A common misconception among disability claimants is that you must apply for and receive short-term disability benefits to be eligible for long-term disability benefits. That seems logical but rarely is it true in practice. Most short-term and long-term disability plans are administered according to separate plan documents, and those plan documents usually do not condition receipt of one benefit upon receipt of the other. Meanwhile, failing to apply for long-term disability benefits is a costly mistake that could result in forfeiture of those benefits and dismissal of a subsequent lawsuit. This article will explain what steps to take to preserve your entitlement to LTD benefits if your STD benefits have been denied.
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What Happens If My Short-Term Disability Claim Is Denied?
If your short-term disability claim is denied, you can appeal that decision. However, regardless of whether you appeal, you should still apply for long-term disability benefits (assuming you anticipate remaining out of work). Most short-term and long-term disability plans are administered according to separate plan documents. It’s rare for one plan to condition receipt of benefits on another plan, but it does occasionally happen. For that reason, requesting the plan documents from your employer is an important first step in any disability claim.
If you appeal the denial of your short-term disability benefits and are successful (and the same company administers both your short-term and long-term disability plan), there is a good chance that company, on its own, will initiate a review of your eligibility for LTD benefits. However, because the outcome of any appeal is highly uncertain and because many long-term disability plans contain strict application deadlines, it’s best not to delay applying for LTD benefits.
How Do You Go from Short Term to Long Term Disability?
Ordinarily, if your short-term disability claim is approved and paid without incident, and the same company administers both your short-term and long-term disability plans, that company will initiate its review of your entitlement to LTD benefits halfway through the STD period. So, if your short disability plan provides for six months of benefits, and you anticipate remaining out of work beyond that date, your short-term disability claims adjuster will refer your claim for review by the long-term disability department for consideration around the three-month mark to ensure the seamless transition of benefits.
If your short-term disability benefits are denied or terminated, your company does not offer short-term disability benefits, or your company’s short-term disability plan is self-administered, then you may need to apply for long-term disability benefits yourself. To do this, ask the company administering your long-term disability plan for an application. You can also request the application from your human resources department. Next, follow these steps to maximize the chances of your LTD application being approved.
What Are the Consequences of Failing to Apply for Long-Term Disability Benefits?
If you fail to timely apply for long-term disability benefits, perhaps due to the mistaken belief that you are disqualified due to the denial of your short-term disability claim, you risk forfeiting those benefits. That is because most group disability policies contain strict deadlines that govern when a disability claim must be filed – usually within 30 to 90 days following the completion of the waiting period but in no event later than one year from the date of the disability.
If your long term disability benefits are paid through an insurance policy, and you are fortunate to live in a state that has adopted the notice-prejudice rule, then you may be able to overcome a denial of disability benefits due to late proof of loss if you can show the insurer was not prejudiced by your delay. If your disability claim is due, in whole or in part, to mental illness, you may be able to overcome a denial based on late notice if you can show you were mentally incompetent during the time in question. Finally, the U.S. Department of Labor has extended many ERISA deadlines (including the deadline to apply for benefits) by up to one year for so long as the country remains in a state of emergency due to the COVID-19 pandemic.
If you fail to timely apply for LTD benefits, and you are unable to persuade the disability plan to consider a late application, then you must show the plan’s refusal to entertain your late claim was unjustified if you wish to pursue the claim in court. The U.S. Constitution, and many state constitutions, prohibit judges from issuing advisory opinions. Thus, if you fail to apply for LTD benefits in a timely manner, there is no case or controversy for the court to review, and your lawsuit will be dismissed for lack of standing.
Furthermore, assuming your long-term disability claim is subject to the federal ERISA statute, courts have interpreted ERISA to require that a claimant exhaust his or her administrative remedies prior to filing suit, subject to narrow exceptions. The mistaken belief that you were ineligible for LTD benefits due to the denial of your STD benefits is likely not sufficient to be excused from ERISA’s exhaustion requirements.
What Do I Do If My LTD Plan Administrator Refuses to Consider My LTD Application?
Occasionally, disability claimants are told by the LTD plan administrator that they must appeal a denial of short-term disability benefits to be considered for long-term disability benefits. This is generally incorrect. Unless the LTD plan document explicitly states that receipt of STD benefits for the full duration is a pre-condition to receiving LTD benefits (most do not), then the LTD plan administrator cannot require that you appeal the denial of STD benefits before applying for LTD benefits.
There are many reasons a person may wish to apply for LTD benefits despite not appealing the denial of STD benefits. If there is only a week or two weeks of STD benefits remaining, the claimant may decide it’s not worth the trouble to appeal. Or perhaps the claimant is receiving salary continuation or another source of deductible income such that it doesn’t make economic sense to appeal.
If you find yourself in the forgoing situation, you should write to the LTD plan administrator to request an LTD application. If the plan administrator continues to refuse to provide you with an LTD application, that action is arguably an “adverse benefit determination” within the meaning of the ERISA claims regulations such that you are entitled to appeal rights. See 29 C.F.R. § 2560.503-1(m)(4). You can then appeal the denial of your request to apply for LTD benefits, pointing out that nothing in the STD or LTD plans requires exhaustion of STD appeals as a precondition to applying for LTD benefits. If the LTD plan administrator persists in its position that exhaustion of STD appeal is required, you will have done everything in your power to comply with ERISA’s exhaustion requirement prior to filing suit.
Even if you fail to appeal the LTD plan administrator’s denial of your request for the LTD application, you will likely be excused from ERISA’s exhaustion requirement if the letter denying your request does not comply with the ERISA claims regulations, including the requirement that the plan administrator recite the specific plan provisions upon which the determination is based and your appeal rights. Id. at § 2560.503-1(g)(1)(ii), (iv).
In summation, if you are told by an LTD plan administrator that receipt of STD benefits is a precondition to receiving LTD benefits, commemorate your request for the LTD application in writing. If you continue to encounter resistance, push back – ideally in writing, with the assistance of counsel – against information that conflicts with the plan terms.
The disability application process can be confusing and counter-intuitive, which is why it’s in your interest to hire a employee benefits lawyer early on, especially if your short-term disability benefits have been denied and you wish to apply for long-term disability benefits. The attorneys at DeBofsky Law have assisted many clients in your situation. Call us today to schedule your initial consultation!