Disability benefit plans are often structured to provide two different types of benefits. The first is for short term disability or often just refered to as STD, which typically provides benefits for the first 3-12 months of disability. After the conclusion of short term disability benefits, the claim is then transitioned for approval of long term disability benefits, also referred to as simply LTD. Often, the same insurer administers both the short and long term plan and the definition for eligibility of benefits is identical. However, many of our clients find that after the expiration of short term benefits, they do not continue to receive benefits and have to go through the approval process all over again to receive approval for their long term disability claim!
Unfortunately, this is a normal course of events. We find that even though a client has been approved as disabled under a short term disability plan, insurance carriers treat the long term claim as a new claim and require a new submission of new proof. One of the reasons we suspect that this transition is not “seamless,” (as may be promised) is that the employer funds short term benefits out of its own account, and for the benefit of its employees, whereas long term disability is funded with an insurance policy where the insurer is on the hook to pay benefits. Ordinarily, insurers have no allegiance to employees. Therefore, even though the definitions of disability are the same under the short and long term plan, it is more difficult to be approved for long term disability benefits.
As a result, when the claim is transferred to the long term disability unit, the insurance company may require new and additional attending physician and employer statements, updated medical records and claimant completed statements before it will evaluate the claim. This can cause a delay in long term disability benefits and even a denial of the claim, despite the fact that the same insurance company approved the disability claim just weeks before!