Dangers of Employers Switching Long-Term Disability Insurance When You Have a Claim

Employers in Chicago often offer their employees group long-term disability insurance governed by ERISA. Employers, like all of us, periodically shop for the best deal, meaning they may change insurance carriers periodically. This ordinarily does not affect you, unless you have an upcoming claim around the time of the change. Here are things for which to watch out that can benefit you, and your employer in negotiating the change to a new insurer.

Does the New Policy Carry Over the Pre-Existing Condition Exclusion Time Limit from the Previous Coverage?

If your claim started before the new insurance became effective, some policies inherit the claims (which costs the employer more), and sometimes your claim remains a “run-off” claim with the old insurer.

Know the Polices’ Terms Before Initiating a Claim Around the Time the Insurer Changes

A long-term disability insured encountered a problem recently in Tait v. Principal Life Insurance Co., No. 20-cv-702, 2021 WL 1238285 (W.D. La. Mar. 31, 2021). Tait’s last day at work was December 31^st, and the new insurer, would not pick up the claim because it preceded its coverage. The old insurer argued the disability did not commence until the day after its coverage ended. When Tait sued under ERISA § 502(a), Tait alleged he condition deteriorated, and she was disabled as of the last day worked. The court held Principal responsible because its policy expired at midnight that day, and Tait was disabled by the end of the workday.

If you have a disabling illness or injury and anticipate making a long-term disability claim, contact a respected ERISA long-term disability insurance lawyer.