Why Did My Claim for Long-Term Disability Benefits Get Turned Down?
We’ve talked about long-term disability insurance (LTDI) as an excellent tool for doctors and other professionals to guard against income loss in the event of an injury, illness or other disabling condition. We’ve talked about the need for LTDI and the different types of policies one can purchase. One aspect of LTDI we haven’t touched on yet is the possibility that you’ll purchase a policy (through your employer or on your own) and pay your premiums diligently over the years, only to have your benefits turned down when you actually need them. Today, we explore the different reasons insurance companies give for rejecting LTDI claims and what you can do if you think your application for benefits was wrongfully denied.
Reasons LTD Claims Get Denied
Long-term disability insurance is meant to provide replacement income to policyholders who become unable to work due to an injury or illness. Most LTDI policyholders are higher-income earners such as doctors or business executives. Insurance companies might, therefore, scrutinize each claim very closely before agreeing to start paying benefits on these high-dollar claims. Some of the reasons insurers deny claims are:
They dispute your condition – The insurer might say you are not disabled under the terms of the policy. It’s important to clearly understand how the policy language defines disability and to make sure your doctor knows this as well. Sometimes, using the right language and providing the right form of documentation are crucial to getting approved for benefits.
They dispute your inability to work – Hand-in-hand with disputing the severity of your condition is a disagreement over whether you are disabled from working or not, a key facet of LTDI. It’s important here to know what type of LTDI insurance you have and whether it is “own occupation” or “any occupation.” If you have “own occupation” coverage, you should be covered so long as you cannot perform your particular job or profession. “Any occupation” coverage, on the other hand, is much broader. This latter type of coverage is cheaper to get, but your disability must keep you from taking on just about any kind of work. A frequent problem for surgeons and medical specialists is that insurance providers do not fully understand your profession, leading to disagreements about the extent of your disability under “own occupation” policies.
Insufficient documentation – Expect the insurance carrier to request copious amounts of documentation from you, your doctor and your employer regarding the nature and severity of the disability, work duties, and more.
Inaccuracies in the insurance application, claim form, or other documents or statements – By requesting multiple forms of documentation, the chances increase that statements made from one document to the next can be made to look inconsistent, incomplete or inaccurate. These inconsistencies might be innocent mistakes or needless quibbles, but they confuse the situation and delay the eventual provision of benefits.
Undisclosed pre-existing condition – Depending on the nature of the condition, the provider might claim an undisclosed preexisting condition is to blame for the current disability, triggering an exclusion in the policy.
Denials May Be Good Faith or Bad
It’s reasonable to expect the insurance company to demand proof before paying a claim; this is typical of insurance providers throughout the industry and not limited to LTDI policies. On the other hand, the more cynical minded among us might think the reasons given for denial are a pretext or pretense hiding the true motive, which is simply to avoid paying an otherwise valid claim. It’s important to know that the insurance company does not hold all the cards in these situations. You have the right to be treated fairly, and there are ways to ensure that you are.
First of all, the insurance company must give an explanation when they deny a claim; a general or blanket denial is no good. Make sure you get that explanation in writing and examine it closely. Is it in line with the documentation you provided, the terms of the policy, medical science, the facts of your case? Are they disputing your doctor’s diagnosis or prognosis? An insurance lawyer can help you parse the insurance company’s explanation and analyze even the most obtuse policy language.
In the case of LTDI, a delay can be just as bad as a denial. If you are out of work, you need those benefits now. The insurance company might be stalling and delaying – through repeated documentation requests, for instance – in hopes that you will give in and accept whatever they offer, even if it is not the full benefits you are entitled to. Be on the lookout for failures to respond, delays in communication, and repeated demands for documentation. Is the organization simply that inefficient, or is something more nefarious going on?
An insurance lawyer can be of help in this instance as well, as state law probably requires the insurance company to act promptly on your claim. In California, companies have 15 days to acknowledge receipt of your request and respond to your inquiry. They should accept or deny your claim within 40 days, and also update you on your claim’s status every 30 days while it is pending. Once accepted or settled, benefits should be paid within 30 days.
If you think your claim was wrongfully denied, the insurance company will have a process for you to appeal the denial internally and obtain a higher level of review. If your claim is still denied after completing the insurance company’s required steps, you could bring a lawsuit in court if you believe the company is acting in bad faith or otherwise violating your rights under the policy. This process can take some time, so it is important to start as soon as possible and stay on top of it. The benefits you bargained for are too important to give up on.
