This is a companion to two other pieces on this site, Disability Insurance Basics and The Social Security Offset. They're long and there's some duplication, but if you're looking at disability you won't regret reading them. You might want to print out all three and read them in bits and pieces.
You’re not disabled because you say you are. You need evidence that you have a condition that renders you disabled according to the terms of your insurance policy. For evidence of disability the first place to go is to your main treating physician. Get a sense of his or her experience in dealing with disability carriers and get a sense for whether your condition in any way lends itself to other points of view.
To deny your claim under an employer-provided LTD policy (the most common kind), the disability carrier needs to show a "reasonable" basis for discounting your doctor's opinion. Those of us who are disabled get really scared about that standard, but they can't quite simply snap their fingers and say you're not disabled. They've got to get the "reasonable" opinion from an independent doctor, although the definition of independence isn't all that clear to my knowledge. But it can't be someone directly on their payroll. Whether it can be someone who does nothing but work for insurance companies against claimants is another story.
So, if I were in your shoes I'd want this to be nailed down as tight as you can make it. The more "objective evidence" there is, the harder it'll be for them to deny the claim. If your treating physician (often a family doctor) is in your court, it never hurts to get a second opinion from someone who's highly credentialed, as long as the opinion is congruent with your main doctor's opinion. You've got to have doctors who are willing to go to bat for you. I've got doctors like that, and just for added assurance they've all got "Harvard Medical School" on their resumes. It’s not a bad strategy, if I may say so myself.
1. Your doctor's support for your disability claim will be crucial. Make sure he or she is on board. Be nice to your doctor(s). Really nice. Do whatever they tell you to do, and offer to pay them for any time they spend on your insurance paperwork. One thing you've got going for you is that a lot of doctors hate insurance companies with a passion that’s almost kind of scary. If your doctor thinks your case is for real and that you're not malingering, chances are you've got a pit bull in your corner. I’m not kidding about this: One of my doctors actually started licking his lips when I raised the subject of insurance companies. You know how the Republicans are always accusing the liberals of hating George Bush? Talk to a doctor about insurance companies and you’ll see the face of hatred.
2. A diagnosis is not a disability. You must have a condition that prevents you from performing the duties of your job.
3. Most disability insurance claims are made under the group insurance plan provided by an employer. Before you file your claim, get a copy of the "Summary Plan Description" of the disability insurance in effect at the time you were disabled. The little booklet they gave you when you started on the job isn't enough. You need the "SPD." Call your former employer's personnel department and request a copy. If they don't send it to you, send them a certified letter asking for it. They must provide this document upon request.
4. Read through the SPD cover to cover. Pay particular attention to the definition of disability section.
5. On the claim form, they will typically have a very small space -- one or two lines -- for you to describe your job. Do NOT feel compelled to limit yourself to a short description! Simply write, "See Attachment" on the form, and include a complete description of your job and your job duties. Back to point #1 above, be sure your doctor is fully on board with the impact that your condition has on your ability to perform the duties of your job.
6. Do as much of your communication as possible in writing -- and save copies of ALL paperwork related to your medical condition and your claim -- as opposed to calling the insurance carrier, chatting with them and relying on your memory and your perception of what you were told. If they do call you, keep your answers short and to the point. Take notes, and in the friendliest possible way let them know you're doing it. Remember, however nice they are on the phone this is not a friendly chat. It is a structured exchange of information.
If you say something like, "Well, maybe it's not that bad and maybe I really could work," you could be in for real trouble. If they ask you when you think you could be back to work, you should answer, "I don't know." If they ask you whether you want to go back to work, say, "It's impossible to answer without talking to my doctor." Don't feel compelled to fill in silences in a conversation!
Here's a real claim-killer: THEM: "I can imagine that the stress of all this is really getting to you." YOU: "It sure is! Honestly, I wonder if all the worrying about it is what's making it impossible to work." That's an invitation to them to classify your disability as "mental" and therefore subject to the two-year limit for mental conditions found in most employer-provided group policies.
So remember: Short, literal and to the point. Save the babbling for someone else.
7. Do not feel guilty for filing a claim. Insurance is there for a reason. You are not obligated to drag yourself to work when you're unable to do the job.
8. Be extremely cautious before considering any sort of part-time work, especially before your claim is approved. All this will do is allow the carrier to base your disability benefits on a lower earnings base. If you might want to work part-time, first get the disability claim accepted. Then give it some time. And then, if you still want to work part-time, study your policy's provisions on what is often called "residual disability."
9. Keep it simple and low-key. There is some irony in this advice, given how complicated the whole thing is. What I'm trying to convey is that you should methodically go through the process step-by-step in the standard fashion. Other than my advice in point #5 above, try not to depart from the forms. Be straight with everyone. This is no time to be clever or creative. Don't engage in "doctor shopping." Don't find some naturopath, osteopathic doctor, chiropractor, nutritionist, tax protester or whackjob shaman to diagnose you with (my personal favorite) six different self-reported neurological diseases.* In line with #8 above, don't shift your activities into some other occupation. Don't move away while your claim is under review. Don't start calling the insurance company every week ranting and raving about this or that.
