A Pragmatic Look At Filing A Disability Claim

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.

The Preamble

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.

The Checklist

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.

The Social Security Offset

This is a companion to two other pieces on this site, Disability Insurance Basics and A Pragmatic Look at Filing a Disability Claim. 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.

The following is a discussion of one of the most contentious issues connected with disability insurance, the practice of offsetting disability payments from government programs like Social Security against benefits paid by group disability insurance. Many people think they'll receive both SSDI and group LTD benefits, and are shocked to find different. Read on:

The Group LTD Offset Issue

Group LTD policies typically include offsets for Social Security Disability Income, Supplemental Security Income, state sickness programs, veterans’ benefits, private pensions and the like. There are seven things to say about offsets, and this posting is going to say them. I discuss the issue mainly in the context of SSDI, but the list of offsettable (a/k/a "deductible") sources of income usually includes all government programs, i.e., Workers Comp, and any pension plans private or public. One thing that’s not usually offsettable is benefits from privately-purchased individual disability insurance policies. Those benefits are typically paid irrespective of any other sources of income, and I’ve never heard of a government program or a Group LTD policy that reduces its payments on account of individual D.I. benefits.

What I have to say is on the blunt side, but I think it’s accurate. The fact that on this set of issues I'm on the side of the insurance carriers does not mean that I'm their p.r. guy. Fair's fair, and when it comes to offsets they are in the right. And for those who say that the insurance agent "told" them otherwise, well, I hope you’ve either got it on videotape or it was said in front of a whole lot of witnesses who were taking notes. Otherwise, what you were "told" + $1.50 will get you a tall coffee of the day at Starbucks.

First, your policy is a contract and its language governs. It's not about what you think is "reasonable" or "right." The insurance carrier is not your mom or dad or friend or minister or social charity or dispenser of truth, justice and the American way. The insurance carrier is a company that collects premiums and pays claims according to the terms of a contract known as an "insurance policy." It's about the contract. I say this so emphatically in hopes of heading off a bunch of wailing about the unfairness of it all.

People who don't like offsets can buy supplementary individual coverage. You never read that disability booklet they gave you when you were hired so you didn't know about any of this, you say? Not to put too fine a point on it, but whose fault is that, anyway? Of course, now it's too late for you to buy supplementary coverage, but it's not too late to tell your kids and your friends to read their disability booklets and think about supplementary coverage for themselves.

Second, if you do not have the contract language in your possession then you owe it to yourself to obtain it. You can do this by sending a certified letter to your former employer. Ask for a copy of the "certificate and summary plan description" of the disability coverage in effect at the time you became disabled. The SPD will answer the offset question, and just about every other question about the policy. In spite of my having just referred to that little booklet they gave you when you hired on, it is not adequate at this point. You need the SPD. You employer must provide it on request, so get it. Now.

Third, the typical employer-based LTD contract will offset for benefits provided by SSDI. The insurance company typically does not offset for cost-of-living increases provided by government programs, but it typically does offset government benefits (before any COLAs) provided to you and your children on account of your disability. From the insurance company's point of view, it doesn't matter whether the government pays you, your children or your dog, for that matter. As long as the government makes those payments on account of your disability, then all of those payments (including the kid's and dog's) are offsettable under the typical employer-based LTD contract. Like it or not, it's about the contract, remember? If you're thinking about how unfair it is, please see point #1 above.

"F" is for Fourth and for those F-ing lump-sum reimbursements. This is when, as a condition of being paid LTD, you apply for SSDI and eventually get a big check from the government representing back pay to the date of your disability. Your group policy says you've got to send that money to the insurance company. To add insult to injury, they call their past benefits an "overpayment," which I think just might be a plot to drive people to have strokes and heart attacks so they can quit paying you! What's next, a request to regurgitate the last two years of dinners because they were overconsumed with the overpayments? Sheesh!

Once you've climbed down from the ceiling about repaying the rich bastards at the insurance company, you might wonder whether, since SSDI is taxable, you'll be taxed on the lump sum that you never got to spend. By and large, the answer is no. Go to the IRS website and find Publication 915. If you use an accountant to do your taxes, mention it to that person. It gives all the details, but the short version is that the amount you pay back is usually fully deductible from your taxable income so it will probably be a wash as far as taxes go.

