Obtaining a Disability Policy
Individual policies are typically bought and paid for by the insured, separate and apart from an employer. Group coverage, on the other hand, is usually offered by an employer or union, and the premiums are paid (in whole or in part) by the employer. There may be circumstances where an employer will purchase and pay the premiums for an individual policy on behalf of an employee. Conversely, an individual may personally obtain group LTD coverage unrelated to his or her employment by joining a group that has group coverage available for its members.
One major difference between individual and group policies is that individual policies are underwritten with respect to the individual purchasing insurance coverage, while group policies are not individually underwritten. Instead, group policies are issued by disability insurance companies based on certain underwriting assumptions related to the general health of a group of people.
Another key difference is the type of law that applies to each type of plan. Under a group plan, because it’s through an employer, it’s subject to a federal regulation called the Employee Retirement Income and Securities Act of 1974, oftentimes referred to as ERISA for short. ERISA was originally enacted in order to make it more affordable for employers to offer benefits to employees such as life, disability, and health insurance, but there were some trade-offs to make it more affordable, and those trade-offs are that they take away certain rights that you have when you go through the decision making process in that type of claim.
Under an individual plan, you’re not subject to the same stringent requirements under ERISA, you are still subject to whatever the requirements are under your policy.
Your Right to a Jury Trial
For example, one of the key rights that is taken away from you is your right to a jury trial. Second, you are not allowed to introduce any new evidence. The evidence is limited to whatever was in your claim file during the administrative review process and that’s the only thing that the judge can consider in a bench decision.
With an individual plan, you have the right to a jury trial. You have the right to testify. You have the right to have your doctors and your friends and family and people get up to testify about the changes and impact that your disability has had on your life. That is another major difference is having the ability to testify and introduce even new evidence that’s been developing over the recent months in that type of case.
The Appeal Process
The other major difference when you have a group plan is that you must go through the appeal process directly with the insurance company before you can file a lawsuit. Typically when you’re denied, you have either 90 or 180 days to file an appeal, depending on your plan, and you must file an appeal directly with the insurance company and go through each required appeal that the insurance company requires before you go to court. If you do not go through the appeal process and you try to file a lawsuit, then your case will be dismissed by the court for your failure to exhaust your administrative remedies. So it is very critical that you go through that appeal process before filing suit.
With an individual plan, you don’t necessarily have to have gone through the appeal process, although you should really look at what your insurance policy requires, and if there are some required appeals in the policy itself. While you’re not subject to the same stringent requirements under ERISA, you are still subject to whatever the requirements are under your policy.
The Standard of Review
The final difference between a group and an individual is the standard of review that a court applies. With a group plan, the “arbitrary and capricious” standard of review applies. What that means is when the court is looking at the case, they have to determine that not only was the decision wrong but was the decision by the insurance company without any reasonable basis? That’s a very tough burden for a claimant to overcome because although you can show that the disability exists and one should be entitled to benefits, it’s oftentimes more difficult to show that the insurance had no reasonable basis for the decision. They can oftentimes point to a medical review or report by one of their doctors that says that you’re not significantly impaired, and if they have that type of report, then the court may allow the decision to stand.
In an individual policy, the standard of review is preponderance of the evidence. It’s the civil standard under state court, not federal court. All you have to prove is that by preponderance of the evidence that you should be entitled to benefits. That’s a much easier burden to satisfy than the arbitrary and capricious standard that we were talking about. The preponderance of the evidence standard is more along the lines of what you think of in any typical case, and that is when you think of the classic scales of justice. So, when you present your case, the jury just has to decide that they believe your case a little bit more than the other side. Let’s say they believe you 51%, and they believe the insurance company 49%. Whichever side that they believe just a little bit more by preponderance of the evidence, then that’s the side that they must rule in favor of. So, that’s a lot easier to establish than showing that there is no reasonable basis for the insurance company’s decision. If you’re using the scales of justice under that, it’s more like you have to prove your case almost beyond a reasonable doubt. So, it’s a much different standard of review.
Ortiz Law Firm Provides Aggressive Representation to Long Term Disability Claimants
The Ortiz Law Firm handles long-term disability claims around the country. If you’d like to talk to an experienced attorney with our firm, then I encourage you to give us a call at (888) 321-8131.