Insurance companies evaluate short-term and long-term disability claims in five steps: they read the policy terms, review the medical documentation, compare your medical restrictions and limitations against the duties of your occupation, sometimes obtain their own examination, surveillance, or investigation into social media postings, and continue monitoring after approval. There are two critical things to keep in mind: 1) A diagnosis alone never establishes disability; the evidence must show that your condition prevents you from performing your occupation; and 2) a conclusory statement as to your disability from your doctor is insufficient; the doctor must provide a rationale for that conclusion and your doctor’s opinion must be consistent with the medical records and test results.
Key Takeaways
- Insurers decide claims on the policy language, the medical evidence, and your occupational duties, not on a diagnosis alone.
- The insurer can require an examination by a doctor it selects and may review surveillance and social media.
- The insurer may have a physician on its staff or hire an outside physician to review your records and verify your disability
- Approval is not the end; insurers continue monitoring and can terminate benefits later. Also, even if there is no medical improvement, a change in the definition of disability or a policy limitation may result in the termination of benefit payments
- Claims supported by objective evidence are approved faster and with less friction.
- If the claim is denied, a claim appeal is the decisive stage in either reversing an unfavorable decision or making the record needed to prove disability in court.
Key Steps in the Insurers’ Disability Claims Evaluation Process
1. Review of Policy Provisions
Evaluations of both short-term and long-term disability claims always begins with a review of the specific policy provisions related to the claimant’s disability and any exclusions or limitations that may be applicable. Such terms include consideration of the definition of disability, waiting periods before benefits commence, benefit amounts; i.e., a percentage of income or a fixed benefit amount, exclusions for pre-existing conditions or other exclusions that may relate to the cause of the claimed disability, and other relevant provisions.
Related Article: Why Do Disability Claims Get Denied?2. Medical Documentation
In addition to certification of disability from the claimant’s treating doctor, the insurance company will usually require the claimant to submit additional medical documentation such as office visit notes, test results, and other relevant information related to the claimant’s diagnosis, treatment, and functional restrictions and limitations.
3. Review of Occupational Requirements
In deciding on whether to approve or deny a short-term or long-term disability claim, the insurance company will evaluate the physical and mental duties of the claimant’s occupation and compare such requirements to the medical information that has been collected in order to determine whether the medical findings impair the claimant’s ability to perform the duties and responsibilities of their occupation and on a regular and consistent basis.
A diagnosis alone is never enough to establish disability unless the condition has resulted in an impairment of the claimant’s ability to perform the physical or mental duties of a particular occupation. An example is someone who has been newly diagnosed with Parkinson’s disease. The condition may ultimately progress and result in a disability but when initially diagnosed, the limitations would likely only have a minor, if any, impact on a claimant’s ability to work.
4. Other Issues That Go Into a Disability Assessment
All short-term and long-term disability benefit plans contain provisions that grant the insurance company the right to have the claimant examined by a doctor of its choosing. That does not mean the insurance company will obtain such examinations in every case, but in some situations, the insurance company is only able to get the information it needs to evaluate a claim by hiring a doctor to perform an evaluation. Such assessments will typically involve a physical examination, review of medical records, and other tests to determine the extent of the claimant’s disability and their ability to work.
Claimants should not automatically assume the examiner will be hostile and is hired to give the insurance company a basis to deny the claim. However, claimants should be wary and when attending an examination requested by insurance companies, they should note any hostile behavior by the examiner and any variation or deviation from the type of exam their treating doctor typically performs.
The insurance company may also conduct video surveillance to determine whether claimants are engaged in activities they claim they are unable to perform. Surveillance is costly, though, and rarely yields results that serve as the basis for a claim denial. Surveillance may only be conducted in the open, and it is an invasion of the claimant’s privacy rights for an investigator to use a high-powered telephoto lens to peer into the claimant’s home. Nonetheless, if the claimant’s back yard is visible to others, it is not unlawful to videotape claimants performing activities such as gardening in their yards.
Social media has also become an important investigative tool for disability insurance companies. Claimants should therefore be careful about what they post or what their friends post about them to avoid an insurance company misconstruing the activities the claimant is actually performing.
There is a popular myth that there is rampant fraud in disability insurance claim. That myth is patently untrue since it would require a massive conspiracy to submit an illegitimate claim to a disability insurance company. Therefore, claimants should not assume that their claims will automatically be viewed with suspicion so long as their doctors have provided evidence confirming their disability.
5. Ongoing Monitoring
Once someone is approved to receive either short-term or long-term disability benefits, the insurance company will typically require ongoing monitoring to ensure that the claimant’s condition has not improved and that they remain eligible for benefits. Such monitoring involves collection of reports from the claimant and from the claimant’s treating doctors at periodic intervals so that the insurance company can determine whether the claimant is getting better, worse, or has achieved maximum medical improvement. For chronic conditions, the frequency of such reporting is reduced after a period of time when it becomes apparent the claimant’s condition is unlikely to improve.
