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STD vs LTD differences in benefits

When There Are Different Insurers for Short-Term and Long-Term Disability 

When There Are Two Insurers

Under an ERISA disability plan, there may be two different insurance companies: one insurer for short-term disability (STD) benefits and another insurer for long-term disability (LTD) benefits.

For example, in one of our recent cases, the STD insurer was Sedgwick and the LTD insurer was MetLife. So, what was the problem?

The problem arose after our client applied for and was approved by the STD insurer, Sedgwick, to receive STD benefits, which Sedgwick paid throughout the STD period. So far, so good. But after our client completed the STD period and applied for LTD benefits, he found that the LTD claim was administered by a different insurer, in this case, MetLife. MetLife had our client's file reviewed by a doctor they hired, and that doctor determined that our client had not been disabled at all during the STD period. 

A prerequisite for LTD benefits, under our client's disability policy, was that he be continuously disabled throughout the STD period. Although Sedgwick determined that he was (and paid him benefits), MetLife decided that he wasn't. On that basis, MetLife denied LTD benefits.

Can They Do That?

The short answer is “yes, they can.” Even though the first insurer, Sedgwick, found that our client was disabled throughout the STD period, the second insurer, MetLife, determined he was not disabled during the STD period, and therefore ineligible for LTD benefits. Under the law, a claims determination made by the first insurer is not binding on the second insurer.

Why Do They Do This?

ERISA law permits an LTD insurer to independently decide, after the fact, that an insured was not disabled during the STD period, even after his STD insurer had previously determined that he was. The strategy here appears to be that the first insurer pays STD benefits to create the illusion that the insured's disability claim has been approved and that the insured can therefore relaxand not worry so much about getting his doctors to fully document his disability in the medical records during the STD period. 

Then when the STD period has been completed, and the insured applies for LTD benefits, the LTD insurer relies on the fact that the documentation in the medical record will be less than complete, which allows the second insurer to determine that the insured wasn't disabled in the STD period, and on that basis deny LTD benefits.

What's the Answer?

Document, document, and document. Don't let your guard down. Work with your doctor(s) and with your attorney to bolster your medical records, before, during, and throughout the STD period, to secure your entitlement to LTD benefits. 

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