How to Handle a Disability Claim
Workers get hurt all the time, both on the job and off. In 2009, the Bureau of Labor Statistics reported 1,238,490 injury or illness cases in the United States requiring days away from work to recuperate. In addition, according to the Social Security Administration, a 20 year-old worker has a 30 percent chance of suffering a disability before reaching retirement.
If a worker gets injured or ill as a direct result of their job, that worker is entitled to workers' compensation, where weekly cash benefits and medical care are fully covered by the employer's insurance. However, if a worker suffers an unrelated illness or injury that specifically prevents him from performing his job—this is most often the case in a disability claim—the worker might be entitled to short-term or long-term disability benefits.
"Some of the top conditions [that compel people to apply for disability] are cardiac issues, diabetes, fibromyalgia, chronic fatigue, carpal tunnel, knee difficulties, and difficulties with prolonged standing," says Linda Nee, a licensed health consultant and disability claims expert based in West Newfield, Maine. "In essence, if an individual is unable to do the material and substantial duties of their occupation, by virtue of these policies, they are disabled."
Companies typically purchase group policies for disability insurance for their entire company; however, when the time comes to address an employee's disability claim, it's important to be familiar with the process and what the employer needs to do. This guide is concerned with the employer's duties and responsibilities when dealing with an employee disability claim.
How to Handle a Disability Claim: Preparation
"If you're working for a company, it's likely your employer has purchased a policy for you and is paying premiums on the policy, so that if you get sick and you can't work, that you have income replacement," Nee says.
If you have a start-up company and can't afford group insurance at the moment, notify your employees and advise them to purchase private insurance, if they so choose. However, most companies purchase group insurance policies from the major insurers in the U.S., such as Cigna, Unum, Aetna, MetLife, and Prudential.
When considering which insurance policies to buy—short-term, long-term, or both—be realistic but cautious. Only buy what you think your company needs. Consider the size of your company and the routine amount of danger posed by your office environment. For instance, if you are an office of cubicles whose greatest potential threat is the stapler, short-term insurance may be all you need; however, if your company works in an outdoor environment or your employees handle both deadly snakes and tarantulas, for example—it's probably worth shelling out for that long-term insurance.
While companies purchase and own these insurance policies, employers cannot control who receives disability benefits. A third party administrator—whichever insurance company you chose, e.g. Aetna—is responsible for reviewing claims and delivering decisions.
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How to Handle a Disability Claim: Application
Know which types of benefits your affected employee qualifies for. If the injury, illness, or disability is severe enough, your employee may qualify for Social Security Disability Insurance.
"Social Security [Administration's] definition of disability is that you have to be unable to work at any job at a sustained basis—five days a week, for hours per day," says Stephen Jackel, a disability lawyer based in New York City. "It's different from the private disability insurance; Social Security is broader. You have to be unable to work at any job, not just your past job."
But if the injury or illness is less permanent and more temporary, the employee must complete an application process, requiring the aid of the employer or HR rep, to be scrutinized by the insurance provider.
Insurance providers require three separate forms to consider employees for disability benefits: One form must be filled out by the employee in question, another by the employer, and a third by a doctor or practicing medical professional.
Successful applications for short-term disability can expect to receive payments within 14 days; decisions regarding illness, on the other hand, normally take longer because insurance companies need to collect and confirm evidence that the illness is grave and substantially disabling.
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How to Handle a Disability Claim: Continuation/Termination
Long-term disability insurance covers employees between two to five years, or until the employee turns 65; after this time period, an employer can choose to retain or terminate the person's employment. On the other hand, employees with a short-term disability can only enjoy benefits for any 12 weeks in a 12-month period. During those 12 weeks, the Family and Medical Leave Act requires employers to keep the employee's job and continue to pay benefits.
"That's very helpful to employees who are having surgery and have to be out, and employees who know they're going to be coming back to work, because they can come back to their job and they'll have no lapse in benefits," Nee says.
Once those 12 weeks are up, employers then contact the employee and ask if they are able to return to work. If the employee cannot return by the end of those 12 weeks, employers can fire the employee with the federal government's blessing. Employers are not required by law to continue to pay benefits after those 12 weeks, and most of them choose not to. For the employers, this marks the end of the disability claims process.
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How to Handle a Disability Claim: A Note on Appealing
Employees won't always win their disability claims. While the employer need not be present for the subsequent tug-of-war between the employee and the insurance company, you can certainly help advise your employee about what to do next.
Appeals are generally handled administratively. Should the employee want to appeal, advise your employee to contact the state's office of disability services. Individuals have 180 days to appeal their disability claims decision; however, going a step further and taking the claims to court—particularly for small claims—is strongly discouraged.
"Many insurance companies just sit back and drain the funds of middle class America because they know that these policies are not very good," Nee says. "The laws do not support the insured. In addition to all of that, unless the policy is greater than $3,000 to 4,000 a month, attorneys will not even take the cases. They just won't do it. It's not worth their while, they're not money makers."