Can my insurance company cut off my short-term (STD) and long-term (LTD) disability benefits after they have already been approved
When an individual suffers from an injury or disability that prevents them from working, they can apply and receive approval for short-term or long-term disability benefits. These are typically offered through an employer’s group benefits policy but are also available through an individual’s private insurance.
Getting approval for STD and LTD, however, is only half the battle.
We’re going to cover the details surrounding STD and LTD, how insurance companies determine when to cut off your benefits, and whether there’s anything you can do to make sure you don’t lose your benefits
What’s the difference between STD and LTD?
There are generally 2 types of disability insurance: short-term disability and long-term disability. As their names suggest, the main difference between these two types of insurance claims is the length of time you are anticipated/approved to be receiving the benefits.
STD benefits usually cover a higher percentage of your salary if you become unable to work for a variety of reasons – policies usually have their own terms and restrictions that may vary, but most cover a wide variety of illnesses and injuries. STD is also only available for a short period of time, typically up to 6 months. Unfortunately, STD can be more expensive for a workplace to carry out for its employees, making it an unviable option for many people throughout Ontario.
LTD benefits, on the other hand, can be available for a much longer period of time. Many individuals continue to receive these benefits until they reach the age of 65. Most long-term disability plans will cover 60% to 70% of your regular income.
Why do insurance companies cut off benefits?
There are generally 3 reasons why an insurance company terminates LTD benefits:
- The individual no longer meets the criteria for receiving LTD under the associated LTD policy.
- The individual is in non-compliance with the terms and provisions of the LTD policy.
- The individual has reached the policy’s age limit, which is typically 65.
Nothing can be done to keep your benefits from being terminated once you reach the maximum age limit on your LTD policy.
What about the other 2 reasons, though?
What many people don’t understand is that most LTD polices have two different tests to measure whether they meet the criteria for receiving benefits:
- The first test applies for the initial 2 years of the disability.
- The second test applies if you wish to continue receiving benefits after 2 years.
Generally speaking, in the first 2 years, the applicant must prove they are disabled, or incapable, of performing their usual duties on the job. After 2 years, the applicant needs to be able to prove that they are unable to do ANY job for which they are suited to by reason of education, training and employment history. While the occupation test sounds very rigorous to meet, it’s much more nuanced due to the fact that each applicant is judged based on their own context. That being said, it is still a much more challenging test to meet.
Unfortunately, many LTD insurance companies will try to cut off your benefits before you’re ready or able to return to work. If you’ve been terminated, you should not accept your insurer’s decision to cut off your benefits at first attempt. It’s critical that you obtain fast and accurate legal advice to avoid losing your benefits.
If the insurer’s position is without merit, that is without any reasonable justification, they are in breach of the policy. In this case, you can take legal action to enforce your rights under the breach.
What does this mean for you? If you receive notice from your insurer that your LTD benefits will end for a reason you can dispute, such as not meeting specific criteria under the policy or non-compliance with prescribed medical treatments, you have the right to take action immediately.
Contact us right away to discuss your options.