Why Claims Get Denied After Initial Approval
Even after a claim has been approved, it may subsequently be denied if the claimant gets better. However, even if there is no improvement, the insurance company may conduct a file review which results in a finding of insufficient objective evidence or if the insurer conducts surveillance or a social media investigation and asserts that the revealed activities are inconsistent with the claimed limitations. Thus, it is very important for claimants to keep regularly scheduled medical appointments and undergo recommended testing to prove the disability is still medically supported.
As mentioned above, benefits may also be terminated based on a change in the definition of disability from one that is based on being unable to perform your regular occupation to one that requires an inability to perform any occupation, or if the disabling impairment is one that falls within a policy limitation.
What to Do When the Denial Letter Arrives
For claims subject to the ERISA law (employer-sponsored benefits), the denial letter will advise you of your right to appeal the decision. Appeal rights are often given even if ERISA does not apply. An appeal is an opportunity for you to perfect your claim, and it may be your only opportunity since you may not be allowed to introduce new evidence in court if the appeal is denied. For that reason, it is advisable to hire a lawyer experienced in handling disability benefit appeals who will know what evidence is needed and how to present that evidence. There is no obligation to hire a lawyer for an appeal, but a claimant seeking to appeal on their own may commit an irreversible error that could negatively impact a future lawsuit.
How Discretionary Clauses and the Standard of Review Affect Your Claim
Another reason why it is advisable to hire a lawyer experienced in handling disability benefit appeals is because the governing insurance policy may include language that affords the insurance company a significant advantage if the appeal is denied and you choose to litigate the case. Such language is known as a “discretionary clause”: it is a provision in the policy granting discretion to the insurance company to interpret the policy and make benefit decisions.
Based on Supreme Court precedent, such language triggers a standard of judicial review in court known as the “abuse of discretion” or “arbitrary and capricious” standard of review. In lay terms, what that means is that you not only have to prove that the insurance company’s decision was wrong; you also must prove it was unreasonable. That heightened standard means that evidence must be collected and arguments made sufficient to prove your disability with near certainty and which will be nearly impossible for the insurance company to challenge.
Understanding the STD and LTD Claims Evaluation Process and How to Improve Your Chances of Success
Overall, the process of evaluating long-term disability claims can be complex and time-consuming, both for claimants and for insurance companies who need to ascertain whether a claim is valid. However, both claimants and insurance companies are working toward the same goal – that valid claims get paid. And most claims do get paid – promptly. It is important for claimants to carefully review their policy and to provide as much detailed medical documentation as possible to support their claim, especially test results such as x-rays, MRIs, blood tests, and other objective proof. Claims that are well-supported by objective proof of loss are likely to be approved more quickly and with less bother and hassle so that the claimant is able to focus on their health and not be distracted by ongoing requests from their insurance company.
Frequently Asked Questions About How Insurers Evaluate Disability Claims
These are the questions claimants ask most often about the evaluation process. Each answer is general; your policy language controls.
How long does it take the insurance company to decide a disability claim?
Short-term disability decisions often come within days or weeks. For ERISA long-term disability claims, the insurer generally has 45 days, with up to two 30-day extensions under the ERISA claims regulation. For more detail, see how long it takes to get approved for long-term disability.
What do insurance companies look for when evaluating a disability claim?
Four things drive the decision: the policy terms, the medical documentation, the duties of your occupation, and whether the medical findings prevent you from performing those duties. A diagnosis alone is never enough, and the more objective proof in the form of test results that can be provided, the likelier it is that a claim will be promptly approved.
Why would my claim be denied when my doctor supports it?
Because the United States Supreme Court ruled that insurance companies do not have to give deference to treating doctors’ opinions, insurers often rely on file reviews by doctors who never examine you, and they may deem the objective evidence, such as test results and imaging, insufficient even when your treating doctor’s support is unequivocal. The way to challenge such a denial is to offer additional proof showing your treating doctor’s opinion cannot be questioned.
Can the insurance company make me see its own doctor?
Yes. All policies give the insurer the right to obtain an examination by a doctor it chooses. Attend, be accurate, and note anything that differs from how your own doctors evaluate you.
What is a discretionary clause and how does it affect my claim?
A discretionary clause gives the insurer authority to interpret the policy and decide claims, which leads courts to review a denial deferentially instead of deciding the case fresh. Whether your policy contains one, and whether your state permits it, can shape the outcome of a lawsuit.
What should I do if my claim is denied?
Do not give up. Instead, you should appeal. For ERISA-governed (employer sponsored) claims, you generally have 180 days to appeal, and the appeal is usually your last chance to add evidence to the record a court will see. Building that record is the single most important step.