Fifth, if you had to hire an attorney to get the SSDI ruling, the insurance company typically pays the fee. The SSDI lump-sum will typically come to you net of the attorney's fee. In such cases, you pay back only the net award, which means the insurance carrier pays your attorney's fee. I say "typical" because there are some wrinkles, for example if you use a non-attorney representative or if you choose a lawyer that your insurance company won’t pay for. All of these things are discussed in the contract, which is yet another reason to get a copy of your SPD.

Sixth, even though the insurance carrier takes the lump sum, filing for SSDI was definitely in your interest. Let us count the ways. For starters, the insurance carrier usually doesn't take the cost-of-living increases, and over time those add up. Also, after two years on SSDI you become eligible for Medicare, which is a major benefit to people with chronic illnesses. And when you become eligible for SSDI, your Social Security retirement benefit calculation is frozen retroactively to the date of your disability. This stops the government from counting you as "unemployed" and cutting your future retirement benefits, which can make a huge difference over time. Bottom line: Just because it was in the insurance company's interest that you get approved for SSDI doesn't mean that it was a pointless exercise for you. Quite the contrary!

Seventh, I believe that your insurance company can't actually force you to write a check for the equivalent of your SSDI lump sum. The insurance carrier will ask you to write the check, or even to authorize an electronic debit from your checking account. Unless you have reason to believe they're going to cut off your benefits I generally think you should do so. But if push comes to shove, I believe they are limited to stopping your future benefits (often there's a minimum monthly amount that they'll still have to pay you no matter what, but it's typically a pittance) until the amount of your SSDI lump-sum has been fully paid off. However, the case law varies throughout the country, so before you rely on what I've just written you must check with an expert!

I am told that the retroactive repayment issue has recently become a hotbed for litigation. The issues are not only whether or not your carrier can require you to send them a check, but also whether it's legal for them to offset Social Security payments (both past and ongoing) made to dependents on account of your disability, even when it's in the contract. The cases get way into the tall grass, involving stuff like subrogation, actuarial data, state insurance commissions and astrological tables.

Caryn Montague will forget more than I will ever know about these issues. Besides being the moderator of the outstanding and invaluable Disability Insurance Forums website, she is a non-attorney disability claims consultant with a long and impressive background of insurance industry experience, knowledge and contacts. If I needed to know the latest scoop, she's where I'd turn.

And if you have a high tolerance for legalese, you could check this site or this site to see just how much ferment there is. However, I really caution people not to try to "play lawyer" on this stuff. When it comes to these issues, I am a very emphatic advocate of finding expert help. Wisdom is often a matter of not just knowing what you know, but of knowing what you don't know, and being willing to get help.

Disability Insurance Basics

This is a companion to two other pieces on this site, A Pragmatic Look At Filing A Disability Claim 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.

Get ready for a complicated discussion. I’m going to make this as orderly as I can, but when it comes to disability insurance there is no way to be simple. There are too many details to cover for this to be an easy read, so you're going to need to print it out and read it in sections -- more than once. I've written it in terms of multiple sclerosis, but the information here is broadly applicable.

So, roll up your sleeves. I’m going to start with a sort of checklist of simple, general statements.


IN GENERAL ...

Prepare for disability
If you have multiple sclerosis, there’s a strong chance that you’ll eventually be disabled. I looked up some numbers from the Census Bureau a while back, and they showed that two-thirds of women and four-fifths of men with MS are disabled.

I think those percentages are too high, by the way. For a variety of reasons, doctors are catching more early, mild cases of MS than they used to. Therefore, I think the percentage of MSers who will be disabled is a lot lower than the Census numbers would imply. That said, if you have MS you still ought to think about disability. Maybe you’ll be preparing for a war that doesn’t happen, but that’s far preferable to being caught by surprise.

Get insurance now, if you can
If you’re reading this because you’re worrying about symptoms but you haven’t yet told a doctor about them, the very first thing to do is to get as much disability insurance as possible. Why? Because once you’ve told a doctor about your symptoms, you’ve almost certainly made yourself off-limits to most disability insurance companies. They want to sell insurance to healthy people, not to sick people. So get on the horn to an insurance agent. Pronto!

A diagnosis is not a disability
You must have the disease and be unable to work according to the rules of whoever pays your benefits.

Your doctor must be on your side
When it comes to going on disability, your word isn’t enough. Someone else has to agree. One of them must be your neurologist, and another one should be your primary care doctor.

Read your insurance policy
When it comes to insurance companies and disability, forget about those "like a good neighbor" ads on TV. They’re not your family, or your friends. They’re financial companies that collect premiums and pay claims according to their contracts, which are known as insurance policies. You get what the contract says you get. Your need for the money is irrelevant, so don't expect the insurance company to pay special attention just because you need the money really bad.

