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Friday, July 25, 2008

Senate Asks Disability Insurers to Turn Over Information About How They Handle LTD Claims

The New York Times is reporting today that Sen. Charles Grassley (R-IA), the senior Republican on the Senate Finance Committee, has sent information requests to 9 Disability Insurance companies requesting information about how they handle Long Term Disability ("LTD") Insurance claims. The 9 companies are Aetna, Cigna, Hartford, Lincoln (who recently bought Jefferson Pilot), MetLife, Prudential, Reliance Standard, Standard Insurance Company, and UNUM. The Senate is apparently investigating the common practice of having all LTD insurance applicants apply for Social Security, even though many do not qualify for Social Security Disability benefits.

Often, LTD insurance policies pay disability benefits when people cannot perform their own occupation, even if they can work in another type of job. This is commonly called "own occupation" coverage. However, Social Security requires that a person show they cannot work in other jobs too. Their system is based upon age, education and work experience, and for many that apply for Social Security Disability, they must prove there is no job they can perform. LTD insurance companies make people apply for Social Security Disability because their insurance policies usually allow they to deduct the amount Social Security pays from the LTD benefit they pay to their insured.

In my experience, each of the insurers which Senator Grassley is investigating have made people apply for Social Security, many of whom would never qualify. The Senator's investigation is geared toward determining whether these insurers are helping to create the huge backlog of cases at Social Security. What is worse, many people get Social Security Disability, and the insurance companies still deny their claims!

Copyright (c) 2008 by John V. Tucker and Tucker & Ludin, P.A. All rights reserved. Any content borrowed or referenced from another source is referenced by citation to the original source as noted in the text above.

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