Everything you ever wanted to know about disability claims

Phase 1: Initial adjudication

The process begins with a confirmation of your client’s eligibility.

Group insurance eligibility begins after a waiting period, typically three or six months from the date of employment. If the individual becomes disabled before completing the waiting period, they will not be eligible for benefits, whether they have a bona fide disability or not.

The elimination period for short-term disability (STD), is the time that needs to elapse before income replacement benefits become payable. This can be anywhere from three to 14 days, depending on the cause of the disability. In the case of an accident or hospitalization, elimination periods can be reduced to zero days. Other cases can have longer periods.

Similarly, the qualifying period for long-term disability (LTD) is the number of weeks or days that must elapsed before LTD benefits become payable. This usually runs 17 or 26 weeks, however some go as high as 52 weeks.

If the benefit plan sponsor offers both STD and LTD coverage, the STD maximum benefit period, or the number of weeks of payable STD benefits, would match the qualifying period for LTD benefits. This enables continuous income replacement for those members who have a continuous period of disability.

The pre-existing condition exclusion limits coverage for a condition that causes disability within a defined period — typically one year from the start of benefits coverage. The exclusion applies when the covered person was investigated, diagnosed or treated for the condition in a defined period prior to that coverage beginning — typically three months prior to the effective date of coverage.

Your client must submit three forms.

1. The plan member’s statement documents the reason for the disability, the condition and its symptoms, their severity and how they prevent your client from performing their work. The member also provides information about the treatment that has been prescribed, their primary care physician and any other clinicians involved in their treatment.
2. The plan sponsor’s statement is completed by an employer representative and outlines the plan member’s disability coverage including date of employment, effective date of coverage, last day worked and provides information about modified work or other accommodations that may have led up to the individual’s work stoppage.
3. The attending physician’s statement. The disability contract typically requires that this form be completed by a licensed doctor which is often the individual’s primary care physician, if they have one.

Phase 2: The insurer’s claim decision

Once confirmed that the coverage is active and there are no contractual provisions that have not been met, the disability case manager will review the documents submitted to determine if the individual meets the contractual definition of disability.

There are three common definitions of disability. The condition may disable the member from performing the essential duties of their occupation, their specific job or any occupation.

The insurer’s adjudication includes review of all three of these forms. The disability case manager must understand the essential duties required for the member to engage in work, the impairments associated with the injury or illness and which of them interferes with their ability to perform their work.

As part of the review, the disability case manager conducts a telephone interview with your client. A phone call with the employer may also be done to help understand if there were any challenges in the individual’s performance of their job or any extenuating circumstances or incidents leading up to the work stoppage.

The disability case manager makes the approval decision. They consider the limitations or restrictions resulting from the injury or illness. How severe and persistent are they? Can your client perform essential duties for a portion of the day, or not at all? Can they perform some of duties, but not all?

They establish which duties are impacted and to what degree, and determine if those are essential duties. Could any meaningful work be done by your client?

Any limitations or restrictions that impact your client’s ability to perform essential duties are referred to as disabling impairments. This analysis forms the basis for an approval of the claim for whatever period recovery will take.

Additional considerations are made if the disability is the result of a chronic condition.

Phase 3: Ongoing claim management

Your client’s continued eligibility is determined through ongoing engagement. Case managers will ask for updated medical information and document progress.

There is typically a contractual obligation on your client’s part to participate in prescribed treatment and engage in the recovery supports offered by the insurer or recommended by clinicians. If your client fails to do this, they forfeit the continuation of their benefit payments.

There is no contractual obligation to abstain from travel, but there is an expectation that your client advise the insurer of travel plans, and confirm that they will continue to participate in their treatment while travelling.

Case managers will determine a goal — usually a return to work — and a recovery timeline for your client, based on the evidence on file.

If there is insufficient funding available to provide the care your client needs, the disability insurer will often fund that care to ensure recovery and resolution of the disability. This is overseen by the disability case manager who coordinates and monitors the interventions. These interventions need to be evidence-based, with a clear return-to-work focus.

Phase 4: Returning to work

Generally, there are three return-to-work options: to pre-disability job; pre-disability occupation with a different employer; or gainful employment in a different occupation.

When the time is right, your client is contractually obligated to actively participate in the return-to-work process.

If your client returns to their pre-disability job, temporary accommodations may be made by the case manager and employer. The return can be gradual, if the situation warrants it. That will follow a prescribed timeline that can be anywhere from two to eight weeks.

If your client chooses to leave their employer, the rehabilitation process can include support with resume writing or other upgrading skills while the treatment interventions are under way. Otherwise, the core steps in the return-to-work process remain the same.

The third option, in which your client seeks employment in an alternate occupation, sees your client’s case manager supporting transferable skills as well as physical and cognitive recovery. This includes vocational rehabilitation interventions that assess the education, training and experience of your client.

The disability case manager’s core mandate is to enable return to work whenever possible and feasible. Both aspects are key. Possible relies on physical and cognitive function; feasible, on the investment required for a rational employability outcome.

The measure of gainful employment may vary somewhat among insurers. Typically, the threshold for what’s considered commensurate earnings is guided by the LTD benefit rate (e.g., 60% or 66 2/3% of pre-disability earnings).

Disability management best practices assume an alignment of interests between the claimant, employer and insurance company. All involved want to see a successful return to work. Given the complexity of the process however, and the fact that your client has their health to deal with on top of all of this, they’ll value your help.