A related point. If you become disabled, make sure to get a copy of your LTD policy. I'm not talking about that little booklet, I'm talking about the big kahuna. It is known as the "Summary Plan Description," or SPD, and it typically runs for about 20 or 30 pages of fine print. Ask your human resources department for a copy of the SPD for the disability coverage in effect at the time you became disabled. If they don't send it, then send them a certified letter asking for the SPD. Federal law requires them to provide you with this document upon request, and there are substantial penalties for non-compliance.

Social Security is an insurance policy, too
The only difference is that Social Security is funded by the taxpayers and administered by the government. When it comes to benefits and rules, it works just like an insurance company.

Get a lawyer
Most people hire lawyers when it’s too late to do any good. It comes from watching all those TV shows where the lawyer saves the day at the last minute. I am strongly in favor of seeing a lawyer before submitting any claim forms. Find someone who is experienced, diligent, and reasonably sympathetic. Always interview at least a couple of attorneys. Ask about the fees up front. Once you’ve agreed on the fees, pay them. These people have to eat, too.

My lawyer said he has the hardest time collecting when he got the benefits without ever going to court. Clients try to argue that he didn't do anything special. Have you ever heard anything so stupid in your life? Here's the deal, cheapskates: When you hire a lawyer you are hiring every case he ever worked on. And the best professionals regardless of what field they are in make it look easy. Pay your bill.

It’s O.K. to go on disability
If you’re guilty or embarrassed about going on disability, far be it for me to dictate your feelings. All I’m going to say is that, like all those handicapped parking spaces out there, disability insurance exists for the disabled. You’re not required to work until you drop dead. If you’re still worried, see a shrink. Pay cash and don’t give your real name. If you're still feeling guilty, try reading my essay on guilt.

Dry your tears, honey: Keep your wits about you
Now is not the time for emotion. It's time to read your policy and have frank discussions with doctors and lawyers, and to do it before you file your claims. When it comes to talking with the insurance company, the less said to them the better. You're much better off dealing with them in writing, as opposed to calling them up.

Oh, and about that lawyer. It is very much in your interest to keep him in the background. Don't go threatening your insurance company with a lawsuit. You think it will scare them? Come on, they have all kinds of lawyers on staff just looking for something to do. All it will do is slow them down while they triple-check everything and ponder what sort of idiot would think they'd be scared of a lawyer.


TYPES OF DISABILITY INSURANCE ...

O.K., now for the complicated stuff!

There are three major classes of disability insurance. Please keep the acronyms clear in your mind (or write ‘em in big, bold letters on your printout), because I’m going to be using them throughout and you don’t want to get them confused!

Social Security Disability Income, also known as SSDI
If you've been paying Social Security taxes, you're probably covered. The benefits vary according to how long you've been employed and how much you've been paying in Social Security taxes. There is no "means testing," meaning that if you're eligible you get SSDI regardless of how much other income you have. The only people not eligible for SSDI are those who haven't worked long enough, along with some state and local government employees covered by their own systems. Those who aren't eligible for SSDI or other programs should look into Supplemental Security Income, also known as SSI. That's a federal program for people who have little or no other income and not much by way of assets. It pays a pittance, but it's better than nothing.

Group long-term disability insurance, also known as LTD
If you’re working, there’s a good chance that your employer provides LTD, most likely through an insurance policy. Many employers also provide short-term disability coverage, either through a separate policy or as a consequence of sick-leave policies.

Individual disability insurance, which I will call DI
People who don’t have LTD sometimes also buy DI. Others who make a lot of money frequently buy DI to cover the gaps in LTD and SSDI.


THE TYPICAL WORKER: SSDI and LTD

Most people have a group LTD policy offered through their employer, and because they are working they are also covered by SSDI. For efficiency’s sake, I’m going to talk about SSDI and LTD together. This is because, at least financially, they usually work hand-in-glove. Here’s how it starts: You and your doctor decide you’re disabled. You resign from your job. You file a claim with your insurance company and with Social Security. And for the next several months, you don’t get a lot of sleep as you worry about whether your claims will be approved.

If you have typical LTD insurance, it will pay either 60% or two-thirds of your pre-disability earnings to a maximum level, often $5,000 or maybe $7,500 a month. Now here’s the kicker: Almost all LTD policies count your SSDI as part of the two-thirds of past earnings. This means your LTD benefits are reduced by whatever SSDI pays. Some people go crazy when they find out about that. But remember what I wrote above about reading your policy? If you had wanted more coverage, you'd have bought it.

