You’ve been receiving long term disability (LTD) benefits and have just received a letter from your insurance company stating that your benefits will be terminated at the two-year mark. The insurance company has sent you this letter because how total disability is defined in your policy changes at the two-year mark. The “two-year mark” refers to the two years after you became totally disabled from working in your occupation. Before you decide to take any action, it’s important to understand the definition of total disability before and after the two-year mark.
Before the “Two-Year Mark”: You cannot perform the essential duties of your own occupation (It does not matter where you are employed, rather the policy only looks at if you can do your occupation).
After the “Two-Year Mark”: For most policies the definition changes from being unable to perform your own occupation to being unable to perform the essential duties of ANY occupation for which you have the education, experience, and/or training. In some insurance policies, there may be a clause that further defines total disability to include your being unable earn a certain percentage of the gross income you were earning at the time of you became disabled.
Coming back to the letter you have just received from the insurance company a few months (typically 3-6 months) before the end of the two-year mark. This means the insurance company has determined that you do not fit under the second definition of total disability (“After the ‘Two-Year Mark’”). In other words, the insurance company believes that even if you cannot do your own occupation, you can work in a different occupation. As a result, you have received an advance warning that your benefits will stop at the two-year mark, or you might have received your benefits till the end of the two-year mark.
Let’s take a look at scenarios that will help better explain this.
Mark, a construction worker injured his knee on the job and the insurance company agreed he was disabled from his occupation as a construction worker because he could no longer lift heavy objects as he did before. At the two-year mark, the insurance company has now determined that Mark can work in a different occupation (e.g. a desk job), therefore he no longer fits the definition of total disability because the definition of disability changed after the two-year mark. But, a deeper look into this case reveals that Mark is unable to perform a desk job because he does not have the training, experience, or education that is required.
In Mark’s policy, there isn’t a percentage of income earned parameter and even if the insurance company does a transferable skills analysis and determines he can work as a greeter at a retail store, case law suggests that the amount of money he earns in the new occupation should be somewhat commensurate with what he was earning in his original occupation before his disability.
Therefore, given Mark’s training and anticipated pay as a greeter he may still be eligible to receive LTD benefits beyond the two-year mark.
Jane, is an advertising director for a large marketing company. Regrettably, she has been suffering from anxiety and depression which stems from family, financial, and other past mental and behavioural issues which have recently resurfaced. Her workplace has been somewhat of a poisonous work environment for a number of years. Almost 2 years ago, she stopped working when she could no longer continue working in this unhealthy work environment.
Six months before the two-year mark, Jane’s LTD insurance company advises her that she no longer meets the two-year change of definition. In other words, the insurance company believes that her education, experience and/or training will allow her to continue working in another occupation and possibly in a less poisonous working environment.
In Jane’s policy, there is a specific definition of total disability which states that Jane will be considered totally disabled if she is unable to earn at least 66.67% of her gross income at time she becomes disabled. Based on her gross income of $120,000 per year, the suggested work positions by Jane’s LTD insurance company are occupations that are more likely to pay her $40,000 to $50,000 per year and not the $80,000 per year (as stipulated in the LTD policy).
Therefore, Jane’s ability to continue to earn LTD benefits, even after deducting her wages from some other form of employment, allows her to continue to receive LTD benefits beyond the two-year mark.
When to Contact A Lawyer?
You should be contacting a lawyer as soon as you receive the denial letter, the two-year mark letter, or the change of definition letter from the insurance company. This will let the lawyer review your case at an early stage and determine whether to disagree or agree with the insurance company’s position. In most cases, the insurance company does have the evidence to substantiate its decision to terminate your LTD. Contacting a lawyer at this stage will also give them the lead time required to request and review your file, along with providing a preliminary opinion. So, when the cut-off date for your benefits arrives, your lawyer is in a position to start litigating or commencing an action against the insurance company. Waiting to contact a lawyer until after the cut-off day will cause even further delay in your ability to collect benefits as the lawyer will require time to request, receive and review your file from the insurance company as well as your health care providers.