What are Long-Term Disability Benefits?

Most common questions and their answers

  1. What are long-term disability benefits?

Long-term disability benefits provide financial assistance to covered employees or self-employed individuals whose disability prevents them from working. Although there are some general aspects of these benefits, outlined below, the details are always set out in the employee’s insurance policy.

  1. Who is eligible for long-term disability benefits?

A person is eligible to receive long-term disability benefits if they: are covered under a disability insurance policy; were actively employed when they became unable to work due to disability; have a medical condition that makes them unable to perform the regular duties of their own job or the duties of any job; be disabled for at least three months or more; and meet all other requirements under their insurance policy.

  1. Who has disability insurance?

Some employers have group insurance plans for their employees which provide them with workplace benefits such as short-term disability benefits, long-term disability benefits, life insurance, medical and dental benefits, and vision benefits.

It is also possible for someone to have an individual disability insurance plan. To obtain one, it is necessary to enter into a contract with an insurance company, through a broker, and pay premiums. They are most common for self-employed individuals and business owners.

  1. What is a long-term disability?

Someone is qualified for long-term disability benefits if they are totally disabled. There are two tests used to determine whether someone is totally disabled. First, the individual is assessed as to whether they can perform the duties of their own job or occupation (i.e. their pre-disability job). The period of time in which this test is applied – sometimes called the “own occ” period – usually lasts two (2) years. Second, the individual is assessed as to whether they can perform the duties of any job or occupation for which they are reasonably suited (i.e. that they are qualified for based on their education, experience and training). The period of time in which this test is applied – sometimes referred to as the “any occ” period – begins when the own occ period ends. The point in time in which the first period turns into the second is known as the change of definition.

Therefore, long-term disability is not defined in terms of specific medical conditions but in terms of how, and the extent to which, a medical conditions interferes with one’s ability to work. Two terms are used: restrictions and limitations. A restriction is an activity that the doctor has advised one to refrain from doing. A limitation is an activity that one cannot do because one lacks sufficient physical/mental capacity. Some medical conditions that can restrict or limit an employee from performing job duties and so lead to an extended absence from work include chronic pain (e.g. arthritis), orthopedic injuries (e.g. broken leg), brain injuries (e.g. concussion), psychological illnesses (e.g. depression) and chronic illnesses and conditions (e.g. multiple-sclerosis).

The insurer may conduct surveillance (e.g. online searches) and medical review (e.g. having a medical consultant review the employee’s medical records) to investigate the claims of disability.

  1. How does one apply for long-term disability benefits?

An application for long-term disability benefits is a process that is started when the employee completes and submits the application forms. The employee can obtain the application forms from either their employer or insurance company. There are three different forms: one that the employee completes; one that the employer completes; and one that the attending physician completes. It is the employee’s responsibility to arrange for everyone to fill in the forms and to submit them.

  1. If an employee’s claim is approved, what are the parties’ rights and duties?

If an employee’s claim has been approved, the parties have a number of ongoing obligations. An employee’s duties are set out in their policy but generally include that the employee must: make reasonable efforts to recover (meaning that they be under the care of an appropriate physician and take the treatment recommended by the physician); make best efforts to participate in a rehabilitation program and a gradual return to work; make best efforts to obtain other benefits; advise of changes in their income; and advise of any changes in their health. An employer’s duties include: to act in good faith (such as by providing forms and filling in their sections); to respect the employee’s right to privacy; and to accommodate the employee who seeks to return to work.

  1. What are an employee’s options if their claim has been denied?

If an employee’s claim has been denied, he/she can seek to appeal the insurer’s denial. An appeal means that the employee is seeking to have the insurer’s decision reviewed and overturned. There are two main kinds of appeal. An internal appeal is a process that involves appealing the denial to someone higher in the hierarchy at the insurance company. It is less independent in that the decision-maker is the same entity as the one who made the initial denial. An external appeal is a process that involves appealing the denial to someone independent of the insurance company. Usually, this entails commencing a lawsuit in court. Sometimes, the employee’s policy provides that the appeal must be made through arbitration rather than court.

There are deadlines for appealing. The deadline for an internal appeal is set out in the employee’s insurance policy. The deadline for an external appeal is always two (2) years from the date of the insurer’s denial of. If the employee misses the applicable deadline, they are not able to appeal.

  1. How can an employee’s claim be denied?

An employee’s claim can be denied at any stage and for many reasons. A claim can be denied sometime during the application phase, and benefits can be terminated after an employee has already received them for a period of time.

Reasons for why an insurer might deny an employee’s claim include: that the employee’s illness or disability is excluded from coverage; that the insurance policy is null and void because the insurer discovered that the employee misrepresented or failed to disclose material facts in his/her insurance application; that the employee failed to pay insurance premiums; etc.