You didn't know? Never thought about this stuff? Okey-dokey, but whose fault is that? When you started on the job they gave you a little booklet concerning your disability insurance benefits. You know, the one you tossed in the bottom of your desk drawer and told yourself you'd read someday? Yeah, that one. So if you're looking around for someone to blame because you didn't have enough insurance, might I suggest finding the nearest mirror?

When you file for LTD, your policy will require that you also file for SSDI. If you fail to do this, your insurance company will simply deduct your potential SSDI benefit from whatever they pay you. This is because the LTD policy really is insurance for the difference between SSDI and whatever percentage of your past income mentioned in the LTD documents.

Let’s imagine you filed your SSDI and LTD claims on, oh, January 1st. The insurance company will probably make its decision on your claim by March 1st or April 1st. If you’re really lucky the government will go that fast, too, but it’s quite possible that Social Security will deny your claim and give you the run-around. These run-arounds have been known to last for years on end. I know a guy who waited for just short of a decade. Let me hasten to add that this is rare. Really rare -- although if the Republicans get away with squeezing Social Security like they want to, maybe it will become less rare. Hard to say.

If you have LTD and if your insurance company has accepted your claim, guess what? If the government rejected your claim, LTD will pay the entire percentage of your working income specified by the policy including the government’s share. But there are some conditions attached. One is that you must appeal any government denial of benefits – with the insurance company paying for a lawyer to represent you. Secondly, if the government eventually decides in your favor and awards you back pay for the benefits that had been denied, that money belongs not to you but to the insurance company.

(Important: For complete detail about the offset issue, see The Social Security Offset posting on this website.)

Some people get really mad about sending the government’s back-pay award to the LTD carrier. These people conveniently forget who was paying the government benefits while they were waiting for their appeals to be heard. And they didn't read the LTD policy, and you know how I feel about people who don't bother to read their insurance policies. A side note: The back-pay award from Social Security is taxable, but a reimbursement to the insurance company is tax-deductible. In other words, it’s a wash. Bottom line: If you’ve been collecting LTD while waiting for SSDI, don’t spend the back-pay award. It’s not your money.

At this point, you might be wondering why you should have bothered to appeal a government benefit denial in the first place. The LTD carrier will pay the full amount anyway, so what’s the difference? Well, there are several answers. The first answer, of course, is that your LTD policy will require you to appeal. But there are two powerful reasons why it would be in your interest to appeal even if that requirement didn't exist. And there’s a third reason that’s less powerful at the moment, but still relevant.

You see, SSDI isn’t just about disability. There’s a five-month waiting period before you’re eligible for SSDI checks. Once you’ve been eligible for 24 months, you also qualify for Medicare. For an MSer and just about everyone else with an expensive, chronic disease this is a big, big deal. Medicare isn’t perfect, but it’s one hell of a lot cheaper than regular health insurance. And they can’t cancel you. The other powerful reason is that, once you’re declared disabled by Social Security, you’re treated as if you’ve retired. If not for that, the formula for calculating your eventual retirement checks would have considered you unemployed rather than disabled, and your future retirement checks would be cut way back.

The third reason to appeal a negative ruling is currently less powerful than the other two, but you never know what will happen. SSDI benefits are indexed for inflation. LTD benefits rarely are indexed, but LTD will not keep cutting its benefits to counteract SSDI’s inflation adjustments. As time goes by, this could matter more than you think! For example, let’s say you made $60,000 a year at the time you were disabled. Under a typical LTD plan, you’d get a total of $40,000 a year, which is $3,300 a month.

About half of that would come from SSDI, and it would grow with inflation. Anyone remember the 1970s? Half protection is better than no protection. If you don't want your COLAs, please send me an e-mail and we can arrange for you to send me the money. I promise to give it to charity, my favorite being a certain distillery west of Edinburgh.


THE FINE POINTS OF LTD AND SSDI

Definition of disability
How are you judged to be disabled? First a general statement. As I write, people with MS are being treated pretty well by most LTD carriers and by Social Security. I haven’t heard about too many denials of claims. But you can never pay too much attention to this issue! Typically, SSDI will cover MSers who have serious mobility issues, heavy fatigue, or severe cognitive deterioration as documented by neuropsychology testing results. Your status will be reviewed periodically, ranging from every three years to longer.

