You have a medical condition that made you unable to continue working in the same career you once did. For some people, a disability can start as a repetitive stress injury. For other people, disability can begin in an instant with a traumatic injury of some sort. When you become unable to work your job because of an illness or injury, your long-term disability insurance helps protect you against poverty. However, many long-term disability options include clauses that limit what you can do once your claim for benefits gets approved. In some cases, you may not be able to work any job in the future.
Long-term disability benefits are held to a particular standard under federal law. The Employee Retirement Income Security Act of 1974 lays out specific standards for policies and offers a baseline level of protection for policy holders. When a policy is governed by ERISA, the person who holds the policy and receives the benefits gets protected from unfair termination or denial of benefits. That also means that ERISA guidelines apply to any appeal made. Those who seek legal intervention cannot have a jury determine the outcome. In that way, ERISA may benefit insurers as well as the insured.
Language in your policy is critical
A woman who contracted Lyme disease in 2000 while working as a pharmaceutical representative received ERISA long-term disability benefits. Starting in 2001, she received benefits from an extended disability benefits plan. However, in 2014, it came to the attention of the claims administrator for her policy that she was working as a dog trainer. She was working for pay and giving seminars. As a result, her benefits were terminated. Her policy had a clause stating benefits could be ended if the person receiving them was “engaging in an occupation for profit.” Her dog-training work was enough.
Although she filed a lawsuit in the hope of getting her benefits back, the courts found that the insurer had adequate documentation from surveillance to show she was working with some regularity. Her appeal got denied, leaving her without future benefits.
Will she be able to offset the loss of her disability income by training dogs and giving seminars? Her case highlights the importance of understanding your ERISA benefits and policy language.
For those who are receiving ERISA-governed long-term disability benefits, it’s critical to read and understand the requirements of the policy. Your insurance company will use any violation as a means to terminate your coverage. Just because your claim got approved doesn’t mean you can’t later have your coverage ended. Something that may not seem like a big deal to you, like sporadic income from training dogs, could prove sufficient to have your ongoing coverage terminated.