Those Who Wish to Convert (life insurance), Beware!

If you are leaving work for a health related reason – for example medical leave for treatment, short or long term disability, or any other medical reason – it may be imperative to find out about whether you can take your life insurance policy with you when you go!

Usually, if you have life insurance through a group policy at work, when you leave employment you have a right to convert that group insurance into an individual policy. This right is guaranteed in the majority of states (see a list of some, but not all, states statutes at the end of this blog post for examples.).

When you purchase a life insurance policy, the insurer generally will require you to answer questions about your current and past health conditions, and maybe submit to some type of medical exam. This is so the insurer can decide how big of a risk you are, whether they even want to give you a policy, and how much they want to charge you in premiums. Their investigation of your health is called medical underwriting.

However, when you convert your policy, you do not have to undergo any medical underwriting. You are guaranteed the right to continue your policy, although it will likely be for a higher premium than you were previously paying.

If you are leaving your job for a health related reason, it may be very difficult for you to obtain life insurance again, because of your medical history. It is very important to find out the costs and process for converting your policy to an individual policy.

Many times people do not know they have this right to convert their policy, and in some states depending on the policy language an insurer may not be required to notify you. A recent case that was denied review by the United States Supreme Court said that if the policy does not require notification of conversion rights, they are not required to tell an employee who is leaving a job about the right to convert their insurance to an individual policy. (See Walker v. Fed. Express Corp., 2012 U.S. App. LEXIS 14468 (6th Cir. Tenn. 2012). To read about the case, go to http://www.bna.com/supreme-court-declines-n17179871733/

The moral of the story is: be proactive and find out the price and procedure for converting your life insurance policy. Be especially sure to find out the time limit to submit any required premiums and paperwork, since most policies have a very short time frame in which to complete the conversion process. Request the paperwork, even if you are unsure whether or not you want to go through with the conversion, so you have everything you need in case you do decide to convert.

(State statutes regarding life insurance conversion from a group policy into an individual policy: Arkansas, Ark. Code Ann. §23-83-122; California, Cal. Ins. Code §10209(b); Delaware, 18 De. Code Ann. Tit. 18 §3125; Georgia, O.C.G.A. §33-27-5; Illinois, 215 Ill. Comp. Stat. Ann. 5/231.1(h); Massachusetts, Mass. Gen. Laws ch. 175 §134A; Minnesota, 61A.09, subd. 1(h); New Jersey, N.J. Stat. Ann. §17B:27-73; New York, N.Y. Ins. Law §4216(d); Pennsylvania, 40 Pa. Cons. Stat. Ann. §532.7; Tennessee, Tenn. Code Ann. §56-7-2305(c).)

What to Do if Your Disability Claim is Denied or Terminated

“You’re Disability Benefits Have Been Terminated.”

            Working with insurance companies to maintain disability benefits is difficult. Even after your benefit claim is approved, which is a feat in itself, the insurance company usually has the right to request that: (1) your physician submits documentation of your progress and your expected return to work; (2) you provide updated medical records from all of your doctors; (3) you submit to an examination with one of the insurer’s own physicians; or (4) that you answer lengthy questionnaires about your activities, medical condition and financial records.

We set out below some ideas of what you should do if the insurance company for your employer-provided disability benefit plan sends you a letter letting you know your disability benefits are being terminated.  But, importantly, there are attorneys (like us at the Law Office of Katherine MacKinnon) that specialize in helping people when they receive the dreaded, “your benefits are being terminated” letter.

What Should I Do Now?

  1. Read the letter carefully. Read the letter the insurer sends to you explaining why it is denying or terminating benefits. What are the insurer’s reasons for denying the benefits? What does the letter say the procedure is for appealing that decision?
  1. Make note of any due dates. A letter explaining that a company is denying or terminating benefits must outline the process which you must follow to appeal the decision. The letter should also tell you the date by which any action must be taken – be careful not to wait until the last minute to either contact an attorney for help, or begin working on an appeal yourself. The appeal is often a big undertaking.
  1. Is the insurance company asking for something? While carefully reading the letter, notice if the company is asking for any information that was not submitted. Are benefits being terminated or just suspended for failing to have a doctor submit a form? Is paperwork missing? Maybe there is something simple the company is simply missing or asking you to complete that would fix the whole problem.
  1. Write to the insurance company, and request copies of all your plan documents and a copy of your claim file. The company is required by federal regulations to provide you with “reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits.” 29 C.F.R. §2560.503-1(h)(2)(iii). Since there is a time limit on when an appeal can be submitted or a claim can be brought in court, it is important to write and ask for these documents right away.
  1. Administrative appeal. In some circumstances a person can put together their own appeal, and in some circumstances it is best to consult an attorney. An appeal is often your best and last opportunity to furnish the insurer with all relevant information regarding your disability benefit entitlement. The insurer needs and wants the information so that it can make an informed decision about whether you are entitled to benefits. Helpful information might include: all your medical records from each provider; a statement explaining your disability and how it affects your ability to work; letters from your doctors, coworkers, family members, or friends talking about your disability and inability to work; a videotape showing your condition and how it impacts you; your employment records showing how you struggled to work; any decisions from the Social Security Administration, other disability insurers, or other entities that considered you to be disabled.

Putting together an administrative appeal is a huge project, involving collection of many pieces of information from multiple sources. If you get confused or frustrated, you can always contact an attorney who specializes in ERISA benefits for help. Good luck!

What the Heck is ERISA?

Even after completing law school, most lawyers have no idea what ERISA is other than a vague understanding that it involves employee benefits and that they should consult an expert if they encounter it. If you are not a lawyer, the first time you hear “ERISA” would likely be if you’ve been denied some type of benefit from work.

So what the heck is ERISA?

ERISA is an acronym for “Employee Retirement Income Security Act”, a federal law enacted in 1974 that sets minimum standards for employee benefit plans: pension, long and short term disability insurance, health, welfare, life insurance. It requires plans to provide participants with certain information, such as features of their plan such as what benefits there are, how to apply of benefits, and how to appeal a denial of benefits. It also provides fiduciary responsibilities for those who manage and control plan assets, meaning they have to act in the best interests of the plan participants as a group. ERISA also gives participants the right to sue for benefits and breaches of fiduciary duty.

What Does An Attorney Specializing in ERISA Do?

As attorneys specializing in ERISA, we help people obtain benefits through their employee plans. This could mean helping a person with a disabling condition who can no longer work obtain disability benefits, help a widow or widower get the life insurance proceeds from an insurance policy, or helping a retiree get pension benefits they worked very hard to earn. Here at the Law Office of Katherine MacKinnon enjoy helping people get the benefits they need and are entitled to receive.