LTD carriers will typically pay full benefits for two years of inability to perform the major duties of your own occupation. After that, they’ll see if you’re able to perform the major duties of any occupation for which you are qualified by training, education, or experience. Typically, you have to be realistically capable of earning at least two-thirds of what you earned when you were working, and that threshold is usually adjusted for inflation. Some helpful advice from a former insurance executive now disabled by MS: Make certain that all of your symptoms are documented by your doctors, especially fatigue.

Here's another little gem: When you're filling out the claim forms, you'll notice that they usually give you one or two lines to say what you did for a living. Now, the fact that they give you so little space doesn't mean you have to use so little space. Just write "see attachment" on that line. Write a separate statement that goes over your job duties in loving detail and submit it along with the forms. Have your lawyer look at it, and maybe run it by your doctor.

Waiting peroids
You start with your disability date, which is usually the day you stopped working. That's when the clock starts ticking on the waiting periods, which in private policies are also known as "elimination periods." LTD typically has an elimination period of 90 days. This is so you don't double-dip from other sources of income like sick pay or, for those who get it, STD or short-term disability coverage. Social Security pays benefits starting in the sixth full month of disability; in other words, it has a waiting period of five full months. Some LTD policies will say 90 days from your final paycheck.

Let's take SSDI and the five-month waiting period. Imagine your disability date is June 17th. June doesn't count as a full month, so your waiting period consists of July, August, September, October and November. Your first benefits are payable for December. Social Security (and lots of insurance policies of all kinds) pay one month in arrears. In this example it means you get December's check in January.

When it comes to DI (discussed in the next section), the elimination period is one of those negotiable features that goes into the price of your coverage. You can buy a 90-day elimination period, a 180-day elimination period or something even longer. Chances are if you're buying DI in addition to your other coverage, you can afford to wait a little longer for that first check. A lot of people buy a 180-day wait in return for a lower premium.

Taxation of benefits
80% of SSDI benefits are taxable at whatever the tax rates are at the time. LTD premiums are cheap, which is why employers are usually happy to offer the coverage. The benefits are taxable if your employer paid the premiums. But if you pay the premiums, or if you have been careful to declare their value as taxable income every year on your 1040 form, then your group LTD benefits will be non-taxable. The tax law has recently changed in such a way as to make it easier for companies to include the value of premiums in an employee's taxable income. I strongly recommend either paying your own LTD premiums or having your employer add the premiums to your income. Talk with your personnel department. It could be the smartest thing you ever did.

Appealing benefit denials
SSDI has a multi-stage appeal process. At the first stage, all claims are handled by a state agency. Denial rates vary quite widely, with some states being notorious for denying just about every application on the first try. Eventually, the appellate process reaches a federal level, and ultimately about half of all claims are accepted. I have never heard of an MSer whose SSDI claim was ultimately rejected. But it could take quite a while, and if you’re not getting LTD in the meantime it can be a rough road.

Lawyers who handle SSDI appeals are limited by federal law to charging 25% of your award. If you’re also on LTD it doesn’t matter; the insurance company will demand repayment of your back-pay award after the lawyer’s share has been deducted. If you didn’t have LTD, the 25% lawyer’s share comes out of your own pocket. I realize this is a hardship, but I urge people whose SSDI claim is denied to hire a lawyer. In fact, I think it’s a good idea to see a lawyer before filing it – but then I’m a cautious sort.

On the LTD front, appeals can get hairy, and I’m going to discuss those issues in the next section.


DI: THE GOLD STANDARD OF PRIVATE INSURANCE

You typically buy a set benefit amount, such as $5,000 a month. A healthy person in his or her 30s would usually pay an annual premium of one-third the monthly benefit. Thus, a benefit of $5,000 a month might cost $1,700 a year or so. Straight out of your own pocket. Expensive! No wonder it’s not very common, but DI is great insurance for a variety of reasons.

For starters, because you pay the premiums yourself the benefits are non-taxable. Secondly, they don’t affect benefits from any other source. If you are eligible for $5,000 a month in DI benefits, you can still collect your full SSDI, your LTD and be eligible for Medicare. Thirdly, there are multiple "riders" available, such as the ability to inflation-adjust or otherwise increase your benefits, or have the coverage not just to retirement age but for life. Fourthly, DI is typically "own occupation" insurance. If you’re a computer programmer and your MS prevents you from doing the duties of your job, you get the benefits even if you can – and do – wind up in an occupation with different duties.

