Can You Cancel Long-Term Disability?
Statistics show that 25% of today’s 20-year-olds will be out of work for an entire year at some point in life. Even with these odds, some 51 million working adults in the U.S. are without disability insurance.
Fewer than half of private employers offer long-term disability (LTD) policies as part of a benefits package. Private coverage is also available from disability insurance carriers like Hartford, Unum, MetLife, Cigna, and Lincoln Financial.
Say you do have to miss work due to a disability, insurance companies often find ways to cancel your benefits, but what if you decide to cancel an LTD policy? Is there anything stopping you legally or administratively from doing so?
For all your disability questions and concerns, contact me at Victor Peña Law PLLC. Located in Fort Lauderdale, Florida, my firm handles cases in any city throughout the country.
What Is Long-Term Disability Insurance?
As mentioned briefly above, LTD policies are sometimes employee-sponsored and sometimes purchased by individuals, who can then transport these policies from job to job and not potentially lose coverage if employers change.
Typically, an LTD policy will cover about 60 percent of your lost wages while you are out on disability and unable to perform your job duties. However, these policies all contain what is known as an elimination period, which is like a waiting period before your benefits can kick in.
Elimination periods can range from 30 days to a year or more, depending on the policy. The shorter the period, the higher the premium, generally speaking. If you have employer-based LTD coverage, you need to check the plan’s details.
If you have no private or employer-based coverage and you become disabled, the Social Security Administration (SSA) sponsors a program called Social Security Disability Insurance (SSDI), you have to wait until you are disabled to see if you qualify. SSDI only approves applicants who are facing a disability of 12 months or longer, or even death.
Reasons an LTD Policy Can Be Canceled
Most LTD policies are guaranteed renewable, meaning the insurance company cannot cancel you so long as you pay your premiums or your employer quits paying, but things change when you need the benefits under the policy.
Say you do develop a condition, physical or mental, that prevents you from working, and your LTD plan approves your benefits. Several months in, you suddenly get a notice that your benefits are being canceled. What happened?
Generally, there are several reasons insurers, whether private and employer-sponsored (the same companies often underwrite both), cite for canceling your plan, including:
Not Being Truthful in Your Application: If you lie about your condition, the insurer will eventually find out, and you will be canceled, or at least have your benefits eliminated and a demand issued to return the funds.
Missing Deadlines for Paperwork: Insurers will often inundate you with requests and make various paperwork demands for a disability claim. If you miss a deadline in responding, you can be canceled.
Missed Doctors Appointments: During the course of your disability, if you stop seeing your medical providers on a regular schedule for checkups and treatment, the insurance company might conclude that you’re no longer disabled and cancel you.
Refusal to Undergo Medical Therapy or Treatment: Insurers will often prescribe certain medical treatments or therapies for your condition. If you refuse to follow the insurer's choice of prescriptions, insurer’s can cancel you as being no longer disabled.
Refusal to Accept an Independent Medical Exam (IME): Insurers will also often require you to undergo what is called an independent medical examination with a physician of the company’s choosing. This is a requirement, and if you refuse the IME, you likely will be canceled.
Failing to Apply for SSDI: Most insurance policies require you to apply for SSDI to offset the insurance company’s liability. If you fail to do so, your benefits can be stopped or canceled.
Acting in a Manner Not Consistent with Your Disability: Yes, insurers are known to spy on you in public places. Insurers will also check your social media accounts to see if you post any suspicious photos, such as frolicking at the beach or dancing in a bar. Insurers can use this surveillance to cancel you.
Reasons to Cancel Your Own LTD Plan
Circumstances in your life may change, and you decide you no longer need disability insurance. Maybe you are nearing retirement age and figure you are good to go until that time, or perhaps you just received a windfall inheritance that can cover all your needs.
You may be switching jobs and cannot take your plan with you, so you drop out of that one and sign up for another one at your new job or purchase a policy from a private insurer to cover you.
Canceling an LTD Plan
Before you cancel, you need to consider all the consequences. Perhaps you are in a situation where an LTD policy is no longer necessary, but if not and you cancel, should you want to apply for a new policy later on, you will have to undergo a further medical evaluation, and your premium may be higher.
If you have a private policy, you can simply stop making payments and your plan will be canceled in about 31 days, or you can call your agent. Sometimes you will be asked to submit a form.
If you are on SSDI, you can withdraw your application at any time, but you will have to repay any benefits you have received.
How Legal Counsel Can Help
If you run into trouble with your LTD provider – whether insurers cancel or cut your benefits – contact Victor Peña Law PLLC immediately. Employer-based policies are covered by federal legislation known as the Employment Retirement Income Security Act (ERISA), and there are legal steps we can take. If you’re covered by a private insurer, you still have rights under state and federal law.
Located in Fort Lauderdale, Florida, my firm handles cases nationwide, including clients in Los Angeles, Seattle, New York City, and Chicago.