Can You Be Denied Long-Term Disability Insurance?

Long-term disability insurance provides a financial safety net, offering income replacement if an illness or injury prevents an individual from working. These policies protect against financial strain from a prolonged inability to earn a living. While many individuals secure this coverage to ensure their financial stability, the application process for benefits can be complex. Understanding the factors that lead to a denial is important for anyone considering or applying for long-term disability benefits. This article clarifies common denial reasons and outlines steps individuals can take in response.

Understanding Eligibility and Application Requirements

Eligibility for long-term disability (LTD) insurance requires active employment when the disabling condition arises. Policies specify income thresholds and other criteria for coverage. These policies aim to replace a percentage of an individual’s income, commonly ranging from 40% to 60%, when a qualifying injury or illness prevents them from performing their job duties for an extended duration.

The application process demands thorough documentation, including comprehensive medical records that detail diagnoses, treatment plans, and progress notes. Financial information may also be required to substantiate the income replacement aspect of the claim. Applicants must accurately complete all forms, ensuring every section is addressed and all necessary supporting documents are attached.

A fundamental aspect of any policy is its specific definition of “disability,” which outlines the conditions under which benefits are paid. This definition frequently centers on an individual’s inability to perform the “material and substantial duties” of their occupation. The wording of this definition can vary significantly between different policies, directly impacting eligibility.

The “elimination period,” also known as a waiting or qualifying period, refers to the time between disability onset and benefit payments. Elimination periods range from 30 days to a year, commonly 90 or 180 days. During this interval, the policyholder is responsible for their financial needs. Choosing a longer elimination period often results in lower premium costs.

Policies also differentiate between “own occupation” and “any occupation” definitions of disability. An “own occupation” policy provides benefits if an individual cannot perform the duties of their specific job, even if they are capable of working in another field. In contrast, an “any occupation” policy is more restrictive, offering benefits only if the individual is unable to perform any job for which they are reasonably suited based on their education, training, and experience. It is common for group policies, particularly those provided by employers, to initially use an “own occupation” definition that later transitions to an “any occupation” standard after a certain period, often two to five years.

Common Reasons for Denial

A frequent reason for long-term disability claim denials is insufficient medical evidence. This issue arises when medical records are incomplete, lack detailed diagnoses, or do not adequately demonstrate the limitations imposed by the condition. Insurers require comprehensive documentation that clearly links the medical condition to the individual’s inability to work. Brief doctor’s notes or the absence of objective medical test results, such as lab work or imaging studies, can significantly weaken a claim.

A common basis for denial is the failure to meet the specific definition of disability outlined in the policy. Each insurance policy contains precise criteria for what constitutes a “disabled” status. If an applicant’s condition does not align with these terms, the claim may be rejected. For example, if a policy employs an “any occupation” definition and the individual is deemed capable of performing another job, even one outside their previous field, benefits may be denied.

Pre-existing condition exclusions are frequent grounds for denial. Many policies prevent coverage for conditions diagnosed or treated within a specified “look-back period” before coverage began. If a disability stems from such a condition and occurs within an initial exclusion period (12 to 24 months), the claim might be denied. These clauses protect insurers from individuals seeking coverage only after developing a known health issue.

Incomplete or inaccurate application information contributes to denials. Errors, omissions, or misrepresentations during the application process can lead to claim rejection. This includes failing to provide timely notification, submitting insufficient documentation, or misstating financial details.

Failure to follow prescribed treatment plans can result in a denial. If an applicant does not adhere to recommended medical treatments, insurers may argue the individual is not actively working to improve their health. This can lead insurers to question the condition’s severity or the claimant’s willingness to mitigate its effects.

Insurers may deny claims based on financial misrepresentation or information inconsistent with the claimed disability. Investigations can uncover activities or financial data contradicting the claimed impairment’s severity. For instance, if surveillance footage shows an individual engaging in activities inconsistent with their reported limitations, the claim could be denied. A policy can also lapse due to non-payment of premiums, automatically leading to denial of subsequent claims.

The Denial and Appeals Process

Upon receiving a long-term disability claim denial, the initial step involves a thorough review of the denial letter. This letter should clearly state the specific reasons for rejection and outline the appeal process. Identify the policy provisions cited for denial and any technical issues mentioned.

Following this review, request a complete copy of the claim file from the insurance company. This file can be extensive, containing all documentation and communications related to the claim. Examining it helps pinpoint discrepancies or missing information that contributed to the denial, aiding in appeal building.

For employer-provided group policies, governed by the Employee Retirement Income Security Act (ERISA), claimants have a specific timeframe, often 180 days from the denial notice, to file an internal appeal. This appeal allows submission of new or additional evidence. The insurance company must issue a decision within 45 days, though a 45-day extension is possible with claimant notification and reason explanation.

The appeal should include comprehensive medical records, such as detailed diagnoses, treatment history, and specific statements from treating physicians outlining functional limitations. Opinions from medical specialists and vocational experts can further strengthen the appeal by providing expert assessments of the individual’s inability to perform their job duties or any other suitable occupation.

The appeal letter itself should be formal and precise, clearly stating the intention to appeal the denial. It needs to systematically address each reason for denial presented in the original letter, refuting them with the newly gathered supporting evidence. The letter should conclude with a request for reconsideration of the decision.

If the internal appeal process does not result in a favorable outcome, individuals with ERISA-governed plans must exhaust these administrative appeals before pursuing legal action in federal court. External review options, through state insurance departments, might be available depending on the policy and regulations.

Given the intricate nature of disability insurance policies, strict deadlines, and appeals process complexities, seeking assistance from a long-term disability attorney is beneficial, particularly after a claim denial. An attorney can guide through procedural requirements, assist in gathering compelling evidence, and ensure all necessary steps are completed correctly. Legal support is crucial because new evidence cannot be introduced once a case progresses to litigation, making the administrative appeal phase the final chance to build a complete record.