum payment is typically a percentage of the aggregate sum of disability benefits received during the policy term.

Retirement Protection Insurance Depending on the insurer, this may be offered as a rider or a stand-alone policy.  If you become disabled and your claim is approved, your insurer will establish a trust for your benefit, where disability benefits are deposited and invested (similar to an employer-sponsored 401(k)), with funds likely becoming accessible after the age of 65.

Our next post in this series will discuss the importance of choosing a plan where disability benefits increase over time.

[1] 2015 Report on U.S. Physicians’ Financial Preparedness, Young Physicians Segment, American Medical Association Insurance, https://www.amainsure.com/reports/2015-young-physician-report/index.html?page=5.

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Disability Insurance: What Residents Need to Know – Part 2

In our previous post, we looked at how important it is for residents to have a plan to protect themselves financially in the unfortunate event they become disabled.  In this post we will address some critical terms to look for when comparing potential disability policies.

Perhaps the most important provision in your disability insurance policy is the definition of “Total Disability.”  For physicians, dentists, and other highly specialized professionals who have invested both years and hundreds of thousands of dollars in their careers, a policy that defines “Total Disability” in terms of your inability to perform the specific duties of your “own occupation” (as opposed to “any occupation”) is critical.  If your policy defines “Total Disability” as being unable to work in “any occupation,” it will be much more difficult to establish that you are entitled to benefits, in the event you suffer from a disabling condition.

In addition to knowing and understanding your policy’s definition of “total disability,” it is also crucial to know how working in another profession is treated by your disability insurance policy.   For instance, if you happened to be an oral surgeon with an essential tremor, you may no longer be able to operate safely on patients, but you may still be able (and want) to teach. Alternatively, if you happened to be a physician who did not take steps to increase your disability coverage to match your increases in earnings, working in another capacity may be the only way to maintain your lifestyle in the event of disability.  Consequently, it is also important to know if your policy will allow you to work in another capacity and still collect disability benefits.  Along those lines, here are a few other provisions you will want to watch out for:

No Work Provisions

These provisions mandate that you cannot work in another field and still receive disability benefits.  This can be problematic if you do not have sufficient disability coverage to meet all of your financial needs.

Work Provisions

These types of provisions require you to work in another occupation.  This, of course, can make it impossible to collect on your disability benefits if your disability prevents you from working.

In our next post we will look at how you can select a plan that grows with you over time, as both your financial obligations and income change.

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Disability Insurance: What Residents Need to Know – Part 1

As a medical resident who is just starting out, you have likely heard about disability insurance, but you may not know a lot about what it is, and why it is important.  In this series of posts, we will be discussing a few things that every medical resident should know about disability insurance.

In this post we will look at the likelihood of disability, and discuss how you can begin to protect yourself now and in the future.  In subsequent posts we’ll address some of the key provisions to look for in a disability insurance policy, ways to make sure your policy meets current and future expenses, and ways to increase your disability benefits over time, as both your earning potential and financial obligations expand.

Likelihood of Disability

As a resident, you are beginning what will hopefully be a long and successful career as a physician.  The possibility of suffering either a short or long-term disability is probably the last thing on your mind, especially if you are still young and healthy.  However, the American Medical Association (AMA) reports that 60% of surveyed physicians have a colleague who has sustained a disability accident or injury.[1]  A Social Security Administration report shows that it is significantly more likely that a worker born in 1996 will become disabled during his or her career than die,[2]  and just over 1 in 4 of today’s twenty-year-olds will become disabled before they retire.[3]

Protection Against Disability

The majority of young doctors under 40 are married, have children, are homeowners, and 75% report that they are their family’s primary breadwinner.[4]  Young doctors also face substantial student loan debt, totaling around $166,750, on average.  With a resident’s salary averaging just $50,000 a year,[5] it can be tempting to put off adding the additional expense of an insurance premium.  However, with most young doctors having less than $50,000 in an emergency fund [6], it’s never too early to start planning to protect your family and provide for care in the unfortunate event you can no longer practice.

While many residents and doctors choose to take part in disability plans offered by their employers, these plans will often not provide adequate coverage, and any disability benefits you do receive will likely be taxable. In contrast, an individual plan provides coverage that is yours as you move from your residency and through (potentially) many different employers. Individual plans also typically allow you to adjust your disability coverage as your income potential grows.[7]  However, not all individual policies are created equal and it is important to carefully choose a disability insurance policy.

In our next post, we’ll examine some key provisions to be aware of when shopping for an individual disability insurance policy.

[1] Robert Nagler Miller, Residents: Your disability insurance coverage may fall short, AMA Wire, April 4, 2017, https://wire.ama-assn.org/life-career/residents-your-disability-insurance-coverage-may-fall-short

[2] Johanna Maleh and Tiffany Bosley, Disability and Death Probability Tables for Insured Workers Born in 1996, Social Security Administration, Office of the Chief Actuary, Actuarial Note, No. 2016.6, October 2016.

[3] You, disabled?  What are your chances?, The Council for Disability Awareness, 2015, http://www.disabilitycanhappen.org/chances_disability/

[4] 2015 Report on U.S. Physicians’ Financial Preparedness, Young Physicians Segment, American Medical Association Insurance, https://www.amainsure.com/reports/2015-young-physician-report/index.html?page=5

[5] Kathy Kristof, $1 million mistake: Becoming a doctor, CBS Money Watch, Sept. 10, 2013, http://www.cbsnews.com/news/1-million-mistake-becoming-a-doctor/

[6] 2015 Report, Supra.

[7] Miller, Supra.

[8] 2015 Report, Supra

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