I recently reviewed a group Long-Term Disability (LTD) policy for a client. My client will be covered by the LTD policy, provided by his employer, when he begins a new job later this year.
He will also apply for his own individual disability insurance policy because of the high-quality, guaranteed coverage it provides.
Even though my client has no control over the LTD policy provided by his employer, we agreed it would be a good idea to review the policy to find out what type of coverage will be offered.
Our review of the employer’s policy showed that it contained many of the typical limitations of LTD policies in general, as well as some lesser-known limitations.
One of the lesser-known limitations of the employer’s group LTD policy has to do with the Elimination Period (EP).
You’re probably familiar with how a disability policy’s EP works. Basically, it’s the number of days at the beginning of a disability that are not covered.
Think of it as a deductible that must be met before benefits are paid, except the EP is measured in days disabled, not dollars. Most individual disability policies and LTD policies have either a 90 day or 180 day EP.
“Consecutive Days’ vs. “Interrupted Periods”
Some policies require a certain number of consecutive days of disability to meet the EP. Other policies allow non-consecutive, or interrupted periods, of disability to meet the EP.
My client’s employer-paid LTD policy requires that the EP be satisfied with 180 “consecutive days” of disability.
If you become disabled, … Your first thought will likely be, “When can I get back to work”?
The “consecutive days” requirement is a potential problem. This requirement could penalize you if you try to return to work after becoming disabled. It could cause some irritating delays when you’re trying to qualify for disability benefits.
How can the “consecutive days” method hurt you? Let’s assume you are a hard working doctor with a good work ethic, as most of my clients are. You want to work if you possibly can.
If you become disabled, the first thing you will likely think is not, “When will my disability benefits begin”? Your first thought will likely be, “When can I get back to work”?
If it’s possible to go back to work, you’ll likely do everything in your power to do so. You might miss a day or two of work at first, maybe a week or two, but if your health allows, you’ll likely be back to work as soon as possible.
But if you try to go back to work, even for a few days, then go out again, you will not be able to use the first period of disability to count toward your EP because it was not consecutive with the days you’re currently missing.
Meeting your EP with “consecutive days” could be especially difficult if you had multiple periods of missing work, going back to work, then missing work again.
Depending on your situation, it could take considerably more than 90 days of missed work to accumulate 90 “consecutive days” of disability.
The “interrupted periods” method allows non-consecutive days of disability to satisfy the EP. This is a much more favorable method for you.
Policies that use the “interrupted periods” method to satisfy the EP allow you to accumulate days of disability to meet the EP, even if they are separated by days of work.
However, there are some limits with the “uninterrupted periods” method. The EP must typically be met within a period of two times the length of the EP.
For example, if the EP is 90 days, you would have a period of 180 days to accumulate 90 days of missed work. If the EP is 180 days, you would have 360 days to accumulate 180 days of missed work.
With the “interrupted periods” method, it only takes 90 days of missed work to satisfy the EP.
You Want Your Money NOW!
The “consecutive days” method vs. the “interrupted periods” method can become very important at claim time.
Sometimes small things can make a big difference in the life of a disabled physician or dentist who is trying to satisfy the EP so he or she can get paid.
Clearly the “interrupted periods” method of meeting your EP is preferable to the ‘consecutive days” method at a critical time in your life when you and your family may be uncertain about what the future will bring.
Everyone who gets disabled wants to get paid NOW or at the earliest possible time. Having a disability insurance policy that allows for “interrupted periods” of disability to meet your EP is the best way to get paid at the earliest possible time.
My client has no control over his future employer’s group LTD policy. You may be in the same situation.
But even if you have no control over what type of policy your employer will offer, you can at least understand how that policy works so that you’ll be prepared if you ever get disabled and need to file a claim.
Assert Your Control
Ultimately, you can assert a certain level of control over your disability income by purchasing an individual disability insurance policy from a leading carrier for physicians and dentists. Most of those policies use the “interrupted periods” method of meeting the EP.