The claim process is the procedure that all parties are supposed to follow. That can involve notice, claim, proof of loss, time limits, and the appeals or reviews. There can also be reviews as to pre-existing conditions, prior coverage, and work status. Not only is proving disability important, but also following procedures is important.

 

Notice of Claim

 

Notice of claim is a common requirement found in disability policies. It requires you to inform the insurance company of your name, contact information and policy number, along with words showing a desire to file a disability claim. You must furnish knowledge of facts that would lead a prudent insurance company to act. It signals the intent to file a disability claim.

 

Sending an email or letter may be notice, or there may be a form to send in after making a phone call. Some policies require written notice. The word “written” has been interpreted by some courts broadly to include emails, and certainly facsimiles. There is typically a time limit with the notice provision, for example, 15, 20 or 30 days.

 

Here is an example of the notice of claim provision:

 

CLAIM PROVISIONS

 

Notice of Claim

Written notice, or notice by any other electronic/telephonic means authorized by the Insurance Company, must be given to the Insurance Company within 31 days after a covered loss occurs or begins, or as soon as reasonably possible. If written notice, or notice by any other electronic/telephonic means authorized by the Insurance Company, is not given in that time, the claim will not be invalidated or reduced if it is shown that notice was given as soon as was reasonably possible. Notice can be given at our home office or to our agent. Notice should include the Employer's Name, the Policy Number and the claimant's name and address.

 

This may be an important requirement. Some insurance companies have denied claims for failing to comply with this notice provision. The extremely brief time required to comply with this provision can be very unfair, especially if an injury or sickness suddenly incapacitates. Insureds are not typically focused on making certain that they provide prompt notice of a potential disability claim when the focus is on getting better and back to work. You may not immediately know that your injury or sickness will disable for a long term or for the rest of their lives.

 

To protect your rights, it is important to keep this notice provision in mind. If the notice is triggered very early, commencing on the date of the injury or sickness, then before you realize that the injury or sickness will keep you out of work for all of the elimination period, you are nonetheless required to furnish notice of a disability claim. Some policies have terms that are longer, as the notice of the claim does not arise until after it is evident or at least probable that the disability will last longer than the elimination period. Make certain that you understand your provision as to when notice is required in your policy.

 

The Claim

 

This is the heart of the disability benefit process. Any request for an insurance company to pay benefits described in your disability policy is a claim. This provision is not as difficult to understand, but it is important to understand the time limits and procedures triggered. There are procedures that must be followed in order to make a claim, and one that is common is to complete and provide claim forms. 

 

Usually furnishing the notice of claim will trigger provision of the claim forms. If it does not within the time frame promised in the policy or within a reasonable time such as two weeks, then you should provide your general contact information, medical records, and statements from your physicians indicating the conditions which you contend disable you. That may suffice to file a claim.

 

After filing the claim, then time limits start for the insurance company to decide the claim. Nearly all disability policies promise a time limit for the insurance company to decide the claim after it is received. If there is no time limit, then a reasonable amount of time is implied.

 

Many policies particularly state that you are not allowed to file a lawsuit before 60 days pass after providing proof of your loss. That allows the insurance company at least 60 days to decide the claim. Under federal law known as Employee Retirement Income Security Act (ERISA), which governs many policies in the workplace, there is a claim procedure regulation which mandates the time frames that must be followed for a full and fair review to be provided. If the time frames are not followed under ERISA, you may be able to file a lawsuit.

 

After the claim is decided, if it is unfavorable, there is a right for you to challenge that decision. There may be a time limit set forth in the policy, which you must follow in order to keep your claim “alive”. If there is no time limit, then again, a reasonable time is implied.

 

If your policy is provided through the workplace, then most likely there is a claim procedure regulation applicable, which establishes the minimum time frames that must be followed. The claim does not “end” until either it is paid out to the maximum benefit period, the claimant passes away, is no longer disabled, fails to challenge a denial of the claim in a timely manner, or fails to file a lawsuit in a timely manner to challenge denial of that claim.

