What Does Disability Insurance Typically Cover?

When serious injuries, illnesses, or mental health issues prohibit an employee from returning to work, they may be able to receive some financial relief in the form of long-term disability benefits. In Nova Scotia, disability insurance can help protect policyholders and their families if unexpected accidents or medical diagnoses render them unable to earn a living for a significant period of time.

Disability benefits are not, however, designed to replace the entirety of an eligible policyholder’s salary. Similar to Employment Insurance (EI) benefits, disability benefits replace only a percentage of a recipient’s regular salary. In Canada, long-term disability plans typically cover between 60-70% of a recipient’s regular wages.

Many long-term disability plans impose a cap on the amount of monthly benefits payments eligible policyholders are able to receive. As a result of monthly benefits caps, depending on their regular salaries, some employees may not be able to collect the full 60-70% of their monthly wages. If an insurance policy’s payment cap is lower than 60-70% of a benefits recipient’s normal monthly wages, they may only be entitled to the capped payment amount offered by their insurance company.

Long-term disability benefits may be taxable. If your employer pays even a portion of the premiums for your group insurance plan, you may be required to report any disability benefits you receive as income on your taxes.

While benefits payments may provide a much-needed financial lifeline to workers struggling to cope with their disabilities, long-term disability benefits may not last indefinitely. Many insurance policies stipulate that, in order to receive long-term disability benefits, for the first two years of coverage (known as the “own occupation” stage), a policyholder’s condition must prevent them from performing activities related to their current job. However, after this two year period expires, most insurance policies’ eligibility requirements will be re-defined. In these cases, in order to continue collecting long-term disability benefits, a recipient’s medical condition must prohibit them from completing the tasks of any job, even if it is unrelated to their current position.

Other Sources of Disability Benefits 

If your medical condition prevents you from working, federal assistance programs such as the Canada Pension Plan Disability (CPP) may provide you with some financial relief. CPP Disability Benefits may be made available to individuals who have contributed to that plan, and aren’t able to work at any job as a result of their disability.

Although disabled individuals may be able to collect disability benefits from multiple insurance providers, the payment amount they receive from one source typically offsets the income from other insurance plans. In fact, most insurance policies reduce the amount of benefits available to recipients if they collect disability income from other sources. That means the total amount of benefits disabled workers may be eligible to collect from all income sources available to them could only replace between 60-70% of their regular pay. In some cases, this value may fluctuate up to 85% of a benefits recipient’s salary.

Depending on your insurance policy’s level of coverage and the circumstances that caused your disability, you may be able to file additional claims for the following:

• Disability Creditor Insurance
• Critical Illness Insurance
• Accidental Dismemberment Insurance
• Short-Term Disability Benefits
• And possibly more

After sustaining a physical injury that limits an individual’s ability to work, the disability benefits available to them may not be sufficient to cover the total amount of the financial losses they’ve incurred. If your disability was sustained in an accident caused by another party’s negligence, a Nova Scotia personal injury lawyer may be able to pursue financial compensation on your behalf through tort action. By filing a lawsuit against the negligent party responsible for your injuries, you may be able to recover both pecuniary and non-pecuniary damages. These damages may include medical expenses, rehabilitation costs, lost income as a result of missed work, loss of future earning capacity, pain and suffering, and possibly more.

How is Eligibility for Long-Term Disability Benefits Determined?

Different insurance plans covering long-term disabilities may have different eligibility requirements, and different definitions of what constitutes a disability.

Generally speaking, though, in order to qualify for long-term disability benefits, you must be enrolled in an insurance policy with appropriate coverage, either through your employer’s group plan, or a privately held policy. You must also have received ongoing medical treatment for a condition that prevents you from performing the duties of your occupation, and have exhausted all other compensatory options available to you, such as paid sick leave, vacation time, and short-term disability benefits.

Some conditions that may qualify individuals to collect long-term disability benefits include:

• Heart disease
• Back problems
• Chronic pain or complex regional pain syndrome (CRPS)
• Lupus or Lyme disease
• Psoriatic arthritis or fibromyalgia
• Paralysis
• Depression
• Bipolar mood disorder
• Post-traumatic stress disorder (PTSD)
• And possibly more

If you are unsure if your illness or injury qualifies you to receive long-term disability benefits, a Nova Scotia long-term disability lawyer may be able to review your insurance plan and help explain its eligibility requirements.

To submit a successful application for benefits, you may be required to include supporting medical evidence to support your claim. Your application’s approval may depend on a number of factors, including:

• How, when, and where your illness or injury occurred or began
• How your symptoms affect your ability to work
• When you were last able to work
• When your medical treatment began, and if it is ongoing
• Your occupational duties
• Your prognosis
• And possibly more

Even if you prove that your medical condition prohibits you from carrying out the duties of your job, and you’ve supplied your insurance provider with thorough medical evidence to support your claim, for a number of reasons, your application for long-term disability benefits may be denied.

If your application for long-term disability benefits was rejected, but you believe your medical diagnosis should entitle you to receive payments, a Nova Scotia long-term disability lawyer may be able to help you appeal the insurance provider’s decision.

Appealing a Denied Claim for Long-Term Disability Benefits

Filing an internal appeal directly through the insurance company may be a worthwhile course of action for policyholders whose claims were denied due to insufficient supporting medical evidence. In these cases, providing additional documentation or clarifying minor technicalities may lead an insurer to overturn their initial determination.

However, the internal appeals process could take months to complete. Disabled individuals who are unable to earn an income may not have the luxury of time to wait for an internal appeal to be completed. Furthermore, after what might be a lengthy review process, the new supporting evidence provided to an insurance provider during an appeals process may not even affect their initial decision to deny an application.

Therefore, a long-term disability lawyer may advise their clients to file tort action against their insurance provider for unfairly denying their claim. By filing a lawsuit, you remove the decision-making power from the insurance company. If the lawsuit is decided in the applicant’s favour, they may be awarded payments for:

• Previously denied benefits payments
• Legal fees
• Damages for mental stress experienced
• Punitive damages
• And possibly more

Contact Preszler Injury Lawyers 

If your claim for disability benefits was unfairly denied, or your benefits payments were prematurely terminated, Preszler Injury Lawyers may be able to help you appeal your insurance company’s decision, so you can receive the financial compensation you need to help cope with your disability.