Why? Because you don't want your claim to attract an extra level of scrutiny. Claims examiners have two piles: The easy pile and the hard pile. If at all possible, you want your claim to land in the easy pile. Those are the ones that get approved fast and painlessly. The Japanese have a saying: The nail that sticks up gets hammered down. I'm thinking that they must have a lot of experience with insurance claims.
A corrollary is: Don't get greedy by trying to somehow arranging to double-dip when the rules don't allow it, or to work (above or under the table) and collect benefits. Or to file a bad back claim without it interrupting your weekly golf game. An old Wall Street saying applies here: Bulls win, bears win, pigs lose. Insurance companies are a lot like the telephone company: They look a lot dumber than they actually are.
(* As in, "I have Chronic Fatigue Syndrome, Migraine Headaches, Irritable Bowel Syndrome, Fibromyalgia, Fasciculations and Lyme Disease. How can those cruel bastards at the insurance company call it a mental disorder and limit my benefits to two years?" My response? "As much as I believe in telling the truth on the claim form, it might not have been such a good idea to mention that your symptoms appeared after the alien abduction.")
10. Have no illusions. Your insurance company is a financial institution, not a social service agency or a friend. They are not in business to do "the right thing," but rather to administer a type of contract known as an "insurance policy." It's not their job to dispense mercy, understanding or fairness, or to base any part of their decision on how badly you need the money. It is their job to live up to the contract. It's all you can expect, but you should expect it all. Oh, and along those lines, no matter how precarious your financial situation don't let them know about it. It will only weaken your bargaining position if there's a dispute.
11. Be prepared for the offset. If you're covered by a typical employer-provided insurance policy, you will be required to apply for Social Security disability as a condition of receiving full insurance company benefits. And if Social Security rejects your application, you will be required to appeal the rejection – typically at your insurance company's expense. If you win on appeal, you'll be required to reimburse the insurance company for the full amount of your Social Security back-pay award.
There is much more to say on the offset issue, but for now the important thing is this: It's (almost certainly) part of the contract. Which brings up #9 above. The insurance company is a financial institution that administers a contract. You get what the contract says you'll get, not what you consider "fair." Most people don't realize that an employer-provided disability policy typically pays the difference between Social Security disability and a percentage of your past employment income, usually 60% or 66%.
And if Social Security provides extra money for your kids as the result of your disability, that will also typically be deducted from the insurance company benefits. As long as it's coming from the government and it's paid on account of your disability, it's usually deductible. But remember, I'm only describing the typical policy, and you will need to read the details of your SPD to be sure.
(Note: I am informed that the offset issue is a hotbed of litigation lately. For more information, see The Social Security Offset posting on this website.)
12. If you're filing under an individual insurance policy, there are three main differences from what I've written above. The first is that instead of obtaining and reviewing the "SPD," you will need to review the policy that you purchased. The second is that most individual disability insurance does not have an offset provision of the sort discussed in #10 and therefore this will not likely be a consideration with respect to your individual policy claim. Thirdly, if you’ve got an individual policy it’s harder for them to argue with your doctors. The insurance company can still send you to that "independent" doctor for another opinion, but the legal standard for denying your claim is almost always higher than if your claim is under a group LTD policy. That’s the short version. The long version involves law books.
13. Lawyers: The Pros and Cons. If you’re worried that the insurance company might try to deny your claim, or if you're just really nervous (like I was) about the whole process, I highly encourage hiring a lawyer. It will cost $500 to $1,500 and is almost always money well spent. However, and this is really important, don’t be too quick to sign a contingency fee agreement. You’ll probably use the lawyer to do nothing more than read your policy, advise you on the process and review your applications. Valuable as this can be if you find a smart, experienced and diligent lawyer, it’s not worth a big retainer and 30%-50% of your benefits. It’s worth an hourly fee, most likely $150 to $250 an hour.
Also, keep in mind that once your insurance carrier knows you’re represented by legal counsel they’ll send most or all of the correspondence to your attorney, who then will wind up as (another) gatekeeper when it comes to information. I think it’s better to start with your lawyer in an advisory role as opposed to a representational role. If your claim is denied and you have to appeal your case or go to court, that’s usually the time for your lawyer to disclose his involvement to the insurance company -- and for the two of you to negotiate a contingency fee agreement.
Contingency fees in private cases range from 25% to 40% depending on the amount of the claim at issue. If it's a Social Security filing, government rules cap the lawyer's fee for representation at 25% of your backpay. Social Security appeals are discussed further in point #2 of the SSDI discussion below.