Finally, because different laws cover DI and LTD, it’s a lot harder for a carrier to deny a DI claim than it is to deny an LTD claim. Take Aetna Insurance, for example. They sell LTD to employers and DI to individuals. There is documented evidence that Aetna told its claims reviewers to be tougher on LTD claimants because the law makes it a whole lot harder to appeal an LTD claim denial.

There are whole books written on the differences, but I’m going to boil it down. DI is covered by state law, and states are usually tough on insurance companies. Why? Because in most states, the insurance commissioner is an elected official. Under state law, if an insurance company acts capriciously or outrageously, the claimant can sue for the benefits not paid plus for punitive damages for the carrier’s "bad faith." LTD, on the other hand, is governed by a federal law that specifically prohibits bad-faith damages. No matter how outrageously an LTD carrier acts, you can only get what you were owed anyway. Not a lot to deter outrageous conduct, and the insurance companies know it.

Beyond that, state laws usually require DI carriers to come up with plenty of proof before overruling the opinion of your doctors with respect to your disability. Federal law is a lot easier on the insurance companies. Even if they wrongly deny your claim, that denial can be upheld if they can show that they acted "reasonably" when they made the error. Talk about a loophole big enough for a semitruck! But this is what the U.S. Supreme Court has decided. And they’re right to have decided it that way, because the federal law is clear on the matter.

The law, incidentally (accidentally?), is called the Employee Retirement Income Security Act, or ERISA. It has been denounced ever since it was passed in 1974 as a "reform." But no one can ever get it changed. Not that the insurance companies have lobbied Congress to keep it just as it is. Nope, nothing like that would ever happen in America. That said, however, I haven’t heard of MSers being denied too often under ERISA. But that’s no guarantee! Oh, by the way, when it comes to your doctors and their opinions, Social Security uses pro-claimant rules similar to those used by DI carriers.

I hope I haven’t lost you by now. I told you it was complicated, and I’ve only scratched the surface! Do you see why I hired a lawyer at the front end of the process to advise me on how to fill out the forms? Glad I did, too, because three insurance companies and Social Security accepted my claims on the first try.


SUMMARY & FINAL THOUGHTS

Get as much as insurance as you can
If you haven’t seen a doctor yet but suspect MS or something else that’s serious, the first person to call is a DI agent. Get as much individual DI as they’ll sell you. In fact, if there’s nothing wrong with you it’s a good idea to have DI. I had it for a decade before using it, and it took two months of benefits to get all my premiums back. (Oh, and don’t lie on an insurance form. They’ll find out.)

Read your insurance policies
With LTD, the booklet from the employer will be enough to give you a general idea of the coverage. A request for the full policy, while being your legal right, could serve as a tip-off that something’s wrong. Employers have been known to fire people if they think a serious medical issue is coming up! But once you go out on disability, make sure to obtain a copy of the Summary Plan Description of the coverage in effect at the time of your disability.

Start a medical file
Save all doctors' notes, reports, and copies of MRI films and other test results.

Make sure your doctors document your all of your symptoms
Especially fatigue. You can help by making a one-page, bullet-point list and giving it to your doctors at every visit.

Don’t cut your work hours
Do not drop back to a part-time schedule in hopes of being able to stay on the job. All you’ll accomplish is the reduction of your future disability income. If it turns out you can work part-time in the future, you can return to work and your LTD and DI policies will likely make up a bunch of the difference between your former earnings and your part-time income. Now, doesn’t that sound better?

By the way: If you have one of those high-pressure jobs where you work 60 hours a week, keep something in mind. Disability policies tend to say that you’re disabled if can’t work 40 hours. They don’t insure your ability to work like a dog.

Pay attention to the tax issue
Either pay your LTD premiums yourself or declare your employer’s payments as taxable income so your benefits will be tax-free. Oh, do I ever wish I had thought about this!

Lose the emotion
Especially the guilt. Look, the MS is going to do what it will do. Filing a disability claim is about the money, not the disease! And do not, not, not call your insurance carrier crying about your desperate need for the money. Who do you think they'll stiff-arm first, a person who's on the brink of bankruptcy and can't fight back, or someone who is calm, cool, collected and shows every sign of being about to sustain a long fight?

For more information
For Social Security info, go to their website for more information. When it comes to LTD and DI, this site is outstanding. People will often give you a bit of advice there on SSDI too. And one last thing: Everything I've written is the result of my experience and my reading on the subject. But I'm not a lawyer, an insurancce agent or a government official. So proceed at your own risk, because I'm not guaranteeing the accuracy of any of this.