 

Here is an example of the claim provision from a policy, which includes the notice provision as well:

 

CLAIMS

 

NOTICE OF CLAIM

Written notice of claim must be given within 20 days after a covered loss starts or as soon as reasonably possible. The notice can be given to us at our home office, or to our agent. Notice should include your name and the policy number.

 

CLAIM FORMS

When we receive your notice of claim, we will send you claim forms for filing proof of loss. If these forms are not given to you within 15 days, you will meet the proof of loss requirements by giving us a written statement of the nature and extent of your loss. You must give us this proof within the time set forth in the Proof of Loss section.

 

Proof of Loss

 

The evidence that supports your claim is called proof of loss. It is part of the initial claim but is usually an ongoing requirement. Your loss is the loss of income due to a disability that is covered by your policy. Proof of that will typically be medical records, opinions of physicians as to restrictions and limitations, observations by co-workers or family members, a pain or headache diary, photographs or videos documenting restrictions and limitations, and so forth. It may also include your contentions as to when your disability began, your last day of work, the cause of your disability, and what exactly prevents you from performing the major duties of your work. There can be certain types of evidence in your policy which restricts the proof of loss that can be furnished, such as “objective medical evidence,” which is discussed in another section.

 

Here is an example of proof of loss:

 

Proof of Loss

Written proof of loss, or proof by any other electronic/telephonic means authorized by the Insurance Company, must be given to the Insurance Company within 90 days after the date of the loss for which a claim is made. If written proof of loss, or proof by any other electronic/telephonic means authorized by the Insurance Company, is not given in that 90 day period, the claim will not be invalidated nor reduced if it is shown that it was given as soon as was reasonably possible. In any case, written proof of loss, or proof by any other electronic/telephonic means authorized by the Insurance Company, must be given not more than one year after that 90 day period. If written proof of loss, or proof by any other electronic/telephonic means authorized by the Insurance Company, is provided outside of these time limits, the claim will be denied. These time limits will not apply while the person making the claim lacks legal capacity.

 

That sounds complicated to some people. It means, when you are requested to provide proof of loss, you have 90 days to provide it. If there are reasons justifying more time than 90 days, that can be extended up to one year. Most policies have a similar requirement.

 

A trap that can arise here is failure to realize that proof of loss is an ongoing requirement. Policies can be confusing in this regard. They are often written to refer to proof of loss as part of the commencement of the claim, but since disability benefits are paid on a month-to-month basis, and since some individuals can regain their ability to work, proof of loss also pertains to the claim going forward. Therefore, you can never “rest on your laurels” and assume that the insurance company will continue to pay the claim because you furnished proof of loss at the commencement of the claim. You will have to continue to furnish that proof whenever requested.

 

Another danger is that in most instances, proof of loss requires completion of attending physician statements, or an ongoing opinion from your physician supporting your disability claim. Some physicians do not like to complete forms, and those that do often will require that you make an appointment in connection with completion of that form. It can be difficult to schedule an appointment and see it completed and submitted within the time limits required by the policy for furnishing ongoing proof of loss.

 

Yet another problem is that many forms are misleading, inconsistent, or confusing. It is easy for a physician or a nurse to fill it out incorrectly. A “wrong” statement on a form can cause a claim termination. The practical result here is that if an individual has a disability policy claim, it is important not only to be treated by a doctor who can address your physical issues, but it is also important from a claim perspective, to have a doctor who will assist with the completion of forms or proof of ongoing disability. If a doctor refuses to do that, then you will need to have another means of addressing that issue or the insurance company will not pay your claim. 

 

This request for completion of claim forms will vary under policies and practices of insurance companies. It can be once every few years to several times each year. I have seen some instances in which the insurance company wanted a claim form every single month. That is a bit much if the condition is static or declining. It is critical to follow the proof of loss requirements to avoid issues that may delay your benefit or cause a claim termination.