14. Lawyers and fees. If all the lawyer ever does is help you with the paperwork and explain things, don’t think that he or she didn’t earn $100 or $200 an hour. The best outcomes are when a lawyer helps you get what you want without anyone ever knowing you had one. When you hire an attorney you are paying not just for the person’s advice to you, but for all the expensive schooling and all the experience gained from all the cases he/she ever worked on. The best professionals make it look easy, but that doesn’t mean it was. So shut up and pay the bill. And no, I’m not a lawyer.
15. There are also disability claim consultants who aren’t lawyers. Some of them are great, but as with lawyers you need to be careful to examine a consultant’s experience and to pay close attention to fee arrangements. Don’t be squeamish about fees – not with lawyers and not with consultants. No one works for free. Discuss it.
16. Here is an excellent summary of court cases on some of the most commonly discussed and disputed legal fine points surrounding disability claims.
Social Security Disability Income (SSDI & SSI)
Thus far, thus guide has applied mainly to disability claims under private insurance. Social Security Disability Income is operated by the U.S. government and has a set of rules all its own. Briefly, an SSDI claim is similar to individual insurance in that they must pay attention (but not automatically defer to) your treating physician. If you can prove SSDI’s doctor’s wrong, you can sustain an appeal. On the other hand, SSDI’s definition of disability is more rigorous than most insurance companies. People who are capable of doing menial work can have their claim denied for that reason.
1. A multi-layered system. The first application for SSDI/SSI goes to a state agency that applies Social Security guidelines to your case. Approval rates vary widely by state. I am told that many Southern states have high rejection levels. Some areas within states have much higher rejection levels than other areas, and some places within a state take a whole lot longer to make decisions than other places in the same state. If your claim is rejected at the first level you can appeal it twice, eventually reaching a federal Administrative Law Judge. Overall approval rates for SSDI/SDI claims are 55%.
2. Lawyers. If you get rejected on your first try, you should hire a lawyer who specializes in Social Security Disability cases. If you also have a group policy from your employer, the insurance company will almost always pay for that lawyer. Be certain that you use your own lawyer, as opposed to one named or recommended by the insurance company. If you use their lawyer your claim details might be shared with the insurance company later on, and you could even find that their lawyer steers you toward a "mental and nervous" claim that then allows the carrier to invoke the standard two-year limit on group policy benefits.
3. Back pay. A SSDI/SSI claim can take anywhere from six months to four years to settle, depending on how many appeals it takes. If yours takes, say, three years to settle, you’ll get back pay to your date of disability plus five full months. If you used a lawyer in your appeal, he will almost always get 25% of your back pay. If you did all of this while your group policy was paying benefits, then you’ll be liable to pay the net back pay to your insurance carrier. But you will be able to keep the inflation increases that were tacked on during those three years.
4. Elimination period. All disability insurance, including SSDI/SSI, has an elimination period, i.e., a period of time when no benefits are payable. In Social Security, it’s approximately six months. You are eligible for SSDI/SSI benefits after five full months of disability. Example: You’re disabled as of January 12. Five full months start in February and run through June. The first month you’re eligible for benefits is July. You are paid one month in arrears, so if you were approved right away your first payment would show up in August.
5. Benefit level. It’s based on a percentage of your average earnings during the 10 years prior to your disability. (I think it’s about one-third, capped by the average of the various maximum income levels subject to Social Security tax during those 10 years). Once you’ve been approved for disability, the minimum benefit level is about $600 a month. If your earnings didn’t justify $600 a month or if you never worked outside the home, part or all of your benefits will be paid under a program called Supplemental Security Income, or SSI.
6. Children’s benefits. You can get up to an additional 50% of your benefits if you’ve got dependent kids. The money is sent to you, but you’re required to spend it for the care of the kids. Some people think they have to set up a separate savings account for the kids’ benefits, but that’s not true. You do have to keep records of how the kids’ share is spent, but you can allocate a portion of things like food, utilities and housing costs to the childrens’ benefit.
7. Inflation and Taxes. SSDI/SSI adjust your benefits for inflation every year. It’s a nice feature, and group disability benefits do not offset for the inflation increases. 80% of SSDI/SSI benefits paid to you are taxable. Typically, if you are living on nothing but Social Security you’ll be liable for no federal taxes, but if you get other taxable income (like taxable group benefits) it’ll be a different story. Any back payments from Social Security that are forwarded to insurance companies are untaxed. See IRS Pub. 915 for details.
8. Offsets. The average group disability policy offered through employers offsets for SSDI/SSI, along with any other government benefits such as veteran’s disability, worker’s comp or state disability benefits. Group offsets will include all money paid on account of your disability, meaning the children’s benefits. It’s in the contract. Remember what I wrote about insurance companies not being friends but rather administrators of contracts? If you had wanted additional income in case of disability, you should have read your group policy and gone out and bought supplemental insurance. So if you’re looking for someone to blame, find the nearest mirror.
9. Medicare. Once you’ve been collecting SSDI/SSI for two years, you are eligible for Medicare, which now includes the insanely complex Part D prescription benefit. Make no mistake about it, Medicare coverage is a big plus. If someone ever figures out Part D, please let me know.