Since we're in the fourth month of a national lockdown due to the coronavirus pandemic, we're facing a multitude of obstacles for employers and their employee benefit advisors. Let's first discuss how a long term disability occurring today might become "complicated" and let's start with the risk of anyone becoming totally disabled.

Millions of working Americans are facing a growing crisis: a lack of adequate disability insurance coverage. Today, the absence of emergency savings, rising medical costs, and an overall trend of fewer employers offering benefits to workers has created a critical blind spot for many American workers and their families. Without some kind of income protection, more Americans are experiencing severe financial difficulty if they need to miss work due to illness, injury, or pregnancy.

Consider the following:

At least 51 million working adults in the United States are without disability insurance other than the basic coverage available through Social Security.
Only 48% of American adults indicate they have enough savings to cover three months of living expenses in the event they're not earning any income.
More than one in four of today's 20-year-olds can expect to be out of work for at least a year because of a disabling condition before they reach the normal retirement age.
5.6% of working Americans will experience a short-term disability (six months or less) due to illness, injury, or pregnancy on average every year. Almost all of these are non-occupational in origin.
A 2014 study of consumer bankruptcy filings identified the following as primary reasons: medical bills (26%), lost job (20%), illness or injury on part of self or family member (15%).

Next, let's identify how we can help employers prevent troublesome key issues when filing long term disability claims now, before they become insurmountable problems at the point of claim.

The FFCRA (Families First Coronavirus Response Act) signed into law on March 18,2020 does not appear to offer any clarity regarding employer sponsored short and long term disability (LTD) programs.

With all of our Employee Benefits clients, at the end of every second year we'd ask employer clients to give us updated census data to obtain current quotes, performing our due diligence on their short and long term disability programs. Let's stop to consider the census data we'd request from employers as it relates to COVID. That data always included employee name, gender, date of birth, occupation, and current income. Let's look at a representative employer with say 50 employees. To highlight the potential C-19 conflicts:

We'd have say 5 key executive employees that are actually working today w/all other employees either furloughed or working full time @ home.
Their incomes would be dramatically lower than when their LTD plan was put in place two years ago. [Note: Their normal budgetary requirements cannot be satisfied at today's reduced compensation, especially considering their added risk of becoming disabled.
Key execs, including company owners, might be drawing no income whatsoever; waiting for the return to work order that may be a long way away. What LTD benefits can be paid when there's no income to insure?

What can we expect to happen when a 60 year old key corporate executive (and part-owner) suffers a totally disabling heart attack and is not expected to ever be able to return to work??!!

I've noticed several references recently to 'Force majeure' a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, epidemic or an event described by the legal term act of God, prevents one or both parties from fulfilling their obligations under the contract.

It would appear the mention of 'Force majeure' intent is to free both parties from liability or obligation; which is exactly what we don't want. In my opinion, since we're dealing with the handling of an LTD claim; and we certainly want our LTD insurer to cooperate, so the issue is how to get an LTD claim paid possibly under some new rules.

Regardless of my interpretation, my goal is to help the employer, their HR professional and their benefit advisors to immediately contact their disability insurer; asking the following questions:

During the current COVID-19 pandemic, with employees working offsite, can we assume the 30 hour workweek criteria does not have to apply?

Regular occupation means the occupation (or occupations, if more than one) in which you are regularly engaged at the time you become disabled. Sickness means your illness, disease or physical condition which: (a) causes loss beginning while this policy is in force; and (b) is not excluded from coverage.

Total disability or totally disabled means, during the elimination period and during the time following the elimination period, that due to sickness or injury: (a) you are unable to perform the material and substantial duties of your regular occupation; (b) you are not engaged in any occupation for wage or profit; and (c) you receive regular medical care.

Can we assume if the disabled employees work duties are different from the duties noted on the most recent census data, that the new duties would apply?

We're paying premium in good faith based on a percentage of company payroll when employees were working full-time. Now we have employees who are no longer actively at work. Can we assume that there will be a premium adjustment when employees have returned to work full-time?

I'm now officially retired from the employee benefits business; so I'm no longer actively advising and assisting the employees of client companies file long term disability claims. We had created a "Disability Counseling Service" that provided a team support and comfort that employees greatly appreciated when faced with the financial consequences and emotional upset of becoming disabled.

I can certainly appreciate that it's difficult to evaluate an LTD claim without being able to see the "whole picture." Yet the questions we've raised, suggesting that employers query their LTD insurer during the C-19 Pandemic, are certainly reasonable considering the current circumstances.

Allan Checkoway, RHU (allan@eldercaresurvival.com) is a long-term disability specialist. His company created a 'Disability Counseling Service' that provided a "team support" and comfort that employees of client companies greatly appreciated when faced with the financial consequences and emotional upset of becoming disabled. He learned firsthand that assisting disabled people in "real world" situations gave an invaluable perspective.

Instant Insights /

The COVID-19 pandemic: Guaranteed to complicate long-term disability claims

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