 

Legal Incompetence

 

Legal incompetence or legal incapacity refers to the inability to understand the nature and effect of the actions that you are required to take under the policy. Legal competence refers to the minimum level of intelligence, understanding, memory, and judgment relevant to what is required to make a claim and provide proof of loss. Legal incompetence or incapacity can also refer to being of age or old enough to be an adult (e.g. 18 or 19). Generally, that would not be applicable to a disability claim since most individuals will be of legal age when disabled. This term instead generally refers to insufficient mental competence.

 

Here is an example where this term is mentioned:

 

Under no circumstance will we pay benefits if written proof of loss is delayed more than one year, unless your inability to provide proof of loss is due to legal incompetence or lack of legal capacity.

 

This provision comes into play when proof of loss is furnished more than a year after it was required. Lacking legal capacity does not refer to being sick or injured alone. Many people feel too sick or sore to deal with legal matters while recovering. These policy terms do not permit that as a reason to provide late proof of loss.

 

However, if the claimant is in a coma or sedated for months on end, a physician should be able to provide proof demonstrating legal incompetence under those circumstances. In other circumstances, physical injury or sickness that affects the ability of the individual to comprehend the action that must be taken must be demonstrated to excuse late notice. A court also can determine legal incompetence. Only the actual days of legal incompetence will be counted toward the added time left to provide proof of loss generally.

 

Sickness and injury can cause incompetence, and individuals who will care for these persons may not be aware of the disability policy. It is a good idea then to have a durable power of attorney in place, in case of legal incompetence that can arise for any of us. Furnishing a copy of the power of attorney along with your disability policy would be prudent so that someone will know what to do. If action is not taken promptly, it still may be possible to file a proof of loss after the maximum timeframe by demonstrating legal incompetence.

 

 

Plan Administrator and Claim Administrator

 

These two terms occur in group policies offered through the workplace. The terms are typically defined under a federal law such as Employee Retirement Income Security Act (ERISA). The Plan Administrator means the person or entity responsible for managing, operating or supervising the plan providing your disability benefit. This person or entity is designated as the plan administrator for the policyholder's group disability benefit plan.

 

The plan administrator is responsible for meeting obligations mandated by federal law. This obligation may include providing forms, providing truthful and accurate information to those insured under the plan, and providing plan documents among other things. Sometimes the plan administrator also decides the claim, but that obligation may be delegated to another person or entity.

 

There can be delegation of the plan administrative duties pertaining to claim decision making to a claims administrator. The claims administrator decides whether a claim will be paid or not. As to providing forms and plan documents, that may remain the plan administrator's duty, or it could be a duty of the claims administrator. That has to be investigated by reading the plan document or policy, so you know who is responsible.

 

Here is an example of both terms:

           

Plan Administrator means the person or entity affiliated with the Employer that has executed an Adoption Agreement or Contract of Insurance and elected coverage under this policy issued to the Policyholder and is responsible for managing, operating or supervising the plan providing your disability benefit.

 

Claim Administrator means any of the organizations, corporations and other entities who have been designated by the plan administrator as having the obligation and right to make all decisions regarding a claim made for benefits under this policy.

 

This splitting of roles between plan and claim administrator often occurs because an employer will determine that it wishes to furnish a long-term disability benefit to employees but does not want to fund the benefit itself. Accordingly, it purchases a long-term disability policy from an insurance company to provide that benefit to its employees. Employees are the beneficiaries of the contractual arrangement between the employer and the insurance company. The employer may retain the duties of plan administrator while the insurance company may just serve as the claims administrator making claim decisions. There can be various arrangements.

 

It is important to know who has what role in any given policy or plan document. The insurance company may have the obligation to provide a claim record when there is an adverse benefit determination, and so a request for the claim record should be made to the insurance company. If that request is made to the employer, that request may not be honored. Likewise, if a request for a copy of the disability insurance policy or certificate of insurance is made on just the claims administrator, it may not think it has that obligation to furnish a copy of the document. It may not forward that request on to the plan administrator. Accordingly, it is important to know the roles of those entities administering the disability benefit, so you know which one must cooperate.