Disability Attorneys Must Be Prepared

As if people with mental problems didn’t have enough headaches, America’s psychiatrists are changing their mental disorder guidebook, according to a recent article by the Associated Press.

This would be the Fifth Edition of the Diagnostic and Statistical Manual of Mental Disorders (DSM-V), published by the American Psychiatric Association. The revision has been in the works for several years.

Many people might not consider this announcement earth-shaking. But the DSM’s definitions define the clinical characterization and treatment of mental problems. Disability insurance companies and school systems usually base their decisions on benefits on how the DSM defines mental conditions and the treatments recommended.

Scheduled for publication next May, the new DSM seeks to capture the current state of knowledge of psychiatric disorders, according to the Association.

Just what effect the new DSM will have on the care and treatment of people with mental disorders will have to await publication of the manual and digestion of its contents by the lay, medical and insurance communities.

One thing we are sure of, insurance people will be all over the manual with a fine tooth comb, looking for new excuses not to pay mental disability claimants, or how to stop payments to some already being paid benefits. How do we know this? Because we fight with these companies every day over claims that are as plain as the nose on your face to everybody, except insurers.

Any attorney involved in a mental disability claim must be familiar with the new DSM and study it. Disability and ERISA lawyers must follow comments on the Guide which are bound to be published shortly after it is published so as to be up on the latest thinking in this field of claims law.

Knowing as much or more about the DSM changes than insurance company’s minions is an absolute must. Disability income insurance attorneys are bound to be bombarded with calls from beneficiaries who are being threatened by insurers with a loss of benefits because of how insurance companies interpret the new DSM.

Like the Boy Scouts, these attorneys must “Be Prepared”.




ERISA Is Great, But

If you have an ERISA income disability policy (a group LTD insurance policy most often purchased through an employer), you may think you have the same coverage and benefits as a privately purchased disability policy – but, you would be flat out wrong.

First off, in most states you would have to deal with the ERISA “discretionary clause” which puts a policyholder behind the 8-ball before a claim is even filed. Some 16 states have prohibited the clause in new policy language, but most states haven’t.

This clause allows the insurance company, which will pay the claim, to initially determine if the claim is covered by the disability policy. If the insurer says “no”, then the claimant has to climb out of a deep legal hole to prevail no matter what the actual facts of the claim.

A private policy has no “discretionary clause” to put the claimant on the defensive right from the start. If a private insurer denies a disability claim, the policyholder has to prove the disability is covered by a straightforward preponderance of the evidence and does not have to prove that the insurer’s denial of a claim was “arbitrary and capricious” a tough standard of proof in any court.

Other advantages of private over ERISA polices are:

* The way covered earnings are calculated. ERISA covers base salaries while private policies usually cover base plus incentive compensation.
* Taxation. ERISA benefits are taxed to the extent of employer contribution. Private benefits, usually paid with after-tax dollars are non-taxable.
* No benefits offsets. ERISA benefits are frequently subject to offsets from other group insurance benefits, SSDI, and Workers Comp. Private policies usually hve no benefits offsets.
* Portability. Private disability income policies are transferrable if employment changes. ERISA policies are generally not transferrable.
* “Own Occupation”. Private policies have “own occupation” clauses which are more tailored to the policyholder’s occupational status at time of policy purchase. ERISA policies usually have a 2-year “own occupation” coverage and then switch to an “any occupation” disability definition.
* Contract Changes. Private coverage usually prohibits rate increases until age 65 while ERISA rates can increase during the life of the policy.
* Cost of living. COLA increases are much more common in private coverage while it is rare in ERISA policies.
* Mental and nervous disorders. ERISA policies often limit benefit coverage to 2 years. With a private policy, even an unlimited benefit coverage for these types of ailments may be purchased.
* Legal rights. Private policy claims permit jury trials, while ERISA claims do not. In addition, private disability insurance allows full discovery and punitive damages in a proper case while ERISA coverage permits very limited discovery and no punitive damages.

If you are covered only by an ERISA policy and believe you would like to have some of the benefits of a private disability income policy, there is nothing stopping you from buying additional cover age to supplement what you have under ERISA.

If so, don’t delay. Buy the additional coverage BEFORE something untoward happens. Otherwise you’ll cry over spilt milk and lost benefit dollars.