Post by dput on May 28, 2021 12:35:04 GMT -8
I have(had) a good job with benefits. I know I have disability insurance, but I've never actually looked at the coverage. I break my neck and go on disability. As with most non-government jobs, my employer has a disability insurance plan through an insurance carrier that is governed under federal law, ERISA. I am not speaking of workmans compensation although it is regulated through ERISA also. Under ERISA, the insurance carrier can terminate coverage anytime it feels you are no longer disabled. In my case, my coverage was terminated by the case manager at the insurance company because they and a supervisor felt the documentation did not support disability. At this time, I am in a hospital bed that was rented for my home because I can not lay flat. I'm in a brace from my stomach to the top of my head. I've been in and out of the hospital several times. I am on a lot of pain medication. All of my doctors support disability and complete the insurance company forms. Medical records and doctor forms mean nothing, "you are not disabled". So now it's on me to appeal their decision. I submit the appeal myself as there several hundred pages of medical records and 3 doctors confirming that I am disabled at that time. My appeal is denied. Now I have to find a specific attorney that is willing to fight a claim that falls under ERISA. That takes out 9 out of 10 attorneys that do disability and workman comp cases. The attorney tells me that he will take my case as it is a no brainer, but because insurance companies are so unscrupulous with the cover of ERISA, the attorney will receive 1/3 of ALL of my benefits for as long as I receive them. WOW! What choice do I have? None, pay up. The attorney writes the first appeal with all of the same documentation and 13 months after they stopped benefits, I win the appeal! Now under ERISA, the insurance company doesn't pay anything for the attorney fees. They don't pay you interest. You just get what they originally owe you. Just a couple months later they deny benefits again. The insurance company had their own nurse practioner review the case and determined I was no longer disabled. Along with the determination of a supervisor and someone else above them. Apparently these three people are smarter, not having ever seen me, than three neurosurgeons, a neurologist and a primary care doctor that have all treated me and support disability. You have 90 days to submit an appeal. The attorney takes all 90 days to gather more records and write the appeal. The insurance company has 90 days to make a determination. If they need an extension they can just grant themselves an extension. They send my records to an "independant" internal medicine doctor to review. He determines I'm not disabled and they continue to refuse benefits. After finding out who the 'independant" internal medicine doctor is, I research him on the internet. I find a court case he was involved in. During that case, it's discovered 85% of his work is supporting insurance companies in disability claims. Under oath, he states that he performs anywhere between 100 and 180 case reviews a week!! There are 2,400 minutes in a 40 hour work week. If he did 180 reviews, that means he spent 13.33 minutes on each review. Wow! At that time, my case file had several thousand pages. My attorney has to file a second appeal with the threat of a lawsuit (90 days) and the insurance company reinstates benefits 90 days later. Just a few months after that, they deny benefits again. Same grounds. This time it's the insurance companies nurse practioner, doctor, supervisor, head of claims, etc. The insurance company never asked me to actually be examined by one of their doctors. They never performed survlience on me. If an insurance company thought you were a fraud, they would have done both. My attorney writes another appeal and files a lawsuit. My original employer has to be a defendant because they are paid for the insurance coverage. Side note, I would have never taken a penny from my employer as they were great to me and helped in so many ways. My employer is a fairly large company and has their own attorneys. The lead council calls the insurance companies attorney and as I was told, was actually screaming at them and threatened to file their own lawsuit against them. Magically just days later, benefits are reinstated. About 6 months later, I was denied benefits again! Now, each time you get denied benefits, the attorney ask for "the complete case file" and ERISA law, they have to provide every page of it. We get the case file and my attorney sends it to me and points out an independant review the insurance company had sent to a neurosurgeon that they never mentioned, hoping the attorney doesn't read everything and misses it. This neurosurgeon actually reviews my case. In his review, he fully and completely supported my disability. In a big long paragraph he basically scolded the insurance company for harrassing me and how unscrupulous and most likely illegal how they have treated me. That was a bombshell! It turns out that they recieved this review just 2 days before my employers attorney had called and screamed at them. So, after 4 years of disability of which about 30 months I did not receive a monthly benefit, they send an offer of settlement. An offer of settlement is basically 40% of what you would receive if they had to pay the complete claim until it legally terminates, which I believe is retirement age. The attorney advises me to take it because the denials were going to continue. He offers to only take 20% of the settlement to entise me to take it and he would get one big check and be done with it.
