Several of our clients offer disability income insurance for their employees. We’ve recently had two different employees negatively impact their disability claims by trying to return to work full time. Let me explain.
The elimination period (EP) in a disability insurance policy is the amount of time someone needs to be disabled before a claim can be paid. Sometimes called a “waiting period,” this is usually 0, 7, 14, or 30 days for a short term disability policy and 90 or 180 days for a long term disability policy.
Most elimination periods can be satisfied with days of partial or total disability. They cannot, however, be satisfied with a day an employee works full time.
In both of the examples referenced above, the employee in question really wanted to come back to work, so both attempted to return to work for full days during the time that otherwise would have been the elimination period. In both instances, those full days of work either reset the elimination period (short term disability claim) or were tacked on to the end of the normal elimination period (long term disability claim).
Long term disability policies usually have trial work days built into their EP. In other words, a day of total or partial disability will count toward that 90 or 180 day EP, but a full day back to work will not count. Instead, it will be considered a trial work day and added on to end of the EP, delaying claim payments. The number of trial work days is usually limited to 30 days, but contracts vary between insurance companies.
Short term disability policies usually do not have trial work days built in. The EP can still be satisfied with days of total or partial disability, but a full day back to work will often cause the EP to be reset. This obviously doesn’t make claimants happy.
One potential solution to this problem is to advise the employee NOT to return to work for full days. Remember, a partial day of disability counts toward the EP, so if the employee is properly informed, he or she would know that working a partial day is preferable if the end goal is to collect from the disability policy as soon as possible. This seems counter-intuitive…why would you want to discourage an employee from working full time if she’s capable of doing so?
I recently did a quick survey of some of the most common group disability companies. Here’s what I found:
- 80% of the carriers will not count that full day of work toward the EP for either short or long term disability.
- 80% of the carriers will reset the STD elimination period if someone returns to work for 1 full day.
- Trial work days for LTD contracts ranged from 3 days to unlimited depending on the insurance company and the length of the EP.
If we can answer any questions regarding this topic or others related to employee benefits, please reach out to us at (866) 724-0008 or click the link below.