Monday, January 11, 2016

What is the Elimination Period in a Long Term Disability Policy?

In a long term disability claim, the elimination period is the period of consecutive days that a claimant must be disabled in order to begin receiving monthly benefits.  Typically the elimination period is 90 or 180 days.  Sometimes the elimination period is also known as the waiting period.
Some employer provided disability plans also provide for short term disability (STD) benefits.  If your benefit plan also provides STD benefits, then the elimination period will last the same amount of time as the STD benefits.   
The elimination period is partly a cost saving measure created by the insurance industry, but also, its purpose is to allow a period of time to determine whether the claimant is likely to improve his  or her medical condition.
Just a few weeks ago, the Second Circuit Court of Appeals had the opportunity to issue a decision dealing with the question of whether a claimant had satisfied the elimination period before he could become eligible for benefits.  In Sobhani v. Reliance Std. Life Ins. Co., 2015 U.S. App. LEXIS 22041 the Circuit Court held that it was reasonable for Reliance Standard to require the the Plaintiff to show that he had "completed the Elimination Period".  In fact, the evidence on the administrative record showed that Sobhani had worked between 30 to 35 hours a week for several weeks during the elimination period.
Unfortunately, many long term disability claimants are not fully aware of what an elimination period is and engage in conduct during this period of time that clearly contradicts their allegations of disability.  Some claimants are not mentally or financially prepared to go unpaid during this period of time.  This is one of the many reasons why claimants must read their LTD plan carefully and consult with a disability lawyer before filing an application for benefits.  A careful reading of the plan with the assistance of a lawyer can prevent many mistakes frequently made by claimants during the initial application process.