So let's do a little math. Most disability insurance equals 60% of what you were earning at the time of your disability. Let's just say I was making $100k to make the math easy. So, my disability benefit would be $60k per year, paid divided monthly. If you are permanently disabled, you must apply for Social Security disability and of course be approved and that starts 2 years after you become disabled. So, whatever you receive from Social Security, that amount is deducted from what the insurance company would have had to pay. If I received $30k per year from Social Security, the insurance company would only have to pay $30k to bring you to the 60% of your original salary. Remember, the attorney gets 1/3 of everything they collect from the insurance company only. They do not get any of your Social Security benefits.
Tax implications: You are taxed on all income. A couple years ago you could only write off attorney fees base on 2% of your AGI. I don't know what the actual formula, that was the explanation. If my benefit was $60k, the attorney got $20k and the tax write off was only two or three thousand. You get taxed for money that never touches your hand! The attorney gets taxed on that same amount as it is income to him as well. That money is double taxed in my opinion! The Trump tax changes eliminated the ability to write off "any attorney fees incurred to collect taxable income", unless you are a business paying an attorney. How you can get screwed like me. The first denial of benefits lasted 13 months that just happened to be all in one tax year. I had no income that year, so owed not taxes. I win the appeal the following year and the insurance company has to pay me back benefits for that year. You would think that money should have been taxed for the year that it was supposed to be paid, but no, I received it in the following year so it had to be counted as income for the year I recieved it. So that following year it looked like my income was doubled and I had to pay taxes on what looked like I made twice the money. That bumped me up a couple tax brackets and had to pay a higher tax rate! A complete tax nightmare. If you are wondering about taking a settlement. You will pay tax on the settlement amount as if it is a yearly income. All of it! You can not reduce your taxes in any way that I could find, after asking a couple tax attorneys. The settlement money is to cover your monthly benefits for years to come. For me it was suppose to cover 10 years of benefits. You can not put that money in an IRA or 401k because they don't consider it "earned income" although you are taxed as if it is earned income.
I didn't even cover any of the stress of asking doctors to fill out disability forms. Doctors don't like to waste their time even if they support you because they know they will receive more paperwork from the insurance company and it could always lead to being asked for support in a lawsuit later. Chasing doctor offices getting records. If you are truly disabled and have a lot of problems, that's a lot of doctors and paperwork. After 4 years, I think it was around 15 thousand pages. The stress of not receiving a monthly check that you are owed. I was lucky enough that I had saved enough money to cover 13 months. The stress of knowing any day benefits could stop. And they don't warn you that you are under review. You just get a letter stating they have stopped payments. Eventhough I was screwed out of several thousands of dollars, it is a relief knowing that I don't have to deal with the insurance company ever again.
Now a word about our government. Our government passed into law the ERISA act. It basically gives insurance companies the right to stop payment at any time. The nurse practioner reviewed the case and determined you are not disabled, stop payment. The case manager did the same thing. I believe the janitor at the insurance company has the right to deny your benefits. You can only recover your benefit. You can not recover attorney fees. No interest on money they held. No tax relief. As with any law, attorney write them and therefore they are written so that attorneys will always benefit or at least never be hurt by the laws. The congressman and senators that wrote this law for the american people are not governed by ERISA. They have their own disability insurance. They get full pay and do not have any hassles. I believe a lot of government workers are not governed by ERISA either. Not the same insurance, but the couple people I know that were disabled when they had governement jobs all receive 100% of what they were making at the time they were disabled. To think our government would revise ERISA to help disabled people and make insurance companies responsible for harrassing the disabled will never happen. They can't sit down and fix the easiest of problems.
In my opinion, insurance companies should have the right to question a claim. Invistigate fraudulent claims and prosecute them. But when someone is disabled, pay them the money! It's catastrophic to become disabled! You shouldn't have to defend yourself against an insurance company. Again, in my opinion, the insurance game is to make money. It's all about the bottom dollar. If you are disabled from something that you could die from, they will not pay and hope you die before they do have to pay. Or they hope you die of anything before they have to pay. It's a roll of the dice for them and there is not retribution for their actions. They do have a provision that if you can prove an insurance company was dishonest, you can sue them. You would have better luck winning the lottery than winning a lawsuit against a dishonest insurance company.
I know this is a very long post but it is a huge part of becoming disabled. Post opinions or questions and let's see if we can help each other. I know it was hard for me going through this and educating myself about what is right, wrong, legal, illegal.